ONE EGG Scan for December 4th

Short term trend is higher, but economic data¬†and OPEC’s impact on crude prices have raised question marks short term for broad markets. How much speculation will investors ignore moving forward and how much will they react to? Wednesday they put money back to work in¬†basic materials, industrials and energy. Thanks to the bounce off the low in energy stocks and crude oil the satellite sectors are regaining their upside. Two positive days and counting.

Sectors Worthy of Attention: 

Energy (XLE) is still reacting to oil as it attempts to define direction among the speculation. Worries have pushed oil prices lower¬†and¬†OPEC meeting pushes them off the cliff… for a day or two. The challenge in the sector is the ability to deal with the reactions and determine what is real and what is speculation. There was a¬†move off the lows with a solid bounce on Tuesday and Wednesday.¬†Now pushing against resistance at the $82 mark on XLE. A trade in ERX could set up short term with $69 as the entry point.

Consumer Discretionary/Retail broke higher last week and continues to hold the uptrend despite some negative retail reports from the Thanksgiving weekend shopping. A move through the $68 level on XLY got the upside catalyst from earnings and remains on the upside. XRT is of interest as well with the move above the $90 level being tested currently. Still like the outlook through the first quarter. TODAY: Held support, but the sales reports for Black Friday being down 11% on preliminary data are hanging over the sector for now.

SOXX – Semiconductors testing the uptrend in play for the leading sector. Watching to see how it unfolds and any opportunities within the sector. Small bounce on Tuesday and Wednesday followed through with a new high. Still providing key leadership for the broad markets.

Emerging market made another dip lower on the stronger dollar and unrest in the oil markets. The commodity dilemma is hurting the sector as well. Short side could be worth a look short term as well. EEV is short ETF for the sector and in position to breakout at $19.10. No developments yet on the direction.

Markets playing ping-pong currently on direction and news related issues. Willing to let this settle before jumping the world of up and down day to day. Tomorrow will provide more info and trading and we will add it to what we have currently and look for the best direction or opportunity.

Running the Daily EGG Scans: 

TNA – small caps leading the way higher on the day with solid bounce continuation. 1190 next level to take out on the Russell 2000 index.

IBB – biotechs bounced back to keep the upside in play and new high.

VIX – Volatility index reversed directions on the buying Tuesday. SVXY bounced with the downside of the move.

SOXX –¬†follow through on the reversal on Tuesday and hit new high today. The leadership is still in play.

YINN – China bounce back after selling on economic data on Monday? Another issue of volatility and lack of commitment in either direction.

UGLD – long gold? the upside was back today with money going to work on what some believe is a cheap opportunity. $1217 is the level of interest on the upside for owning gold and reestablishing an uptrend opportunity. Nice bounce back from the selling on Monday thus far. Gold miners are in play as a result of the move. GDX shows some of the issues with HFT impact on the final tick of the trading day. Gold miners setting up as a trade opportunity as well.

SIL – silver miners making upside move as well of the lows in the precious metals.

Small Caps (IWM) РRUT-X index was at support of 1153 on Monday. The last two days put together a move back to 1180 and heading towards the 1190 resistance level again. Too many question marks in this type of trading to take the risk of a trade near term, but the break higher would be of interest.

DGAZ – short natural gas is becoming a upside trade as well the last three days. The reversal from the upside following to cold start to winter has been lost in the worries over commodity prices relative to demand. If the downside is the direction then you go with the trend. UNG is now in position to retest the lows of October at $18.96. Watch the upside trade on reversal if this support level holds.

RUSS – short Russia remains in the forefront as lower oil prices could have a negative impact on the finances of the country. Plenty on conspiracy theories in the media the last week on this topic. This ETF has spiked higher as a result.

Current EGG Proposed:

To much back and forth without conviction or direction at this point. Wednesday helped and looking for some follow through in the morning on the upside. The news is being dominated by energy and energy stocks… investors are all over the place with buying one day on optimism and selling the next on pessimism. Small caps were a perfect example with a 1.6% drop on Monday and a 2.1% gain last two days. In running the scans we find this to be true even in leaders like biotech and semiconductors. Patience is the name of this game and we will give it some room and time to define direction.

As always if things shift with the futures we will update this in the morning prior to trading on the table.