Interesting week unfolding for the broad markets with some buying on Monday and some modest selling on Tuesday. The nerves are worn thin at this point following last weeks selling. The trends are still on the upside and the sentiment is still leaning on the positive side. The intraday volatility has picked up and the VIX reflects some concern versus two weeks ago, but not enough to raise any eyebrows on the downside at this point. Thus, go with the trend and maintain your discipline short term.
Russia showing up in the charts the last two days on the downside as the issues with Ukraine gain more headlines. Watching for the downside play with RUSS if this unfolds further.
Treasury bonds are getting some interest as rates bounce off the near term lows. The short play in TBT or TBF are of interest if the downside risk rises and rates start to move higher.
See Trading Notes for July 16th tomorrow morning for further comments to what is moving.
Running the EGG Scans – First the daily winners…
RUSS (Russia) as stated above showing some downside pressure with the Short ETF gaining nicely on the day. Watch for opportunity.
DGAZ (Short Natural Gas) As we discussed offered an opportunity if the commodity (UNG) broke support. That did take place last week and offered a trade in the short ETF. $3.50 entry was the opportunity and that continues to play out with a stop at the $3.60 mark currently.
DTO (Short Crude Oil) The drop below $100 on crude has brought the short side of the trade into play short term.
FAS (Financials) getting a boost from earnings in the large banks worth our attention short term.
VNM (Vietnam) break higher and following through on Tuesday.
ILF (Latin America) hit new high breaking from trading range as well on Tuesday.
Some interesting opportunities showing up in the scans the last two day. Keep watch, manage risk and practice patience.
We posted China (FXI) as the EGG potential to start the trading week. We did gap higher on Monday as noted, but just as importantly we held the move today. With resistance at the $38.50 level we will make the adjustments on the entry if we follow through tomorrow on the upside. I will post any update in the morning as we see how China trades overnight. Willing to be patient as we see how this unfold over the next couple of days.