ONE EGG Scan for July 24th

Market can’t hold the gains to start the day and end in the red. Today ends the week of trading and the question remains… where is the conviction, confidence and willingness of investors to put money to work? It isn’t there still and thus the upside remains challenged by this and the sellers step in at the first sign of things not panning out according to speculation.

Amazon and Starbucks beat on earnings and could set the tone for trading today… but, we will see how it unfolds as the sellers are testing the move higher and the test is more than some expected following Thursday. Banks, technology, consumer and healthcare have been lagging… can they resume the upside momentum is the big question of the day.

Red Text – changes in notes from previous posts.

Result for the Daily EGG Scan: 

Potential leadership results our scans produced for today…

  • DWTI – short crude trade remains 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, followed by more selling on Thursday 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. Added to the upside on Thursday.
  • DUST – the break lower for gold is a big negative for the miners. The downside accelerated on Monday. Tested and resumed higher on Thursday. Gold sell off is pushing stocks lower.
  • EDZ – short emerging markets showing up on scan again. We have to watch $35.50 as the entry point? Hit the entry point on Thursday. Nice follow through on short trade.
  • 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. Tested the move lower and if holds and moves higher willing to add the position.
  • 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.
  • TMF – Treasury bond rallies again on the move to safety? Breaking from a double bottom on the upside? BUT, does this have an upside opportunity? This is of interest going forward.

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.
  • FDN – internet has produced solid move near term and small test on Wednesday & Thursday. Watching how it unfolds.
  • ERY – short energy trade continues to show positive upside trend. Crude moving lower accelerating the trade again. Continues upside trek.
  • BAB – Build America Bonds – break from the base on the upside. Interest rates are declining putting this opportunity in place.
  • TZA – short small caps is building a double bottom and reversal on the move would be worth trading short term.
  • 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.