ONE EGG Scan for October 22nd

The buyers followed through on Tuesday and the upside bounce and continuation of the move remain in play. Despite the news from earnings today and rumblings of outside issues around the globe, markets moved higher. China helped with some positive news on the stimulus helping produce some growth in GDP. ECB announces the start of stimulus similar to the QE program and in the US. Home sales were better than expected, all total the buyers took control on the open and everyone made nice and bought stocks.

Running the EGG Scans

The results below from Tuesday was on the upside obviously and it put the next leg higher in play. The patterns are all setting up to be ‘V’ bottoms potentially. We are half way back to the highs and the question begs how much do the buyers take on relative to risk of a reversal. We have to manage positions and keep our heads level for now.

Semiconductors (SOXL) moved back the high posted on Friday prior to the giveback as the day progressed on Monday. Today we closed at the 50 DMA and filled the gap on left on the downside move. How much more upside is there in the move? Trading pattern post bought this position as the trade upside on Friday.

REITs  (DRN) the REIT sector rallied on the move lower in interest rates and money rotated to safety in the sector. The follow through upside today shows momentum and we added the position in IYR Monday. Challenged by the execution on our limit order, but we will trade out the position as usual. THIS IS the EGG position currently. Nice gain on the day with a strong move higher.

Healthcare (CURE) the upside in the sector rallied as the follow through steps up. Take what the market gives as this previous leaders is needed if the bounce is to continue from here. Big move on Tuesday to add to the move higher. Added on Pattern Trading posts.

NASDAQ 100 Index (QLD) Got the move through the next level of resistance ($113.60) and¬†gapped higher pas the target posted on Monday at¬†$119. Up after-hours on YHOO earnings report… more upside tomorrow.

S&P 500 index (SSO) The broad index posted a positive day on the upside and cleared resistance for the entry point at $107.60. Adding to the upside on Tuesday.

Homebuilders (ITB) solid bounce and move through the $22.90 level would be a breakout on the bottom reversal. Got the follow through move and trade opportunity in the ETF. Boost from the home sales data on Tuesday helped. 23.80 next resistance level to push through.

Trades hit on intraday reversals we discussed last week that still look good as we start the week:

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. Test Friday gives a new opportunity to trade up to $65.

Semiconductors (SOXL) nice reversal off the low intraday. $77.40 was the level to clear on the upside to trade the bounce. Hit this on Thursday as well. 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. Looking for move to go to $280. Strong move on Tuesday to complete the bounce.

S&P 500 Index (SPXL) the index bounced off the lows and pushed through the 200 DMA and looking at $77 now as the upside target with a $65.85 entry point on the bounce. Solid recovery bounce for now.

Watch the trade setup opportunities below as well:

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 ($20.50) setting up the downside trade. Took the downside trade short term.$4.50 entry on DGAZ is the trade. Hit on Thursday at the open last week. Nice acceleration, but testing the move on Tuesday. Natural gas still struggling.

Treasury bonds (TBT) rally in the bond and the decline in the yield gives reason for concern moving forward. The break above $51.80 is the entry point for a short term trade is the bond sells short term in light of that is surrounding the move of late. Hit entry point late on Tuesday and looking to trade it today.

Coffee (JO) back on the list as the move higher pushed the commodity back to a topping flag pattern. A break higher would have been a continuation, but that failed on Friday and the trade to $36.50 could be on. $38.30 short entry. (hit the entry point on Monday as set up and now the target is $36.50 and then $34. intraday reversal off the $36.50 support level on Tuesday and now look to see if the upside follows through or reversal resumes. Long trade setup with $38 entry point?

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. Got the entry on Monday and added as the EGG trade.

Current EGG:

The bounce is still just a bounce in the micro trend downside. Take the trades and then look for the resistance to stall the move and a decision on direction to result from a longer term perspective. Patience is the key for any trading short term.

Traded the IYR position for the move in REITs on Monday. See table for the post. Added nice upside on Tuesday and still upside for trade short term. $73.40 resistance to watch on the day.

DRN is attractive from our scans with entry at $60.25. This hit the entry as well for the leveraged version of the sector.