EGG Scan for June 4th

Markets trade mixed on Tuesday as the outlook remains fair to partly cloudy. As we do every day scanning to find the trends has been challenged by the lack of follow through to last weeks move off the lows. We have to remain patient and let this set up the next trade opportunity.

Running the EGG Scans – First the daily winners…

  • TBT – short treasury bonds. This is something of interest as we stated in our market update on Monday the bottom for yields may be established short term and trading opportunity setting up… if money is willing to rotate from bonds. $63.45 potential entry for a trade in the ETF.
  • YINN – China made another move on the upside. As we stated yesterday, if yhou believe the data from the Chinese government the mend is on and the upside is the opportunity.
  • SOXL – Semiconductors are still rising and leading solid trend on the upside.
  • EEM – Emerging markets (thanks to China) is moving back towards the high. Nice move on Tuesday, but still consolidating near the high and looking for a breakout.
  • OIH – oil services bounced back and heading higher as oil prices settle near the $102 mark for now. I still like the outlook for the energy sector overall.
  • Side note… upside in natural gas (UNG) rested. Downside in gold (GLL) rested. These are still trends in play to watch.

Tuesday’s winners are still showing trends that are tradable, but they bring with them risk as well. China is getting extended or overbought, semiconductors as well, oil, emerging markets and precious metals are still jumpy. Trading is an exercise is disciplined habits… use them.

Technology is still the driver on the upside, but it was a challenging day with the intraday volatility created by the misreporting of the economic data. Taking it slowly for now and willing to be patient as we gain some clarity in direction.

EGG Model Watch List:

EGG Model: KBE 32.50 entry. Banks as stated above, are in a position to break higher, if the market trend continues higher. Watch to see how this starts today as the futures are on the downside early.

EGG Tracking…

  1. ERX – Energy is rising again after hitting stops… needed more room on the stops, but with the declining oil prices had to measure the risk. upside still an opportunity.
  2. PJP – Pharma (breaking from consolidation, but momentum has stalled.) entry $58.75, stop $58. Another gap open with a $59 entry point and adding to the risk of the trade. Still interesting move, but needs a follow through on test of the move. $59.45 entry. still attempting to follow through on the upside.
  3. BRCM – giving the best look relative to the semiconductors leadership. $31.15 entry on Wednesday was optimal looking back. Thus, a test of that level and hold, or a move through $31.50 on volume would be of interest for a EGG trade on individual stock level. Got the early move on Thursday (entry $31.50) and it followed through on Friday. Stop $31.15. News pushed the stock up 12% on Monday at the open. Sold half at $35 and $34 stop on the balance. See how this plays out… the news wasn’t that earth shattering and willing to take my gift of gains. Nice bounce back towards the highs on Tuesday.
  4. Off the beaten path and buried in our scans is the movement in the cloud computing stocks (SKYY). The reversal off the low is of interest and the acceleration last week was positive. It has not shown up on our normal scans as the momentum does meet the criteria. However, our bottom fishing scans has picked this up fro the last week. tested the move on Friday and Monday, but scanning the parts is worth a look as well. One stock to watch here is EMC. Testing the move above $26.45 and a move above $26.80 is of interest for a upside trade, if the sector continues to he upside move. Traded lower on Tuesday, but still worth watching to see if the upside is over or not.

Current EGG:

NONE.

QLD hit the stop posted based on the intraday response to the misreport of the ISM manufacturing number. Not the way you want to see an exit develop as it reversed to move higher on the corrected data. We can’t cry over spilled milk, but it does not make you happy. Played out well in the end despite the shaky start. Recommended selling part (sold 1/2 at $106). The stop at $106 was hit intraday on Monday and we are out of the position with a solid gain and looking forward.