ONE EGG Scan for January 8th

Wednesday brought the buyers back as they values were too tempting. Whatever the reason investor put some money to work on a low volume bounce. Technically the charts are a mess and the uncertainty in the markets remain. This is a traders market and nothing more at this point. We continue to look for the opportunities in this environment, but you have to see the volatility and swings for the risk they present. Patience is a virtue in this situation. IF you bought SDS as posted, you hit an exit point on Wednesday as the buyers stepped in and $22.75 I suggested worked well to exit with a 2%+ profit.

Futures are pointing higher again today for a follow through to the buying on Wednesday. It needs to hold through the first 30 minutes plus today to gain confidence. Watching how this unfolds.

Sectors Worthy of Attention: 

Crude oil has been in a progressive downtrend hitting a low of $47 this week. The bounce on Wednesday closed with a doji. Could be get some upside relief in the stock rally? Watching to see if there is a possible upside trade in this move. USO at $18.80 or UCO at $8.90. Watch how this unfolds today.

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. Added to the downside on Monday and short trade is working. (Wednesday: watch for a relief bounce as it may give another short entry opportunity short term.) Got the relief bounce and could set up rally if all the worries take a break globally. EDC at $22.30 is interesting trade.

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. Added to the upside on Monday with the uncertainty rotating money in the direction of safety. (Wednesday: watching the response of traders in the sector… could see some short term profit taking.) None yet, but it is setting up for some today. TBT is short side ETF.

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. Added to the upside with nice move on Monday. (Wednesday: could see some profit taking in the sector as markets calm.) Futures are down today and sold modestly yesterday… recommended booking the profits on the trade on Wednesday.

REITs (DRN) sold on Thursday, but made nice bounce on Friday to keep the uptrend intact. Flight to quality or dividends is in play and added upside on Tuesday. Nice upside added on Wednesday as money is rotating to “safer” havens.

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 more going forward. Bounce on Wednesday with futures higher is just that and it will have to validate itself to be more. Thursday looks to start positive and upside is trying to come back. Needs validation on the move if it is to continue.

Running the Daily EGG Scans: 

We started 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. Monday confirmed this belief and we are now looking at trading the downside move with an eye of the key support at 1972 on the S&P 500 index. (Bounced on Wednesday… looking to follow through today and we will see how strong this upside move turns out short term. Posted trades on the ONLY ETF strategy for this move if you are interested.)

Gold miners (GDX) breaking from a bottom consolidation offers some upside opportunity as well with a short term target of $20.30. Monday hit the $19 entry point and watching for the target o hit short term. Hit the target on Tuesday lock in your profits today. (Hopefully you took the exit opportunity on Wednesday at $20.30 or better.) 

China (FXI) bounced back on Wednesday from the selling. The positive in the country are building at least from the analyst view. The upside bounce puts the ETF in position to break higher and follow through on the upside. $42.15 entry is attractive for the sector.

Financials (XLF) look interesting as they are oversold. FAS is trade on upside if it can follow through on a move above $120. This is still a sector that cannot find any love, but has offered some great trading opportunities.

Biotech (IBB) bounced back from modest selling and has held up well during the recent volatility. Upside still in play and closed above $310 on Wednesday looking for follow through move today.

Current EGG Proposed:

Follow through on upside would be positive for the broad indexes. I like what we are seeing in the China ETF technically and it has set up to break from the consolidation of late. Fundamentally the talk is of improving data and money flow is increasing to the sector. Looking for trade on the break higher in the ETF as posted.