EGG Scan for September 4th

Each time we gain some clarity on the direction we get a curve thrown at us. The last six to eight weeks has been a issue of news driving and that makes for choppy markets. It was looking as if the dust was settling, but it is back as Russia/Ukraine talk peace, oil prices become volatile, the Fed, the economy and, and, and… the list could go on. The key is keep our focus and let this all unfold.

The reaction to the housing speculation on Wednesday was just the next worry added to the list. Speculation the mortgage or lending would tighten the last part of the year as the Fed withdraws completely from quantitative easing and Congress proposes new legislation to limit Fannie Mae lending. If it is in the headlines it must be fact is the first reaction by Wall Street. I still like the housing sector fundamentally, but we hit our stops and and we move forward with the scans and the next opportunity.

Running the EGG Scans¬†– First the daily winners…

All is well in the land of Russia and Ukraine… right? We will see, but the news shifted the scans with the global markets responding positively on the news.

Russia Long¬†(RUSL) up 17.6% and recapturing the downside from all the speculation of war. This move explains the challenge of trading news. I don’t expect the upside to hold as the lack of clarity in the announcements was a concern. The news driven country remains difficult to trade.

Natural Gas (DGAZ) was doing well on the upside and gets rocked by the worries relative to demand in light of the economic data on Tuesday in Europe and China. We did follow up on the short trade setup with a follow through on the worries, but still a news game no fundamental data to validate at this time. Leader on the downside Wednesday. High risk trade.

Energy (ERY) reacted to the selling in commodities Tuesday and bounced back on the Russia news. This is developing a trend of worry on the charts and watching for the downside trade opportunity if this follow through. Crude lower after hours from the bounce.

Emerging Markets (EEM) back on the upside move with the news in Russia helping China and other countries rebound. Still a positive, but volatile trade sector.

China (YINN) continued the bounce back and broke above¬†the consolidation range near the highs. FXI was up 3.3% and YINN up 9.8%. All is well in the country… right? Not really, but the momentum is in the chart and the uptrend remains in play.

Still interesting: 

Biotech (XBI) jumped through resistance last week and followed it up on the upside. A follow through on this large cap ETF or the multicap ETF, IBB are two to watch for the follow through leadership in the healthcare sector. Flag or pennant setup still in play.

Financials (XLF or FAS) held the upside move with modest follow through and a flag setup on the close still in play. It is still up to the banks and brokers to lead the sector to higher ground. It will require patience going forward.

Brazil (EWZ) solid break from the trading range and move higher. The country is giving the emerging markets a lift overall. Watch for the opportunities in the specific country ETFs.

Latin America (ILF) more focus on the emerging market growth. Positive upside and break higher.

Utilities (XLU) tested lower on Monday after hitting resistance and reacting to the selling in the bond sector on high yields. Could test lower if the yield issues persist.

Current EGG:

NO EGG in play currently.