ONE EGG Scan for June 30th

End of the quarter… Greece and economic data on tap… followed by earnings. The start was Greece on Monday and it didn’t help matters. In fact, it left the big question mark about the selling. If we all knew what was on tap the last two plus months. The selling may be more in line with the markets looking of a correction catalyst than the catalyst itself. We must proceed with caution and the activity on Monday turned the scans upside down. Thus, the last ten days versus yesterday turn up two different views depending on if the selling follows through near term. Thus, be discipline in your approach to the coming weeks.

On the daily scan those sectors that were building negative momentum jumped to the upside on the downside stimulus on Monday. Others showed up on the list as a result of Monday and need to confirm.

Result for the Daily EGG Scan: 

Potential leadership results our scans produced for today…

  • VXX – Volatility index spikes higher on the news and VIX index moves above 18 in a blink after less than a week ago hitting 12.2 on the low. More in store? watching.
  • YANG – short China… this was the EGG on Friday, but the big gap was a pass on the day. We look to Monday for a better entry point. Gapped again and shows the downside risk in the country.
  • ERY – short energy is back on the upside was crude fades? Watch the $20.45 level to break high and possible trade. Hit the entry and retraced on Friday… still like the downside play for energy short term. Followed through on Monday.
  • RUSS – jumped 8% on the worries. Watching $33.20 on the upside as trade opportunity? Hit that level on Thursday. Nice follow through on Monday.
  • 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.
  • EDZ – short emerging markets is back on the table with bottom reversal last two days. 31.75 possible trade entry point. Definitely has played out on the short side.
  • DBA – nice break to the upside as agg commodities start moving upside?
  • SPXS – Short S&P 500 index showed on list with the selling below first level support on Monday.
  • 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: No changes with the downside activity on Wednesday.

  • DBA – jumped to the top of the list as other leaders lose their gains.
  • REK – short real estate. negative for awhile and continues to show weakness.
  • Balance are regrouping relative to leadership currently as a result of the selling on Monday. The move was enough to shift the table relative to the longer term views of the markets.

Current EGG Position:

 

The downside risk is in play. Dow, S&P 500 index and the NASDAQ have established the possibility of downside trades based on the activity. There needs to be a confirmation of the downside and then we will look to add positions going forward.

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.