ONE EGG Scan for July 8th

Intraday reversal? Is the move lower over? I would not be so bold as to make such a prediction, but it is on my watch list at the open today. Unfortunately Greece is still the driving factor on the intraday trading… and Tuesday China had some influence with stocks down early and then rallied late? In early trading futures are down Wednesday in response to the 7% decline in China overnight? The catalyst for the broad indexes is whatever news is in the headlines and today looks like China’s day to play havoc. Thus, patience remains our issue and too much chop to trade the move.

Does the selling resume today? Do the buyers keep the upside rally in play? Do the FOMC minutes throw a wrench in the works this afternoon? Too many questions, too few answers and too much speculation for my comfort. Patience as the day unfolds to give us another opportunity to find a direction.

Result for the Daily EGG Scan: 

Potential leadership results our¬†scans produced for today…

  • DWTI – short crude trade is back in play as the price of the commodity comes under pressure on the supply/demand side of the equation.
  • VXX – Volatility was back in play on Tuesday early spiking to $21.58 only to return to $19.40 at the close.¬†Volatility within the volatility index. Watching.
  • XLU – Utilities bounced off the low? any upside for the sector despite interest rates? Big question mark going forward. Held the move higher¬†with nice jump on Tuesday.
  • 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, but has played out nicely on the downside trade. Stops at the $21.50 mark. Still looks positive.
  • DBA – nice break to the upside as agg commodities start moving upside?¬†Tested lower on Tuesday and watching with tighter stops.
  • Short trades took the day off! Started out aggressively on the selling, but reversed and didn’t accomplish much on the day.
  • New views for Tuesday… DUST (short gold miners on selling in gold.) YANG (big follow through on selling in Chinese stocks.) EDZ (short emerging markets continues to accelerate on the dollar and China.)

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

  • SQQQ – short trade on the NASDAQ¬†set up with reversal move in the index Tuesday? watching for confirmation.
  • 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. Pennant pattern on the move higher… watch.
  • SOXS – short semiconductors setting up on trend reversal. $48 entry for adding to the position worth watching. Look for how this plays out today following the intraday reversal?
  • INDL – India making another attempt to break higher. $20.75 entry point or speculation for lower entry.
  • 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. Tuesday attempted to bounce off the lows and we will watch how that unfolds today. 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. Flip of the coin, news of the day or just plain old worries period are driving the day to day activity. Need some clarity if we are going to put money to work.

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.