ONE EGG Scan for January 5th

Reviewing the move for the last week the momentum has been shifting. The downside move last week has set up some reversal patterns in the indexes, but we will see how the first week of trading in the new year shapes up.

Sectors Worthy of Attention: 

Crude oil is heading lower again and the downside move has come back into play short term. SCO jumped higher again to end the week and is worthy of attention.

Emerging markets (EDZ) returned to the downside again as the uncertainty about the global markets were renewed. Greece is part of the issue along with the stronger dollar. Watch downside opportunity this week.

Treasury bond (TMF) rotation back to safety to end the week pushed the bond higher again and the yield back near the December lows. Watch to see how that story unfolds this week as well.

Gold and gold miners (GDX) made a nice move higher on Friday and has attempted to bounce off the lows. Looking for follow through to start the week a possible trade opportunities.

REITs (DRN) sold on Thursday, but made nice bounce on Friday to keep the uptrend intact.

Two to watch on the downside are SDS and QID. Both the S&P 500 index and the NASDAQ are showing double top patterns or reversal opportunities.

Markets are still playing the worry game as the uncertainty returned last week with oil prices dropping, economic data disappointing and the global markets showing more weakness. Don’t be surprised if this feeds on itself to start the week.

Running the Daily EGG Scans: 

We start the week with a downside bias and we have to respect the potential trend shift in play. Be patient and take what the market gives.

Short S&P 500 index double top pattern could complete and offer downside trade short term.

Short NASDAQ index with same double top pattern that could complete a reversal and short term downside trade opportunity.

Gold miners (GDX) breaking from a bottom consolidation offers some upside opportunity as well with a short term target of $20.30.

I will update the table in the AM as we see which offers the best opportunity if any to start the week.

Current EGG Proposed:

Short the S&P 500 index (SDS) is what I am watching as a trade opportunity to start the week. Entry is $22.15. Stop $21.75 and target it the $24 mark. Let it unfold early if the trade is to work.