EGG Scan for September 8th

The market tested lower on the jobs report or did it? It is like traders liked the weaker number on the hope it would keep the Fed at bay a little longer on hiking interest rates. I always find it interesting how traders think the opposite of what is natural or should I say they think like the government? A handout for growth in stocks is better than an improving economy that would spur growth… go figure. In the end the markets continue to move sideways and look for a catalyst on the upside. Why up? It remains the bias for now.

Running the EGG ScansĀ – First the daily winners…

More movement in sectors that are interesting relative to the news or data. The jump in utilities on Friday was an example with rates a concern on the horizon, but as stated above if the belief shifts towards more handouts that will keep rates low and impact the value of the dollar. Speculation is a wonderful thing. Buy the rumor and sell the news.

Russia LongĀ (RUSL) up 17.6% on Wednesday, down 3.9% on Thursday, and up 5% on Friday. That puts usĀ at the apex of the double bottom pattern and a possible move to the upside. News is the problem creating greater risk to the trade than I like.

Natural Gas (DGAZ) We did follow up on the short tradeĀ setup for DGAZ. That gained more on Friday as one of the leaders on the day.

Crude Oil (SCO) joined in on the downside again. This has been very volatile, but the downside trend remains in place and the bias is to the downside short term.

China (YINN)Ā broke from the consolidation pattern on gap Wednesday and has held the move. Upside bias is in play and potential trade on the upside momentum is still a possibility.

Solar (TAN) the upside has returned with the sector continuing to accelerate. Still attempting toĀ hold the move above $45 as the next level to watch on the upside. Breakout is tradable on upside. Volume is trouble for the EGG.

Emerging Market ETFs continue to show up in our scans. Volume is a challenge in most for this strategy, but sufficient enough for trading smaller size positions. EWW, INDA, SCIF, EHPE, etc.

Trade Considerations:Ā 

Natural Gas (UNG) testing support again at the $20.50 level. The trend is down into the consolidation and thus the bias is to break lower. That would set up a short trade on the commodity. A reversal and move above the $21 level opens way to an upside trade in the range back to $22. I like this setup…

Energy (XLE) has been showing weakness since hitting the highs in June. Support remain in the $95.10 level and the micro trend is lower. The short and intermediate term trend is higher… something must give. Either we get a trend reversal and break below support or a bounce move back towards and beyond the previous high.

Financials (XLF) the test of the $23 level could take place and if it holds would be of interest short term.

Brazil (EWZ)Ā this is a set up for a test and upside continuation trade.

Latin America (ILF)Ā this is a set up for a test and upside continuation trade.

Utilities (XLU)Ā this set up much like EWZ and ILF, but Friday gave an entry at the $43.10 mark. $44.25 target on trade a challenge since the leveraged ETF volume is too thin for me to trade the size needed.

Current EGG:

Financials continue to hold the upside and if we are going to take another leg higher they will be a key part of the leadership. As we have discussed a test of $23 was a potential. The entry level for a trade on the upside is $23.50. The setup for the trade is in place and the upside momentum on Friday was a positive. Watch for follow through on the upside and don’t chase in the event of a gap open.