ONE EGG Scan for October 14th

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 13% on Friday. Followed through on Monday with a 8% gain. 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. Take the money and run. Watching to see how it unfolds near term.

Energy (XLE) is still reacting to oil¬†with the price now at the¬†$77 level.¬†The stocks¬†remain near¬†the $87 level and offered a short term trade on the other models. That was Friday and¬†now¬†the price of oil fell slightly as it continues to look for direction. Worries returned as Saudi Arabia made statements to not worry about prices… plenty of supply. This took the speculation out of the markets relative to China’s rise in imports of oil last month. Uncertainty is still a challenge for any trades in the sector and patience is the key.¬†ETFs to Watch: USO, XOP, OIH, IEO, ERX.¬†with the move on Thursday… downside trade is looking good. 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 to start the week, but it’s holding up and in position 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. Some testing lower on Thursday as the broad market let off some steam. Still like the outlook through the first quarter.

China 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. A move through the 50 DMA on YINN would be promising short term.  ETFs to Watch:  Entry YINN $31.30. Thursday small push higher and still looking for the push.

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 РSemiconductors bounce back, but are showing more of a rounding top than a sector ready to run higher. A test of the move could present an opportunity on the upside as we start the week of trading. Looking for test level and entry for trade on this upside momentum. IF we hold the test and make a push towards the upside we will take trade in SMH. You can trade SOXX as well, but for volume purposes we prefer to use SMH. Still content to trade in the range currently.

Running the Daily EGG Scans: 

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 Thursday and pushing through to breakout from the pattern. (DBA also showed a positive move higher on Tuesday to confirm this move.) MOO has been leading with the Agribusiness stocks moving higher.

WEAT – made it on the list as part of the JJG move. The agriculture commodities are causing some rumblings. These are trade set ups and nothing more at this point based on the current prognosis in the sector overall. $12.02 level is next to clear. Made it on Thursday.

TUR – part of the global markets we discussed last night in update that are starting to show life on the upside. Showed again on Thursday with a follow through move

DUST – short miners back as the teeter-totter metal of gold continues to bounce back and forth.

DTO – Short oil trade back on the list as crude struggles to find support. Nice follow through on Thursday with the washout trade in oil. The drop of $2.60 per barrel and closed below $75.

ERY – Short energy on the move today as the sector reacts to crude prices. Late day buying in the energy stocks will be worth watching early tomorrow.

Global still gaining some traction movers today… YINN, TUR, EWH, EWJ, EWL, EWS, EWN, EWT – bounce is in progress.

The challenge from crude on the markets is gaining traction. It is creating some uncertainty which pushed the VIX above 14 intraday. This is all something to watch as it will create opportunity and rotation in the market short term. The exit from energy and energy commodities today was the first decisive move relative to the concern after bouncing off the lows in mid-October. The speculation is driving the sector volatility and the analyst are yapping about the effects. One day at a time as it unfolds and then we look for the opportunities that are created by the reactions.

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 $24.30 (break-even) currently. Hold 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 and added to the move. Still like the upside opportunity short term. We will be patient for now. We will look at adding to the position if the move follow through resistance at the $31.50 mark on YINN.