ONE EGG Scan for November 17th

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 20% last week. 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. Thursday showed the challenge with speculation runs higher, but it did bounce back on Friday to end the week near the highs. Stop management and time line are key to owning the ETF.

Energy (XLE) is still reacting to oil as it attempts to define direction among the speculation.¬†The stocks¬†remain near¬†the $86 level¬†and working.¬†Worries returned as Saudi Arabia made statements to not worry about prices… plenty of supply. That speculation had a new spin on Friday with OPEC supposedly willing to cut supply. Uncertainty is still a challenge for any trades in the sector and patience is the key.¬†ETFs to Watch: USO, XOP, OIH, IEO, ERX or ERY.¬†

Basic Materials (XLB) Рcommodities, 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 Рmove above $48.50. Hit the entry point on Friday and nice follow through this week on the move. 

Consumer Discretionary/Retail tested lower last week, but it held up and advanced to break higher and take on a leadership role into the year end holidays. A move through the $68 level on XLY got the upside catalyst from earnings and looks ready to move higher. XRT is of interest as well with the move above the $90 level. Still like the outlook through the first quarter.

China was attempting to reverse off the recent lows, but economic data keeps stalling the starts on the upside. Double bottom pattern with a consolidation on the breakout finally followed through on Friday with the break higher.¬†A move through the 50 DMA on YINN should be promising short term. ¬†ETFs to Watch: ¬†Entry YINN $31.30.¬†Friday’s break higher is what to watch for follow through.

Biotech fell last week in response to the elections on belief the Republican controlled 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 is still in the White House. Could present opportunity on the selling short term. ETFs to Watch: IBB, BIB, BIS, XBI. Need to be patient and let this consolidation unfold.

SOXX – Semiconductors¬†completed the ‘V’ bottom pattern and is stuck in small trading range looking for the upside catalyst.¬†This can still go either way, but the move Friday boost the outlook on the upside as the technology sector rallied overall. You can trade SOXX, SMH or SOXL on the break higher in the sector.

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. Got the move higher last week and pushing through to breakout from the pattern. (DBA also showed a positive move to confirm) MOO has been leading with the Agribusiness stocks moving higher. WEAT on move on break of cup and handle pattern Friday.

Running the Daily EGG Scans: 

UGAZ – natural gas made another bottom reversal following some selling on the week. Look for the follow through and trade opportunity to develop on Monday. $14 potential entry to trade.

YINN – China got the follow through breakout on Friday. This is the current EGG.

GLD – Gold made a move on the upside that was impressive intraday. The 114.50 mark is the level to break currently on the upside for follow through.

SOXL – Semi’s positive move back to the top of the trading range and now set up for the breakout to extend the run higher. Technology posted positive day overall and SOCL, IGN, IGV, SKYY and FDN all are producing currently.

JMP – MLP (energy partnerships) made nice push to the upside after the speculation that OPEC would cut production. Still plenty of work to do along with worries about the sector overall.

Global still gaining some traction movers today… YINN, TUR, EWH, EWJ, EWL, EWS, EWN, EWT – bounce is in progress. EZA broke higher on Friday. TUR got the follow through move on the bottom reversal. ECON breakout from flag pattern? even the emergin markets showing some upside hope.

Plenty of concerns creating a choppy rotation and news driven cycles. This makes trading in our strategy a challenge. We are looking at China currently as the EGG, but we have to take a patient view and wider stops to stay in the trade. If a catalyst develops in the broader markets this will change and better clarity short term will emerge. Be patient and focus on your research before putting money at 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 РHome 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. Hit the entry and we have left the trade posted on the table. We did not get executed in the trade due to volume issues for the size we were trading. 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 $24.70 currently. Holding above the $25 mark currently.

2)  YINN РChina 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.

Thursday posted a bounce followed by gap higher on Friday. Still like the upside opportunity short term. We will be patient for now. Gap open negated adding to the position, but we will watch the news Monday with the Hong Kong and Shanghi exchanges joining trading access. Could offer more upside opportunities.