ONE EGG Scan for July 29th

Markets test lower, reverse and close up on Tuesday. This is all good, but it really does create more havoc for the trend or trade opportunities to pan out. The short trade on SPXS hit the stop on the reversal and now we set course again to define direction. The last seven plus months the indexes have not been good on follow through relative to trades. Thus, we will find other territory to deal with going forward.

Most indexes did define support at the 50 or 200 DMA and reversed. Now comes the follow through question relative to the bounce. I am not inclined to speculate on this move, but I will say the volume was not impressive. Above average, but not impressive for the move. We will proceed with caution.

Result for the Daily EGG Scan: 

Scan results¬†based on the last close of the markets…

  • SVXY – inverse of the VIX played out well on Tuesday. hit the entry point $88 on the reversal and moved higher on the day. Stop at break even and watching.
  • CURE – healthcare jumped back from the selling as biotech and providers both moved higher on the day. $41.75 point of interest for upside trade.
  • YANG – Followed through to the break lower. Short trade¬†tested and stop at $86.55.
  • 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 $114.80.
  • RUSS – short crude trade overlapping into the Russia short trade. $34.15 entry hit… watching $35.30 as next entry point also hit. Continued move higher to start¬†the week. Tested lower on Tuesday. Stop $39.50.¬†
  • 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.¬†Bounced back near the highs on Monday keeping the downside pressure on the gold miners. Held up well on Tuesday.¬†
  • 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.¬†Tested lower on Tuesday… stop at $39.¬†¬†
  • TZA – short small caps jumped¬†and broke through the $10.45 level.¬†Testing the move on Tuesday… Stop at $10.15.¬†
  • 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.¬†Followed through as well with additional selling. Watching the downside risk. TBT still entry at $46.60 on yield rising. FOMC meeting today.

Moves of interest for the trailing ten days: 

  • YANG – short China followed through upside¬†and need to manage the risk of the trade near term. Tested on Tuesday.
  • 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. Stop at¬†$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.¬†Some buying on Tuesday to watch if follows through.¬†
  • ERY – short energy trade continues to show positive upside trend. Crude moving lower accelerating the trade again. Continues upside trek.¬†Hit the stop as the buyers stepped in to add positions on the fire sell. I still like short side and will trade for opportunity.¬†
  • BAB – Build America Bonds – break from the base on the upside. Interest rates are declining putting this opportunity in place.
  • 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 start¬†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.

The broad indexes bounced. Still needs to follow through on the bounce and more importantly the conviction from the buyers needs to step up. I am not a buyer on the bounce. No real leadership. Biotech did bounce nicely off the near term support, but still want to see the push from the buyers. Herein lies the issues with the current cycle… by the time we get some conviction or momentum in a direction… the opposite sides steps in to reverse whatever good was done relative to the trend. Thus, remain patient and let this all unfold going forward.¬†