ONE EGG Scan for October 28th

Mixed day with the biggest move coming from the energy sector on the revised crude oil outlook by Goldman Sachs. If the price does hold near the $75 mark for most of 2015 the sector will suffer further on the downside. Balance of the market sectors were flat with exception of emerging markets which led the downside relative to the asset classes. We will continue to take it one day at a time for now.

Running the EGG Scans

Drop early bounces back and trade sideways the balance of the day. Not much changes heading into the trading day tomorrow following the boring trading day to start the week. Could be a case of the wait and see what the Fed says as well. Either way we will be patient and let this all unfold.

Monday Moves Sideways:

Short Energy (ERY) was the leading trade on the day. This is one to watch as this could become the trend in energy with the current outlook for curde oil prices.

Short Natural Gas (DGAZ) equally struggling on the price side as the commodity moves lower. Winter demand will be the key ingredient going forward. For now the downside is in control.

Short Russia (RUSS) back on the leader board after a day of buying on Friday. Consolidating near the high… watch for upside trade on move through this level.

Short China (FXP) the move lower in the Chinese markets gained momentum on Monday and is moving towards another test of support. Downside trade looks attractive short term.

Still Tracking Potential Upside Moves: 

Semiconductors (SOXL)¬†Filled the gap left on the downside move tested and move up again… We cleared the $95 resistance to move higher. How much more upside is there in the move?¬†Only time will tell, but the upside has the bias for now.

Biotech (BIB) hitting new highs as the sector follows through on the upside and is setting the pace for the broad markets. Momentum is still gaining in the sector.

Healthcare (CURE) the upside in the sector rallied as the follow through moves back to the previous highs. This will now be the indicator for how the market will potentially respond to reaching the previous highs. Nice gain hitting $108 and the previous highs. Upside still in play.

MLP Energy (MIE) the MLPs are making a positive move as interest rates have settled along with the treat of the Fed hiking rates near term. The challenge is still in the price of oil. Watch to see if this trade makes sense? I look at it as oversold bounce with elevated risk from uncertainty in the sector.

NASDAQ 100 index (QLD) in position to break through the next resistance level and worth a trade if it makes the move with momentum intact. Made the move on Monday, just failed to hold it.

Moves of interest today: 

Russia (RUSS) short trade in¬†favor and is testing the near term highs.¬†Looking for a break higher and potential trade on the confirmation move. (Watching… risk is high) Friday reversed 6.5% as buyers stepped into the oversold country, but sold again on Monday with RUSS up more than 6%. This is what I stated is high risk.

Biotech (BIB) broke to new high on the trading day. If this confirms looking to add s short term trade on the leveraged ETF. (added to the pattern trade list) Moved higher through resistance on Friday.

Crude (SCO) is the short trade in oil back? Flag pattern on the uptrend of the ETF… if we break higher look for the trade entry on the move. (added to pattern trade list) Bounce in crude, but not downside may not be done yet.

Natural Gas (DGAZ) short trade set up for a second entry on the ETF. Cleared the July high of $5 and held on the close. Watch for this to confirm and add to the position as natural gas continues to struggle. (added to pattern trade list) Gapped higher and could not add the trade, but still watching for the opportunity.

Treasury bonds (TBT) bonds move lower as stocks rally and dollar remains strong. The break above $51.80 was the entry point for a short term trade. Nice follow through today and we will adjust our stops and look for follow through. (Pattern Trade Model) Added this on the test Friday.

Upside Trends to Watch: 

NASDAQ 100 Index (QLD) Got the move through the next level of resistance ($113.60) and gapped higher past the target posted on Monday at $119. Attempting to take out the downtrend from the September highs. Take what the market is willing to give and put the stop at the target of $119 and see how far it runs. (added to the list below as added EGG since we still have some cash available for the trade.)

Homebuilders (ITB) solid bounce and move through the $22.90 level was the initial entry point for the tradel. Boost from the home sales data on Tuesday helped. $23.80 resistance level broken on Thursday with solid move to the September high. Target is $25 for now.

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 gained momentum and we are back near the previous highs from September. The EGG is IYR and settled even on the day, but still moving higher. Watching as this approaches the previous highs and we will determine what to do from there.

Current EGG:

Traded the IYR position for the move in REITs on Monday. See table for the post. Added nice upside last week and still upside for trade short term. Traded higher and we keep our stop in place to protect the position profits. Upside remains, but a bump in interest rates may put the sector in check again. FOMC meeting starts on Tuesday.

Normally on have one EGG, but as we did not get a full position in the IYR trade willing to add the QLD breakout as a second egg going forward. Entry $125, Stop $122. Target $129. Momentum is rising in the large cap index despite the missed earnings from Amazon and Chipotle’s warnings. Patience and discipline in managing the trade. ADDED the trade on Monday as the move higher was at the entry, but staled there. Watching to see if it follows through on Friday.