ONE EGG Scan for July 3oth


Bounce follow through on Wednesday. As we have discussed this remains a market without direction or conviction. This is a trading dream if you into scalping trades. The EGG strategy is not designed that way and it has been a frustrating year as a result. But, we persevere with what brought to the dance over the last ten plus years and move forward. Tomorrow is a brighter day!

Wednesday’s FOMC meeting was a flop. Oil prices jumped higher on the supply data. The major indexes followed through on the upside moves, but some of the previous leaders are struggling and new leadership has not been established. Patience is the name of the game and we continue to look for the lower risk opportunities in light of what is taking place relative to the micro trend.

ONE EGG Scan Results for Today:

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

  • FAS – financials were back on the upside trek and show some promise with the move above the $34.50 level again on Wednesday.¬†
  • SPXL – the S&P 500 index upside trade offer a entry point for the brave of heart. We will continue with in our knitting of looking for the opportunity. Patience.¬†
  • 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. Hit the stop, but the downside risk of China remains of interest moving forward.¬†
  • 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. Another short trade that hit the stop, but the worst of this is not likely done… we will continue to watch how it unfolds.
  • 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. Stop $39.50. hit stop on Wednesday as oil’s jump higher put money to work in the country ETF.¬†
  • 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. Selling returned, but holding up it the pennant pattern.¬†¬†
  • 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.¬†Stop hit as rally in the EEM upside.¬†¬†
  • TZA – short small caps jumped¬†and broke through the $10.45 level.¬†Stop at $10.15. Hit the stop as well on the reversal Wednesday.¬†
  • 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.
  • Stops hit on short trades on Wednesday’s as rally pushes stocks higher. There are still plenty of questions on direction and opportunity. We remain patient as this all unfolds.

Moves of interest for the trailing ten days: 

  • SVXY – nice move higher as the volatility is sucked out of the market. overbought? Watching.
  • YANG – short China followed through upside¬†and need to manage the risk of the trade near term. Tested on Tuesday and moved lower on Wednesday. Trend is still upside, but that can change quickly.¬†
  • 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.¬†More buying on Wednesday triggers stops on the short oil trades. Watching to see how it unfolds near term.
  • TZA – short small caps is retracing as well… double bottom setup, but failed on the breakout. Watching as 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. This reversal puts even the short term ten day outlook in limbo. Transition put the previous sellers on top and we have to let it all unfold.

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 and followed through. Still needs to show some¬†conviction from the buyers and it 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. Wednesday is pushing the buy side for now… watching how it unfolds today.¬†