EGG Scan for May 15th

Wednesday’s downside only adds back the lack of clarity we have been dealing with the last eight weeks. Defensive sector rose back to the top as money looks for shelter again. Choppy is still in play and we have to be aware of the implications going forward.

Running the EGG Scans – First the daily winners… Short Small Caps (TZA) downside risk in the sector is back. China Bull (YINN) as country finds buyers the last few days. Indonesia (EIDO) as the emerging markets remains a leader (EDC). Russia (ERUS) was also leading in the wake of the emerging markets. Base metals (DBB) attempting to break above the 200 DMA on bounce off support.

The five day scan is where I am focused currently for leaders to the upside breaking from the consolidation pattern set up the last six weeks.

  • KOLD or DGAZ leveraged short natural gas is leading over the trailing 5 and 10 day scan periods. $42.60 on KOLD is the break of the next resistance levels. Still leading an hit the entry point for adding to the trade. Small downside on Wednesday.
  • SVXY – short volatility index is still in the top of the scan. Holding in the ONLY ETF Model still. Small amount of volatility on Wednesday? Watch to see how it unfolds.
  • ERUS – Russia has moved off the lows on positive comments from Putin. Move above $18.64 would be breakout point for the ETF. (broke higher on Tuesday above resistance and entry.
  • EEM – emerging markets breaks from the consolidation pattern and the leverage is version (EDC) is in the top performing for the trailing five days. (Still doing well and own as the EGG currently.
  • EPI – India gapped higher the last three trading days and looks optimistic short term. Remains a vertical move — adjust your stops to lock in the gain on reversal.
  • DRN – leveraged Real Estate is the other leader. IYR is the non-leveraged version and is up nicely as well. Watching as the sector gets overbought short term.

EGG Model Watch List: Posted EEM trade for Thursday 5/8. Gap over the entry and then tested lower and keep moving lower. Added partial position at 41.80 into the close Thursday. We added to the position again on Friday as it stayed in the range and looked lazy. That changed on the gap open Monday and has moved higher all three days this week. We will manage our position going forward.

There is cash as we only took what ended up as a 1/2 position in EEM. Watching to see if the opportunity to add arises or we can use the current scans to add a new EGG to the basket and manage both. Not what I like to do, but we will put that money to work if the opportunity presents itself.