ONE EGG Scan for October 23rd

Started higher on the day and then came the infamous test of the move with the broad indexes moving lower in the afternoon and closing at the lows of the day. A test is what we will call the move and look at how this unfolds in tomorrows trading day. Emotions are still at work along with the constant force of news on the traders psychology. Patience as this unfolds and the opportunities present themselves.

Running the EGG Scans

The results for Wednesday revert back to the downside trades showing up. I am keeping the two together for now to compare what transition if any occurs looking forward. The bounce in play, but the downtrend line is still in play as well. Thus, a bounce within the trend… unless it finds enough upside momentum to take out the trendline and accelerate higher. Fun is over, now we have to focus on up or down.

Downside Day:

Gold Minders (DUST & JDST) gold fell 0.5% on the day and that pushed the miners back near the previous lows. Short trade in miners continues to the be the opportunity if you are willing to take the risk of the trade along with the volatility.

Volatility Index (VXX) tested the $32.50 level of support on the move and reversed on the day as the sellers stepped in bounced back to $35.53. Watch to see how this plays out tomorrow as well. If we continue towards the $39.50 mark could be worth trading on the move.

Russia (RUSS) short trade returns to favor and is testing the near term highs. Not sure it is worth the risk of trading.

Energy (ERY) short trade back as the sector sold on lower oil prices. The bounce was positive, but needs to define what will drive stock prices higher in the current environment. This could be worth trading if the selling accelerates again.

Crude (SCO) short trade in oil is back? Testing the lows near the $80 level again. breaks lower the short trade in crude is worth trading on the move lower.

Others to watch from the scans: TZA, SOXS, DUG & DGAZ

Upside Bounce Previous Four Days: 

Semiconductors (SOXL) moved back the high posted on Friday prior to the giveback as the day progressed on Monday. Tuesday 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? Wednesday tested back to the $89.70 after hitting $96 intraday. Critical decision time for the sector.

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. Started higher on Wednesday and tested back near the opening line. Patience with the trade. Interest rates will be the undoing if they creep 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. Wednesday testing the $98 level of support… held, but needs a catalyst on the upside.

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. Small test as Yahoo helped on Wednesday. Still have downtrend line to deal with if we are going to move higher.

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… attempted on Wednesday, but still in position to move higher.

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 entry last week. Nice acceleration, but testing the move on Tuesday. Solid follow through on Wednesday as natural gas is 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.

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:

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. Reversed with the broad index on the day and we raised our stop to protect the position of a fall to test previous support. Patience, but also protective of our principle in this current environment.