ONE EGG Scan for October 31st

Buyers like the news from Visa earnings and GDP revised growth for Q3. They took that as a sign the Fed in on target about the outlook for a better economy and growth economically. That is good news for today, but it has to be sustainable going forward, only time and proof in the data will build sustainability. Good for the upside now however.

Running the EGG Scans

Small test lower at the open met buy the buyers taking on shares and pushing the broad indexes through the next mini resistance levels and closer to the previous highs that will complete the ‘V’ bottom.

Thursday head higher:

Gold broke lower again on Thursday adding to the short trade added Wednesday (GLL) in the ONLY ETF Model. The real play is still in the short gold miners ETF (DUST). It spiked up 22% higher breaking and confirming a nearly six month cup & handle pattern. More selling in the miners? Worth watching. Junior miners ETF (JDST) was up even more on the selling. Adding today even payed off nicely.

Healthcare (CURE) was the first to attain the previous highs and the move on Thursday cleared those highs with a strong confirmation move on the upside. This could be a proxy for where we are going in the broad indexes short term.

Biotech (BIB) sold on Wednesday rallied back on Thursday adding to the healthcare story above.

Financials (FAS) we stated last night the financials were looking ready to break higher and that is what they did on Thursday. Missed the entry on the small gap at the open, but still positive more for the sector.

Small Caps (TNA) nice confirmation and reversal from the move lower on Wednesday. The upside remains in play and could be worth adding to the trades in the sector short term.

Stronger dollar on Fed actions (UUP). That meant rally in short yen (FCS) and short euro (EUO). Worth watching as well on the dollar rally.

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. Cleared the $100 mark and¬†tested with some convincing selling early. Watch as the upside remains in play.

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. Still a leaders following the breakout move and upside follow through. Tested Wednesday and looking for upside to return Thursday with broad indexes. (got the upside return on Thursday and it was tradable to add back the position stopped on Wednesday.)

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 $111 and above the previous highs. Upside still in play. (Accelerated on Thursday confirming the upside.)

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. Still like the upside momentum and bounce off the selling on Wednesday. Small gain added on Thursday.

Small Caps (TNA) lead the way higher. This was the leader off the low and it is back in that role today. Break above 1120 offered renewed entry point to trade the move higher. Some give back on Wednesday, but still upside looking positive. Nice confirmation of upside move on Thursday.

Midcap (MVV) following the small cap stocks higher after lagging the last week. Nice break higher and gave solid entry opportunity. Still positive outlook for the sector.

S&P 500 index (SPXL) upside struggled to keep up with the NASDAQ, but still showed positive move with the leadership spread across the board.

Industrials (XLI) solid move to regain some leadership for the broader market index. Second sector to push back to the previous highs along with healthcare. Look for them both to offer indication of where the broad markets are heading. Need upside follow through.

Moves of interest today: 

Crude oil (USO) attempting to bounce as the commodity held the $80 level of support. Nothing has changed other than speculation on price being oversold short term. Trade upside, but the better trade is likely to be shorting the rally. pattern of a descending triangle in play, but a trend reversal would need some definitive buying short term.

Natural Gas (UNG) Short trade has been working until today! The buyers stepped in and pushed the price off the lows. Clears $20 and pushing some interest in the commodity as a trade short term. FCG not moving higher yet?

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 and we will adjust our stops and look for follow through. (Pattern Trade Model) Added this on the test Friday. Stop at even as Treasury bond rallied on the FOMC news. Watching tomorrow. TMF could trigger buy opportunity for trade if the bonds rally in response to the Fed.

Upside Trends to Watch: 

NASDAQ 100 Index (QLD) Still trending higher. Stopped out of the EGG trade on the intraday volatility in the index. The move following the FOMC needed a wider stop than willing to give at this stage of the game. Watching to trade again on the test and move tomorrow.

Homebuilders (ITB) solid bounce and move through the $22.90 level was the initial entry point for the trade. Boost from the home sales data and housing data overall. $23.80 resistance level broken on Thursday with solid move to the September high. Target is $25 for now. Tested on Wednesday, but remains positive 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. Tested on the FOMC meeting results… watch on Thursday and protect the downside risk.

Current EGG:

Financials (FAS) Tested the move higher with modest gain on Wednesday. FOMC out of the way, earnings were okay, positive sentiment building in the sector… looking to add this position as the EGG position. XLF is the non-leveraged ETF and needs to break through the $23.45 resistance level to add upside momentum to the move. Watching the sentiment in the AM and then we look to add this position. See the table for details. Thursday small gap higher at the open missed the entry trade and then didn’t want to chase the trade. Should have place market order at the open, but the looked in place to give us the trade. Watching to see how it opens in the AM.