ONE EGG Scan for November 7th

Sectors Worthy of Attention: 

Energy (XLE) is still reacting to oil (USO) as prices on the commodity climbed back above the $77 mark on Wednesday and we watch to see what the future holds for the commodity. Oil is off the newly minted low from Tuesday and the future of pricing has not gained any near term clarity only speculation on consumption, demand and outlook. USO moved off the near term lows and working on a bottom reversal? ETFs to Watch: USO, XOP, OIH, IEO, ERX.

Basic Materials (XLB) commodities, and the energy sector have been a weight on the sector, but it setting up technically to break higher if the both of these sectors can lend just a small helping hand. ETFs to Watch: XLB Рmove above $48.50. 

Natural Gas adds to the upside bounce off the lows in the commodity and creating a trade opportunity on the upside. No resistance to speak of at the $22.30 mark for UNG as it jumped 4.2% today. Watch FCG to respond as well on the move in the commodity if it holds the gains. ETFs to Watch: BOIL, UGAZ, FCG, UNG

Consumer Discretionary/Retail tested lower to start the week, but is holding up and in position to break higher and take on a leadership role into the year end holidays. A move through the $68 level on XLY is of interest to the upside catalyst.

China is attempting to reverse off the recent lows, but the economic data keeps stalling the starts on the upside. Double bottom pattern with a consolidation on the breakout is the current look. Need a follow through catalyst to push the sector through resistance and maintain the move higher being attempted short term. ETFs to Watch:  Entry YINN $31.30. 

Biotech fell on Wednesday in response to the elections on belief the Republican control Senate would attempt to make changes in the Affordable healthcare bill. Reality of that happening short term is not great assuming a democratic president who passed the legislation. Could present opportunity on the selling short term. ETFs to Watch: IBB, BIB, BIS, XBI

Running the EGG Scans:¬†Results for Thursday night…

Gold broke lower losing 1.8% and confirming again the downside pressure on the metal. Silver was down 3.4%. Miners off 3.2% and junior miners 5.4%. After a couple of flat trading days the sellers stepped back in to push it lower.¬†traded flat the last two days and the miners were higher on Monday… didn’t last as the sellers were back today to take back the gains. Short trade in GLL is still working well.

Natural Gas (BOIL/UGAZ) nice bounce off the lows in the commodity and creating a trade opportunity on the upside. Another gain today with UNG up and pushing through resistance at the $22.30. Running higher off the lows on expectations of higher demand this winter. Watch FCG to respond as well on the move in the commodity if it holds the gains.

Short Oil (SCO) breaking from the consolidation on the downside and the short ETFs break higher. Followed through on the Saudi Arabia news to cut prices to the US. Price war in crude? Worth watching as target shifts to $75 per barrel near term.

Financials (FAS) we stated the financials were looking ready to break higher and that is what they did last week. I missed this trade, but it is still moving higher as buyers put money to work. Banks are playing a key in the move higher as KBE and KRE on verge of breaking higher.

Housing (ITB or XHB) break from consolidation and looks ready to move higher. Positive news in the sector the last two weeks has been keeping the upside as a possibility. Looking for a move in ITB at $24.30.

Emerging Markets (EDZ) the short side is still a challenge with the dollar, Europe promoting stimulus as well as Japan. All points to potentially lower outlook for the commodities and emerging markets. (ETF to watch EDZ @ $35.75)

Russia (RUSS) the short side of the trade had moved up modestly this week, but today spiked on worries about the Ukraine issues once again in the news. Still a trading position of speculation.

Current EGG:

We are tracking these to trade on the setups and we will take the one that works for the entry. Be patient and don’t force any trades.

1)  SOXX РSemiconductors bounce back on Friday eludes to the strength in the sector as we have discussed in other models. A test of the move on Friday would present an attractive opportunity on the upside move. Looking for $85.50 -86 test level and entry for trade on this upside momentum. No real test to speak of and holding near the highs of consolidation.

2) ¬†YINN –¬†China is attempting to reverse off the recent lows, but the economic data keeps stalling the starts on the upside. Double bottom pattern with a consolidation on the breakout is the current look. Need a follow through catalyst to push the sector through resistance and maintain the move higher being attempted short term. ETFs to Watch: ¬†Entry YINN $31.00.¬†

3)  ITB РHome Construction wants to break from consolidation and looks ready to move higher. Positive news in the sector the last two weeks has been keeping the upside as a possibility. Looking for a move in ITB at $24.30.