ONE EGG Scan for July 27th

Markets turn lower and the scans shift yet again. This is staring to make me seasick. That said we remain in the range and the uptrends are still basically intact, but the worries are returning despite the positive earnings news. More investors are starting to look at the true economic data along with the reality of the affordable healthcare act (not quite so affordable) on employment, the IRS being empowered to tax at will on penalties ($36.500 per worker), and the global picture weakening… Money is rotating again.

Weak Friday with indexes tumbling 1% to complete a negative week for stocks. Below are the scan results as we start the week. Not much to talk about… thus be patient and keep your powder dry for the next opportunity.

Result for the Daily EGG Scan: 

Scan results based on the last close of the markets…

  • DWTI – short crude trade remains in play as the price of the commodity remains under pressure on the supply/demand side of the equation. Stops in place. Supply data accelerated the downside move, followed by more selling to end the week.
  • RUSS – short crude trade overlapping into the Russia short trade. $34.15 entry hit on Wednesday… watching $35.30 as next entry point also hit. Continued move higher to end the week. Manage your stops.
  • DUST – the break lower for gold is a big negative for the miners. The downside accelerated, but managed to bounce late on Friday? hope springs eternal for the gold bugs.
  • 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.
  • VXX – volatility returned at least for the day on Friday. $16.80 entry level hit and watching how it unfolds to start the week. VIX back at 14.5 and watching.
  • TZA – short small caps jumped on Firday… needs follow through.
  • BIS – short biotech as the selling accelerated on Friday and impacted the small caps as well.
  • 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 for the trailing ten days: 

  • 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 $31.
  • 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, but holding the upside trend. Watching how it unfolds after big start Friday that evaporate.
  • 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 returned to end the week. Rotation away from growth started as seen in tech, small caps, retail and biotech. This put more question marks on the market and reintroduces worries and risk and… As we start the week the downside will have to validate the reversal or the buyers show up and restore the upside move. Flip-a-coin based on the data and the speculation on who will drive the direction. This puts news back in the driver seat and that is not a good thing for putting money to work or risk. Discipline is the key and thus, we will start cautious and see how the week starts. Look for clues and don’t over extend your risk relative to the volatility.