ONE EGG Scan for July 10th

Gap open ended with markets drifting back towards even on the day. Not the kind of follow through I was looking for. The inability to mount any type of bounce, rally or push on the upside is a negative sign near term. We ended the day more frustrated than optimistic. Today we look for more of the same with the same worries being pondered, speculated and discussed. Patience it is Friday and we will let this continue to unfold.

Nothing changed in the scans with the give back on the gains from early Thursday… watching and waiting.

Result for the Daily EGG Scan: 

Potential leadership results our scans produced for today…

  • SOXS – short semiconductors are still in play and the move lower on Thursday only adds to the speculation in the sector.
  • DWTI – short crude trade is back in play as the price of the commodity comes under pressure on the supply/demand side of the equation. Nice move higher.
  • VXX – Volatility was back in play on Wednesday, but this time it stuck with VXX closing at the $21.35 mark. upside in place.
  • ERY – short energy is back on the upside with crude selling to the bottom of the range. Watch the $20.45 level to break high and possible trade. Hit the entry and retraced, but has played out nicely on the downside trade. Stops at the $22.25 mark. Still looks positive.
  • Short trades took off on Wednesday! Gapped higher Thurday, but drifted back enough to keep the interest in the short side trades.

Moves of interest trailing ten days: Big rotation in place near term.

  • SQQQ – short trade on the NASDAQ set up with reversal move in the index Tuesday? watching for confirmation. Got the confirmation and move higher on Wednesday as the index struggles.
  • DBA – jumped to the top of the list as other leaders lose their gains. Testing the $22.80 support mark?
  • WEAT – wheat is running higher and created short term opportunity with move higher. Pennant pattern on the move higher… watch.
  • SOXS – short semiconductors setting up on trend reversal. $48 entry for adding to the position worth watching. Look for how this plays out today following the intraday reversal and follow through on Wednesday.
  • TECS – short side of technology showing some positive… watching for follow through. Got it on Wednesday.
  • TZA – short small caps setting up as well with bottom reversal and break above the $9.85 level worth trading. Held the move higher on Wednesday.

Current EGG Position:

Downside risk is still in place as investors decide which side offers the better opportunity to trend near term. Tuesday attempted to bounce off the lows, but reversed to retest the lows on Wednesday with the sellers exerting control. Thursday looked like a reversal in play, but faded back near even on the close… short side still has momentum. Still looking at the scan result for direction and we continue to see high risk opportunities, but prefer to be patient for the near term and let it all unfold. Flip of the coin, news of the day or just plain old worries period are driving the day to day activity. Need some clarity if we are going to put money to work.

This is clearly remains a news driven market which making trading a challenge. It has been challenging to hold trades and let them develop, but we have hit new highs on the NASDAQ and some leadership is showing in Financials, Healthcare and Consumer Discretionary sectors. We are essentially in an extended sideways market that is not attempting to break higher. News is driving the day to day activity. The shortened holding periods makes risk more imperative to manage. Not convinced that either side has control of the direction. Manage positions aggressively based on risk and discipline.