ONE EGG Scan for July 23rd

Selling relative to Apple and company earnings on Tuesday posted a modest impact on the indexes overall. This could have easily have been worse from my view. Running the scans shows a mixed bag of results as some rotation from technology plays into the move today. The SOX index led the downside for tech which was off 1.6% on Wednesday. The scans are sorted below, but the movements are still focused on news… careful how you take on risk in this environment.

Result for the Daily EGG Scan: 

Potential leadership results our¬†scans produced for today…

  • 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. Stops in place. Supply data on Wednesday accelerated the downside move for this trade.
  • RUSS – short crude trade overlapping into the Russia short trade. $34.15 entry hit on Wednesday… watching $35.30 as next entry point.
  • DUST – the break lower for gold is a big negative for the miners. The downside accelerated on Monday. GLD down 2.7%.
  • EDZ – short emerging markets showing up on scan again. We have to watch $35.50 as the entry point?
  • CURE – healthcare moving back into the uptrend and hit new highs. I continue to like this sector going forward.
  • INDL – India moves higher and broke through resistance, but now challenging the move higher. Watch and mange the risk of a trade.
  • SVXY – volatility gets taken out of the market on the buying to start the week. The index has now moved to 12.1 and posted a solid gain on the trade… overbought? raise your stops on this position if you own it. Watching for bounce in volatility… tighten stops on SVXY.
  • BIB – Biotech made gap move higher and in position to test the June high.¬†Testing and watching the last three days.
  • FAS – Financials gapped higher as well and looking for banks (KBE) to lead. Still moving higher, but bank earnings were a catalyst.¬†Nice bounce on Wednesday to keep the upside move alive.

Moves of interest trailing ten days: Big rotation in place 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. Raise your stop to $30.
  • 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. Watching the impact of the analyst comments on the upside for crude.
  • UGAZ – natural gas attempting to break above resistance at the $2.30 entry level.
  • FDN – internet has produced solid move near term and small test on Wednesday.
  • ERY – short energy trade continues to show positive upside trend. Crude moving lower accelerating the trade again.
  • 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.

Current EGG Position:

Volatility has evaporated near term as the upside takes control of the direction. We continue to post the sectors that show trade opportunities, but they still have risk relative to how the news unfolds each day. This remains a trader driven market and most trends are very short lived or include some extremes in the volatility side. Watching how this all unfolds going forward.

This is clearly remains a news driven market which making trading a challenge. We have hit new highs on the NASDAQ and some leadership is showing in Financials, Healthcare and Consumer Discretionary sectors. We are making progress on other indexes, but it is starting to stall near term. Not convinced that either side has control of the direction, but the upside holds the momentum for now. Manage positions aggressively based on risk and discipline.