ONE EGG Scan for November 20th

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. Wednesday started to test the move on the upside again and needs to hold the $13.20 level as support.

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 has traded on both sides of the $75 mark and USO is testing the previous lows again. Still a negative sentiment overshadowing some buying in the energy sector. ETFs to Watch: USO, XOP, OIH, IEO, ERX or ERY

Basic Materials (XLB) – commodities, and the energy sector have been a weight on the sector, but made a move technically and cleared the $48.50 level. ETFs to Watch: XLB – made move above $48.50. Hit the entry point and nice follow through on the move. Nice follow through on the move higher and posted a solid gain on Tuesday and held on Wednesday.

Consumer Discretionary/Retail broke higher last week and continues higher this week after a bumpy start. A move through the $68 level on XLY got the upside catalyst from earnings and remains on the upside. XRT is of interest as well with the move above the $90 level being tested curretly. Still like the outlook through the first quarter.

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? Bounced again on Tuesday and held the move higher. Still in the consolidation range.

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… yes on the upside with a nice break higher from the consolidation Tuesday… only to test it on Wednesday? Watching to see how that unfolds tomorrow.

UGAZ – natural 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. Doji close and setup for continuation on Wednesday an the upside remains with the next hurdle to get through the $18.40 level of previous high.

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

Global gained upside traction last week, but … TUR, EWH, EWL, EWS, EWN, EWT – all tested the moves. Watching to see how the global markets settle near term. EWG brokeout on Tuesday and held as Europe rallied on the economic data. Watching for the trades in the sector. EWZ making bottom reversal move or start on Wednesday.

Running the Daily EGG Scans: 

UGAZ – natural gas… we have been tracking this for a couple of weeks and it continues to work through volatility day to day and speculation on dirction. The upside is winning, but you have to have nerves of steel to hold this position. The trade side is even worse of guessing which day it will move up or down. UNG is still in play as the upside of natural gas is being favored by winter weather predictions and currently.

GLL – short gold… really after breaking higher it sells off to give back the profits? Nice move to $114.50 on GLD and equally nice omve back to test the $113 mark. Not sure the downside is the direction this heads near term, but for now we have to watch and see how it unfolds. DUST gained 15.2% on miners dropping in response.

YCS – short yen… troubles in Japan’s economic plans pushed the currency lower and the dollar higher. Dollar also explains some of the selling in gold. But, the downside for the yen continues.

TZA – short small caps… trouble with the growth sectors again as the lagging continues and the Russell 2000 index broke the 1162 support level on the close. This puts the downside in play to 1140 potentially. Worth trading with $11.85 entry point.

FXP – short China. Two days of news in China over economic data and the sellers have stepped in with a big stick to sell off the stocks. If I were a good analyst I would say the downside is in play… but, I do believe the upside has a better chance short term to bounce off the lows currently or support. The selling may resume, but oversold. More oversold since the downside resumed on Wednesday. Watching this opportunity develop for now.

Breakout move from Tuesday is being tested on Wednesday. Now what happens? Fake out or follow through? Fake out is the feeling on Wednesday night, but still need to confirm a direction near term.

Current EGG Proposed:

* Adding GDX to the table on the move in the price of gold. The miners offer better upside potential is GLD moves to the short term target of $119.50. The dollar will play a role in the price of gold as the test lower in the buck has been a positive for gold. Throw in some positive global news helping the euro and other currencies near term. Be disciplined with your entry and don’t chase a gap open.

Previous Posts:

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. 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 $25 currently. Holding above the $25 mark currently.

2)  GDX – Tuesday was mirror day to Monday as the housing data in China pushed investors to the sidelines relative to the country. Hit our stops below the posted level and took the exit today. I am of the opinion this will bounce back, but we have to follow the strategy laid out by the model. Watching to see if it presents another opportunity near term.

Gold miners bailed on the price of gold dropping sharply in response to economic data and the FOMC minutes. Pass for now. Finishing some scans in the global markets for good risk/reward country ETFs short term as momentum has shift this week.