ONE EGG Scan for November 18th

Sectors Worthy of Attention: 

Uranium (URA)¬†Got the big lift higher last week on the¬†comments about building nuclear power again¬†around the world and¬†the price jumped more than 20%. The action redefined a reversal on the move.¬†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.¬†Tested lower and then follow through on the upside… Clear $14.20 on the way higher.

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. Oil retraced some on Monday as no announcement of confirmation from OPEC. Two inside days for crude… decision time for the commodity. 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 and cleared the $48.50 level. ETFs to Watch: XLB Рmade move above $48.50. Hit the entry point and nice follow through on the move. 

Consumer Discretionary/Retail¬†broke higher¬†last¬†week, but tested lower on Monday… what happens now?¬†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 being tested curretly. 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 erased by the sell off on Monday. Watching to see how it unfolds near term.

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. Attempted to bounce on Monday, but failed to hold the move? Break lower gets ugly.

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. Left a doji candle on Monday? Directional change?

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 and testing on Monday. Need follow through.

Running the Daily EGG Scans: 

EDZ – short emerging markets is at a breakout point on the move today. $35.50 is of interest on the move for a trade opportunity. We don’t have a full EGG position and this could offer a unique opportunity short term if the selling on the dollar and Asia continues.

UGAZ Рnatural gas made another bottom reversal following some selling last week. Got the follow through and trade opportunity on Monday. ($14 potential entry to trade.) Gapped through that level on the open, but still offered a reasonable entry at the $14.70 level. $16.30 resistance is the level to watch now.

VPU/XLU – utilities fight back after selling through support. Is this just a bounce or is the upside still in play? Fundamentally overbought, but that hasn’t stop investors before. Watch for follow through tomorrow on the jump.

XLV/FXH – healthcare got a bump first from biotech (IBB/XBI) which faded with the day, but pharma (PPH/IHE) added to the upside as the day progressed on merger deals. Still like the sector outlook long term, but the short term trading opportunity is too up and down at this point for the EGG scan.

MLPs Рmade solid move across the sector. AMLP, CTR and MLPL all made solid moves on the upside. Sector to watch going forward.

Global gained upside traction last week, but¬†… YINN, TUR, EWH, EWJ, EWL, EWS, EWN, EWT – all tested the moves.¬†Watching to see how the global markets settle near term.

Plenty of concerns creating a choppy rotation and news driven cycles. This makes trading in our strategy a challenge. We are invested in 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. 

Friday’s move failed to hold on Monday as worries relative to Japan’s economy slipping into a recession level for the data. Ripple effect through the region was not pretty as the ETF dropped 3% on FXI and nearly 6% on YINN. Watching to see how it unfolds on Tuesday.