ONE Egg Scan for June 9th

As we covered in the weekly update, the markets are settling into the next leg higher. Like it or not, the trend is higher. We can make excuses and point to the negatives as much as we would like, but the breaks to the upside and the added volume last week is positive. Sometimes we just have to go with the flow and manage our risk one day at a time. Start the week with some weakness in the futures and we will have to see if it means anything to the trading day.

Running the EGG Scans – First the daily winners…

  • SVXY – Short VIX trade continues to be the big winner on the upside. VIX is now below 11 and back at the 2007 levels. Raise stops on these positions.
  • TNA¬†– Small Caps (IWM) posted a solid gain again on Friday leading the major indexes. Entry points hit last week on the trades, but still not an easy trade psychologically.
  • EDC – Emerging markets (EEM) back to the upside velocity. Broke from the upside consolidation pattern and continues the previous uptrend.
  • UGAZ – Natural gas (UNG) still make slow progression to the upside. FCG is the stock ETF for the commodity.
  • FAS – Financials (XLF) Banks and regional banks take on the leadership role again… maybe this time they follow through.

No changes in the leading moves in China, SOX, technology, natural gas, insurance, financials, banks, midcap or India, just more joining the upside as the move broadens in breadth. Europe, healthcare, homebuilders and midcaps join the momentum last week. Rotation is spreading out on what many are believing to be the next rally in the broad indexes.

EGG Model Watch List:

EGG Tracking…

  1. 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. Still attempting to follow through on the upside.
  2. BRCM – giving the best look relative to the semiconductors leadership. $31.15 entry last week¬†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¬†last¬†Thursday (entry $31.50) and it followed¬†through on Friday. News pushed the stock up 12% on Monday at the open.¬†Sold half at $35 and $34 stop on the balance. See how this plays out… the news wasn’t that earth shattering and willing to take my gift of gains. Nice bounce back towards the highs the balance of the week. Raise stop to $36 on balance of shares.

Current EGG:

KBE 32.50 entry. Banks made the break higher and the market trend continues higher. The follow through move helps the upside in the broad indexes and we continue to look for the upside in financials as it attempts to take on a leadership role near term. Stop is $32.

Holding position for now and watching how this plays out short term. Raise the stop to breakeven on the trade and be patient.