ONE EGG Scan for November 25th

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. Last week started to test the move on the upside again and it needs to hold the $13.20 level as support. Testing in earnest on Monday and watching to see how the flag pattern holds up?

Energy (XLE) is still reacting to oil as it attempts to define direction among the speculation. Worries have pushed oil prices lower, but the underlying buying in the stocks have remained. China and European data on Friday helped push crude higher along with the sector. ETFs to Watch: USO, XOP, OIH, IEO, ERX or ERY.  TODAY: Tested the rally and closed back below the $88.50 level of resistance and looking for a follow through… didn’t get it, but still looking tomorrow.

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: $50.75 mark is the next level to take out… watch and let this play out short term.

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 with another nice gain to start the week.

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: Breaking from the consolidation pattern and XBI gapped above our entry point below for the trade… no test on the move and we will watch tomorrow to see how it unfolds. IBB is position as well on the upside.

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: held the upside move and added to the upside move to new 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. TODAY: Tested the move higher and worth watching the negative reversal on Friday and today.

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, ZA and other showing up in the daily momentum scans. Looking for a ETF with enough volume for the EGG.

Markets creeping higher… overextended? Can’t make assumptions just have to watch for clues in the charts and the data. We just have to take it one day at a time.

Running the Daily EGG Scans: 

TNA – Small Caps produce a leading day finally. The bounce put the index in position to break higher and take on some leadership short term. Biotech stocks helped the cause on the day to lead the sector.

BIB – Biotech got the move we were looking for below to put money to work as the EGG, but the gap higher never tested the move and then traded flat the remainder of the day. Watching tomorrow for the test and go.

SOXL – Semiconductors renewed their leadership push confirming the break higher from Friday. We own this in other models and continues to lead.

SCO – short crude returned to the list on the upside as oil dropped 1% today.

SVXY – Short volatility. The dropped below 13 was a negative today and not seeing any signs of uncertainty cropping up in the charts.

YINN – China jumped on the interest rate cuts from the Central Bank. Nice bounce of the lows and looking for a follow through. Small follow through on Monday, but need some conviction behind the move for a solid follow through on the upside.

Global markets still looking positive on the trading day. Watching for the opportunities to partake in the leadership.

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.

Gapped higher on the open and no real test of the move as it drifted higher throughout the day. We are watching to see how it trades in the AM. Patience is key when picking the opportunities.

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 $25.75 currently.Jumped on existing home sales last week 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. Gold held, but the miners sold lower on speculation. If gold can move higher near term this is still of interest. If it becomes purely a speculation based trade the metal will rally and the miners will lag. Still watching for the move.