ONE EGG Scan for November 12th

Sectors Worthy of Attention: 

Uranium (URA) welcome to the party. With commodities gaining some favor of late and comments about building nuclear power again around the world and the price jumped more than 13% on Friday. Followed through on Monday with a 8% gain. Now that is a reversal. Thanks to the comments from Japan about restarting their nuclear energy fleet. CCJ is the company who announced the plans for the 48 reactors in Japan. There are only 11 stocks in the ETF fairly easy to scan for the leaders.

Energy (XLE) is still reacting to oil with the price now at the $78 level. The stocks moved back through the $87 level and offered a short term trade on the other models. That was Friday and now the price of oil fell slightly as it continues to look for direction. Worries returned as Saudi Arabia made statements to not worry about prices… plenty of supply. This took the speculation out of the markets relative to China’s rise in imports of oil last month. Uncertainty is still a challenge for any trades in the sector and patience is the key. ETFs to Watch: USO, XOP, OIH, IEO, ERX.

Basic Materials (XLB) – commodities, and the energy sector have been a weight on the sector, but it setting up technically to break higher if both of these sectors can lend just a small helping hand. ETFs to Watch: XLB – move above $48.50. Hit the entry point on Friday and nice follow through this week on the move. 

Natural Gas adds to the upside bounce off the lows in the commodity and creating a trade opportunity on the upside. No resistance to speak of at the $22.30 mark for UNG as it jumped 4.2% Thursday and tested the move on Friday, but held up well. Monday the sector tested the $22.30 level as support and held… tested lower on Tuesday and bounced back to the $22.30 level again. Watch for a reversal back into the trading range and negative for the break higher. FCG responded on Friday with a solid 5% gain. Gave up 3.5% on Monday. Welcome to the volatility within the commodity sector and energy. ETFs to Watch: BOIL, UGAZ, FCG, UNG

Consumer Discretionary/Retail tested lower to start the week, but it’s holding up and in position to break higher and take on a leadership role into the year end holidays. A move through the $68 level on XLY is of interest to the upside catalyst. XRT is of interest as well with move above the $90 level. Monday was rocky start, but managed to push back towards the high of the day.

China was attempting to reverse off the recent lows, but the economic data keeps stalling the starts on the upside. Double bottom pattern with a consolidation on the breakout is the current look, but that is testing lower again. Need a follow through catalyst to push the sector through resistance and maintain the move higher being attempted short term. A move through the 50 DMA on YINN would be promising short term.  ETFs to Watch:  Entry YINN $31.30. 

Biotech fell last week in response to the elections on belief the Republican control Senate would attempt to make changes in the Affordable healthcare bill. Reality of that happening short term is not great assuming a President who passed the legislation still in the White House. Could present opportunity on the selling short term. ETFs to Watch: IBB, BIB, BIS, XBI Welcome back to the upside which stalled the rolling top developing. Watch for consolidation or further upside. Nice follow through on Tuesday to keep the trend alive on the upside.

SOXX – Semiconductors bounce back, but are showing more of a rounding top than a sector ready to run higher. A test of the move could present an opportunity on the upside as we start the week of trading. Looking for test level and entry for trade on this upside momentum. IF we hold the test and make a push towards the upside we will take trade in SMH. You can trade SOXX as well, but for volume purposes we prefer to use SMH. Still content to trade in the range currently.

Running the Daily EGG Scans: 

Commodity Grains (JJG) The sector has been lagging overall, but has been of interest the last couple of weeks as it has attempted to complete a cup and handle break higher. $38 is the level to watch short term for the move. (DBA also showed a positive move higher on Tuesday to confirm this move.)

Agribusiness (MOO) has been running higher and the break above $54 is a continuation of the upside. Watching for this to maintain the upside move short term with some resistance at the $54.50 mark. The results are starting to effect the grain commodities as well. (above)

Homebuilders (ITB) yes, the trade I missed and hopefully you got was up again on Tuesday with the homebuilders finding buyers interested in the upside move in the fundamentals/earnings.

Gold reversed course on the jobs report? Gained 2.8% on Friday and watching to see if we get any follow through. GDX (gold miners) jumped 8% on the day as well with silver up 1.9%. Precious metals on the move or just a bounce? What happened? DUST was the leader on Monday? Up 18% as the minders (GDX) declined 6%. Gold down 2.2% and silver off 1.1%. Easy come, easy go! Watch to see how this unfolds the later part of the week. Wow! lack of direction from investors is making me seasick. Bounced back near the $112.50 resistance on Tuesday? Setting up to run higher despite the strength of the dollar… or maybe gold know something we don’t about the buck? Worth a trade at the $112.75 on higher volume. 

Some global movement showing up in the scans as well the last couple of days. FKU broke higher today, IFN on Friday, NKY reversed the selling Monday and today… IEV attempting to break through resistance and we could list more. The key is to find the leaders and take what they offer relative to risk and reward.

Natural Gas (FCG) stocks jump 5% to join the commodity on Friday. Tested lower today and back in the consolidation pattern. Patience as this unfolds, but still upside opportunity in the sector short term. Bounced off the intraday low of $14.80 on Tuesday. I still like the upside opportunity if the commodities will follow through short term.

Back and forth on the leadership, but still lacking a leadership move without excess risk.

Current EGG Proposed:

We are tracking these to trade on the setups and we will take the one that works for the entry. Be patient and don’t force any trades.

1)  ITB – Home Construction wants to break from consolidation and looks ready to move higher. Positive news in the sector the last two weeks has been keeping the upside as a possibility. Looking for a move in ITB at $24.30. Friday opened above the entry tested and then ran to the upside as we suspected due to the positive outlook short term. We did not take the trade due to volume issues. Very thin volume on the test and could not get the fill we needed on the trade. If you took the entry manage it out based on the post. Use stop of $24.30 (break-even) currently.

2)  YINN – China was attempting to reverse off the recent lows, but the economic data keeps stalling the starts on the upside. Double bottom pattern with a consolidation on the breakout is the current look, but that is testing lower again. Need a follow through catalyst to push the sector through resistance and maintain the move higher being attempted short term. Solid economic data from China on Monday put this back on the radar and added a 1/2 position. ETFs to Watch:  Entry YINN $30.70 or FXI entry $39.50. ADDED see table. Looking good for now, but stalled on comments relative to the energy consumption and overall speculation about the growth.