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 have pushed oil prices lower, but the underlying buying in the stocks have remained. China and European data on Friday helped push crude back to $76.50 and the stock rallied in return. ETFs to Watch: USO, XOP, OIH, IEO, ERX or ERY. TODAY: Continued rally with 2% move and follow through. This moved back above the $86 level and held. Positive day for sector and crude oil.
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. TODAY: Continued the upside and looking positive short term with upside still in play.
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 currently. Still like the outlook through the first quarter. TODAY: Building the uptrend as we wanted into the holidays.
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. TODAY: Staying in the range and working through the consolidation period with a move back to the top of the range. TODAY: looking for breakout move and possible trade.
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. TODAY: Got the move higher with testing on Wednesday and nice follow through higher again on Thursday. TODAY: hold the upside move and provide overall leadership for broad markets.
UGAZ – natural gas has become the psycho commodity. Watching for some clarity in the uncertainty. Chart shows it in the length of the bars the last two weeks. I like long term view and ownership if you can stand the volatility.
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. But, Friday was buy a global ETF day! — heading higher as noted by EDC, EWZ, ILF, EZA and other showing up in the daily momentum scans. Looking for a ETF with enough volume for the EGG.
Honorable mention to gold as it bounced higher to open, but the dollar took its toll throughout the day Friday, but it did manage to move higher still on the day holding the upside breakout. Still looking for some additional upside as the inflation numbers are picking up as seen in the CPI Thursday.
Running the Daily EGG Scans:
YINN – China jumped on the interest rate cuts from the Central Bank. Nice bounce of the lows and looking for a follow through.
EDC – Emerging Markets bounced with the news from China and Europe. Again looking for follow through on the move.
EWZ – Brazil led the emerging markets with a big jump through resistance. Now has to follow through.
ILF – Latin America same thing on the upside and need follow through.
EZA – Africa same thing on the upside and needs to follow through.
It was a global thing on Friday — this is of interest as money is showing some rotation. Still watching these that have been developing on the list all week.
SOXX – semiconductors hit new high and are back to leadership role.
UGAZ/UNG – 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 direction. The upside is winning, but you have to have nerves of steel to hold this position. UNG is still in play as the upside of natural gas is being favored by winter weather predictions and currently. Longer term view is positive.
ITB – homebuilders make break from the consolidation and move higher. This is a positive for the sector and the longer term view of the sector. If the prices hold, interest rate remain low and inventory is growing… high sales. Good for all.
XRT – Retail tested the $90 level and found support and has now resumed the upside for the holiday’s. I still like the trend and the push that will come from what looks to be a positive sales outlook.
Current EGG Proposed:
XBI – Biotech made nice move on Friday and making a move from the consolidation pattern of a wedge or triangle. Break above the $174 level would be of interest for a continuation of the upside. I like the sector momentum and the consolidation is a positive for the upside to continue. Watching how this open on Monday and adding to EGG table for the entry and trade. BIB is the leveraged ETF for the trade and I would prefer it, but have to watch the volume and we will see if it worth attempting based on the interest. IBB in similar position and needs to move above the $297 level, but large caps are driving the markets currently and make better choice from risk perspective.
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 $25.50 currently. Holding above the $25 mark currently. Jumped on existing home sales today and move through the resistance. Watch and manage your stops accordingly.
2) GDX – Gold miners are still adjusting to the outlook and speculation in gold. If gold holds as it did on Friday and moves higher based on inflation, demand or positive perspective… the trade works. If it is purely speculation based the metal will rally and the miners will lag. That is we experienced on Friday. Still watching for the move.