ONE EGG Scan for July 6th

The scans show the shift in sentiment last week with the sellers showing some resolve to push the indexes into correction mode. A trend reversal would be interesting as it would come on heels of Greece being the catalyst. In other words if the state of Louisiana defaulted it would equal the impact of Greece economically. In fact, the $74 billion potential default in Puerto Rico could have more ramifications. That said, how do we look to start the week?

Selling could show up on Monday if the ‘NO’ vote in Greece impacts the belief a resolution is on the way. Thus, that is the first thing we watch to start the week of trading.

That aside it will be about economic data and the beginning of earnings. Second quarter data as well as June data will continue to be released and then earnings start and we will get to see if the financial sector improved and what impact the dollar had on the technology and multinational stocks.

Thus, we start cautious and willing to watch how it unfolds with an eye on the short side of the major indexes.

Result for the Daily EGG Scan: 

Potential leadership results our scans produced for today…

  • VXX – Volatility was back in play on Thursday and looking at more based on the outcome and reaction to the Greek vote.
  • XLU – Utilities bounced off the low? any upside for the sector despite interest rates? Big question mark going forward.
  • ERY – short energy is back on the upside with crude selling to the bottom of the range. Watch the $20.45 level to break high and possible trade. Hit the entry and retraced on Friday… Followed through on Monday and accelerated on Wednesday. Stops at the $20.50 mark. Still looks positive.
  • TLT – Treasury bonds jumped on the decline in yields… temporary my view… still like the downside and this move gives better entry points on TMV or TBT trades. Put the trade in the short side in motion today if follows through on the selling.
  • DBA – nice break to the upside as agg commodities start moving upside? another follow through on upside.
  • SPXS – Short S&P 500 index showed on list with the selling below first level support on Monday. Still setting up currently. Setting up for the move lower?
  • QID – Short NASDAQ 100 index. bear flag on index and sets up a potential short trade as the tech sector weighs on the index.
  • SDOW – Short Dow Jones Industrial – showed on list with the selling below support and key moving averages. Watching for confirm.

Moves of interest trailing ten days: Big rotation in place near term.

  • SQQQ – short trade on the NASDAQ is setting up. see above.
  • DBA – jumped to the top of the list as other leaders lose their gains. JJG leading.
  • WEAT – wheat is running higher and created short term opportunity with move higher.
  • SOXS – short semiconductors setting up on trend reversal. $48 entry for adding to the position worth watching.
  • INDL – India making another attempt to break higher. $20.75 entry point or speculation for lower entry.
  • DUST – short gold miners continues to show interest on upside. Gold back at $1172 per ounce…broke support and miners sell lower.
  • TECS – short side of technology showing some positive… watching for follow through.
  • TZA – short small caps setting up as well with bottom reversal and break above the $9.85 level worth trading.

Current EGG Position:

Downside risk is still in place as investors decide which side offers the better opportunity to trend near term. Still looking at the scan result for direction and we continue to see high risk opportunities, but prefer to be patient for the near term and let it all unfold. Short side could establish a foot hold if the downside continue to start the week.

This is clearly remains a news driven market which making trading a challenge. It has been challenging to hold trades and let them develop, but we have hit new highs on the NASDAQ and some leadership is showing in Financials, Healthcare and Consumer Discretionary sectors. We are essentially in an extended sideways market that is not attempting to break higher. News is driving the day to day activity. The shortened holding periods makes risk more imperative to manage. Not convinced that either side has control of the direction. Manage positions aggressively based on risk and discipline.