ONE EGG Scan for June 2nd

Ended the week on positive note? The indexes saw selling pressure throughout the day, but managed to rally into the close on Friday. That left doji candles on many charts and plenty of talk of potential reversals as a result. The reversal/correction talk is nothing new and we continue to monitor any shift in the trend short or long term.

Running the EGG Scans – First the daily winners…

  • YINN – China is back on the list as it has put together a solid upside mover the last two weeks. The challenge remains believability.
  • URE – REITs are still in play and made a solid move higher on Friday.
  • EWP – Spain made a break higher from the upside consolidation on Friday.
  • XLP – Consumer Staples? Wow, you don’t see this in the top very often. The sector has been moving progressively higher the last two weeks. We own the position in the S&P 500 Model.
  • VPU – Utilities? Must have been a boring day. Acceleration from the bottom reversal and heading higher for now.

Thursday’s winners saw reversals in four of the five posted with consumer staples the only repeat on Friday. The same leaders continue to hold with Technology, Semiconductors, Consumer and Energy holding the top spots. Patience as this plays out short term… Friday’s first shot at selling is worth noting as we head into the new week of trading.

EGG Model Watch List:

EGG setup going forward…

  1. ERX – Energy is rising again and follow through today would be positive entry point for the sector ETF. Entry $111.25. max entry $112. Target $118. Stop $110. (HIT The entry point on Friday)
  2. SOXL – Semiconductors. (SOXX, SMH)  entry $90.20. stop $87.80. This gapped above the entry point on Tuesday. Still looking for test or reasonable entry point. No test and still showing upside move. Volume has moved down, look for test?
  3. PJP – Pharma (breaking from consolidation, but momentum has stalled.) entry $58.75, stop $58. Another gap open with a $59 entry point and adding to the risk of the trade. Still interesting move, but needs a follow through on test of the move. $59.45 entry.
  4. BRCM – giving the best look relative to the semiconductors leadership. $31.15 entry on Wednesday was optimal looking back. Thus, a test of that level and hold, or a move through $31.50 on volume would be of interest for a EGG trade on individual stock level. Got the early move on Thursday (entry $31.50) and it followed through on Friday. Stop $31.15.

Current EGG:

QLD is still in play for those who took the trade. Played out well in the end despite the shaky start. Recommended selling part on Tuesday (sold 1/2 at $106). Nice upside on Friday after pushing near the stop intraday. The stop remains at $106 based on the close and need to manage into the open today. Focus on the simple not what you think may happen looking forward. Protect the gain for now. I added 1 share to the table to track the trade out for those who entered the position, adjust your stop and manage the position out.