ONE EGG Scan for August 10th

ONE EGG Scan Results for Today:

Sellers are attempting to exert some control over the broader markets. The drop in healthcare, biotech, technology, and consumer sectors put them in a better position to exert some control short term on the downside. Watching how this unfolds in the coming week. I am not convinced the buyers are out, but the are playing possum well. The economic data took on a Fed bias to end the week and that exerted some worries about the rate hikes again for September. We will see how this unfolds to start the week.

One thing I will warn about… the markets need negative sentiment that is fear based relative to the future in order to have a correction of 10% or more. At this point that type of catalyst is not currently in play. Thus, trades only until there is confirmation on the downside.

Scan results based on the last close of the markets…

  • BIS – short biotech showed up on the scan with the 8% gaing. Biotech selling big again on the worries. Added to the downside on Friday.
  • TZA – short side for small cap showed up in the scans as the sector continues be under downside pressure. Hit the $10.45 entry mark.
  • SDOW – short side for the Dow hit the scans as well today. Watching for confirmation. HIT entry on Friday.
  • RUSS – oil moves lower and the selling returns. Gap higher and back near the previous high. Looking for follow through. Testing at the resistance levels. $42.35 needs to get through. Watching the test. 
  • VXX – volatility picked up on the day and watching for a follow through or reversal back to the previous low. Watching the $10.65 mark.
  • YANG – Followed through to the break lower. Short trade still setting up to continue near term. Big wedge pattern at the end of the chart.
  • DWTI – short crude trade remains in play as the price of the commodity remains under pressure on the supply/demand side of the equation not equaling out. Stops in place $121 to give some room.
  • DUST – the break lower for gold is a big negative for the miners. Big flag at the top… should continue higher, but watching.
  • EDZ – short emerging markets showing up on scan again. $40.80 breakout and entry to trade again. 
  • TMF – Treasury bond rallies again on the move to safety? Breaking from a double bottom on the upside? Bring the Fed into question and the upside is realistic. Hit the $80 entry level on Friday… still rallying.

Moves of interest for the trailing ten days: 

  • FAS – financials were back on the upside trek and show some promise with the move above the $34.50 level again. However they have stalled, but still looking positive on test.
  • SVXY – nice move higher as the volatility is sucked out of the market. overbought? Watching.
  • YANG – short China followed through upside and need to manage the risk of the trade near term.
  • DUST – short gold miners have been trending higher since the lows in June. It has some chop, but still worth the risk. Close above $21.50 to add positions and now managing the stops if it reverses at any point soon. Stop at $31.
  • DWTI – short oil is now in a flag pattern consolidating the gains. A continuation is worth trading, but plenty of news/speculation on oil rallying? Caution on the commodity is a must. Downside back in play and upside continues to move.
  • XLU – utilities are moving off the lows and advancing. Money rotating on interest rates dropping.

Current EGG Position:

The broad indexes bounced and followed through to complete the reversal on the upside. That lasted about a week and now the reversal is heading the other direction.  Trading range remains in play and the movement up or down is a part of the uncertainty in the markets looking forward. The short side offers more interest this time as the sentiment is shifting. The rotation is kicking the leaders lower as well this time. If they break trends or support it would be a additive catalyst on the downside for the broad markets. Herein lies the issues with the current cycle… by the time we get some conviction or momentum in a direction… the opposite side steps in to reverse whatever good was done relative to the trend. Thus, remain patient and let this all unfold going forward. We ended the trading week on the downside and look to see how it start the new week.