ONE EGG Scan for October 16th

Wednesday produced the intraday bounce we have been looking for the last four trading days. This did and should give some upside trades short term if the bounce follows through. We posted the winners today below on the positive side and we will continue to track the downside risk of the broad markets going forward. Unless the cloud hanging over the markets is ready to clear the way for some sunshine the downside risk remains in play.

Tomorrow we will look at the set up and see what is worth following through on relative to the EGG trade.

Running the EGG Scans

A continuation in the accelerated selling early in trading for the major indexes as investors ran for cover. The bounce off the lows set up some intraday reversal trades very short term. What to watch tomorrow based on the scans:

Small Caps (TNA) the reversal off the intraday low as tradable for those willing to accept the risk. Watch for the ETF to clear the $58.90 mark for a trade higher.

Semiconductors (SOXL) nice reversal off the low intraday. $77.40 is the level to clear on the upside to trade the bounce.

Biotech (IBB) solid baouce back above the 200 DMA and $257.40 is the level to clear to trade the bounce.

S&P 500 Index (SPXL) the index bounced off the lows and pushed back towards the 200 DMA and that would make a good target with a $65.85 entry point on the bounce.

Crude Oil (SCO) dropped 4% on Tuesday and the short trade renewed it’s trend. How much lower does crude go? That is a big question, but the benefits short term are positive for the consumer and the transports. Look for the commodity to join the bounce from the oversold status. USO is the long trade for crude.

Watch the downside trade opportunities on the bounce to continue as well:

Energy (ERY) expanded the downside again as crude oil touches below¬†the $80 level intraday and closed at $81.50 on Wednesday.¬†The sector has fallen off the cliff and the downside is accelerating? how much lower does it go? That is a guessing game I don’t want to play, but I would have my stops in place on all short positions.

Natural Gas (DGAZ) joined the selling commodities as it fell back to the bottom of the range and support. More selling to break lower and the short side trade is worth out attention. UNG broke support, but move back throughout the day. Still looking at the downside short term.$4.50 entry on DGAZ is the trade.

Treasury bonds (TMF) the upside buy was back as yields moved below the 3% mark to 2.86% and the ten-year is flirting with 2% level. Fear continues to drive money into the sector despite the potential risk and low yields. Upside spiked on Wednesday with the fear driving money towards safety.

Coffee (JO) back on the list as the move higher on Tuesday pushed the commodity back to a breakout and continuation point for buyers.

REITs (IYR) they are completing a bottom reversal and break higher. The sector sold off on fear of higher rates from the Fed, but that has actually been the opposite. Thus, the buyers are back and the upside entry looks attractive at the $71.60-72 mark.

Not in the Scan now, but still in play from the last week:

Volatility Index (VXX) jumped to 31 and a new high on Wednesday near term.. Looking for a test of the 26.5 level  and maybe 21 depending on the bounce strength. Look for SVXY to be the trade if the calm takes the direction of the markets.

Small caps (TZA) again produced a solid bounce higher from the oversold conditions, but couldn’t hang on the move into the close. Looking at the weekly chart the $19 level is next resistance for TZA and closed at that level again. If we find momentum through this level… it would be worth trading. Watch how this trades.

Semiconductors (SOXS) The downside has been building gradually and the acceleration on earnings warnings on Friday put a big dent in the sector. More selling on Monday losing 2.1% in trading. Nearly a 9% decline in the index would beg for a bounce from Tuesday. Got a modest one on Wednesday and still watching the downside concerns in the sector going forward following the bounce if that materializes.

Watch:

Gold Miners (NUGT) gold bounced of the lows on Thursday, held Friday, and rose Monday… inching higher, but the move on Monday hit short term buy signals from our view. No big follow through as the dollar bounced back to the upside and kept the metal in check. The miners bounced back from the selling as well with the upside of interest if the push higher in gold continues. The miners are oversold relative to gold prices. Tuesday didn’t produce anything relative to a bounce and we continue watch.

Current EGG:

The momentum is on the downside. Small bounce to start on Wednesday and at this point the downside is still oversold. One day at a time for now and we will look at how the futures set up tomorrow. Some trade opportunities outlined above and we will keep our eye on them as the day unfolds.

IF you added the QID post from last week the stop needs to move to $49.50. Target hit on the post and taking a 1/3 or 1/2 off would be prudent on the trade to lock in some profit. Stop adjusted to start the trading day following the test lower intraday. NFLX will impact this trade at the open and could look in another 1/3 if the initial move is near $51.50 or higher.