ONE EGG Scan for October 17th

Thursday¬†produced an¬†intraday bounce again, but we cannot mount any type of solid follow through. The response is muted on the buy side. The sellers are still in control based on the activity intraday. 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. Take what the market gives, but that isn’t lasting long which means manage your risk daily.

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:

Russia (RUSS) uptrend for the short ETF continues to gain gound with some volatility mixed in… leader on Thursday.

Volatility Index (VIX) held on the early selling showing the volatility is still in play despite any intraday bounce for now.

Emerging Markets (EDZ) sellers step back in on all the talk and speculation about the global outlook.

Too much waffling to gain any short term clarity on either side. Watching to see how it plays on Friday as we end the week. Buyers want to step in for a bounce, but willing yet to push the issue.

Trades hit on intraday reversals we discussed on Wednesday:

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. That happened on Thursday for the small caps as they are the one bright part of the bounce thus far.

Semiconductors (SOXL) nice reversal off the low intraday. $77.40 is the level to clear on the upside to trade the bounce. Hit this on Thursday as well and offered a high risk trade opportunity. Need momentum to continue in the sector if it is going to close the gap left on the downside move.

Biotech (IBB) solid bounce back above the 200 DMA and $257.40 is the level to clear to trade the bounce. Hit this on Thursday as well. The resistance at $264 came into play, but still looking for follow through on the upside bounce. XBI up 3% Thursday.

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. Hit this level intraday and closed lower, but showing some positive signs on the upside for trade.

Crude Oil (UCO) gained 3.2% on Thursday as the downside reversed intraday with some buyers showing up. Does it last or is this a one day wonder move. (wondered why it moved!). Still willing to be patient, but a move above $25.50 would be of interest short term.

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

Energy (ERY) maybe setting up for a reversal finally? Watch to see if crude bounce holds or gains any additional ground to help the stocks.

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. Hit on Thursday at the open, but continued to sell lower following that move.

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. Sold some on Thursday with the Fed rattling about more QE. Watch for direction to develop

Coffee (JO) back on the list as the move higher on Tuesday pushed the commodity back to a flag pattern and break higher would be a 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.

Current EGG:

The momentum is still on the downside. Sell to start the last two days followed by intraday reversals that have not pushed higher off the lows.The downside is pointing to oversold, but until the buyers are willing to step in and shore up the bottom reversal we have to be patient. 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 off (sold at $51) would be prudent on the trade to lock in some profit. Stop adjusted to start the trading day following the test lower intraday. GOOG will impact this trade at the open. Wednesday took another 1/3 off on the move near $51.50 or higher. (sold $51.50) let the tail run as this plays out with stop in place at $49.50.