ONE EGG Scan for August 6th

ONE EGG Scan Results for Today:

ISM services data was positive and helped the upside move early for the markets. Oil supply data was better with higher draw downs than expected, but close lower. The market continues to trade sideways and the volatility micro term remains in a tight up and down range… this is still a non-descriptive market environment with too much risk short term. The risk is in the lack of direction more than the volatility. Aimless markets, my view, are dangerous. Remain patient and focused on disciplined strategy.

Scan results based on the last close of the markets…

  • RUSS – oil moves lower and the selling returns. Gap higher and back near the previous high. Looking for follow through. Oil still playing havoc on the ETF. 
  • 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.
  • SPXL – the S&P 500 index upside trade offer a entry point for the brave of heart. We will continue with in our knitting of looking for the opportunity. Patience. 
  • SVXY – inverse of the VIX played out well last week. Hit the entry point $88 on the reversal and moved higher on the day. Stop at break even and watching. Complacency setting in for near term.
  • CURE – healthcare jumped back from the selling as biotech and providers both moved higher on the day. Hit the $41.75 point of interest for upside trade.
  • YANG – Followed through to the break lower. Short trade still setting up to continue near term.
  • 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 $114.80 on the bounce back.
  • 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.
  • 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. But, still not a believer. Downside? Watching how the last two days impact the sector. 
  • Important to note the list is not accelerating in either direction and patience is key to success in this environment.

Moves of interest for the trailing ten days: 

  • 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.
  • The 10-day scans are not showing much in terms of trends which only validates the short term trading cycle we are in… as well as the sideways market as seen in the charts since March. Below is the scan result for the 10 day view… you can see not much has changed… and the returns were earned in short burst.
  • Chart

Current EGG Position:

The broad indexes bounced and followed through to complete the reversal, but remain well within the trading range that has been in place since March. Still needs to show some conviction from the buyers and it needs to step up the volume. I am not a buyer on the bounce. No real leadership. Short side of some sectors are gaining momentum, but we remain cautious about the recent lack of conviction on either side. Trades are winning, but they remain random as well based on news and events. 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 upside and look to see how it start the new week.