ONE EGG Scan for October 8th

The broad indexes take to selling again… fear over Europe. Really that is news? That is the first thought you would have when Russia enacts sanctions against Europe… and when did they recover from the financial fallout? Oh, how I  love the media and the selection of reasons for the event that take place in the market day to day. I am going with the sellers never forfeited control and the sellers waited to sell into the momentum of the jobs report and here we are pushing back to the target of 1910 on the S&P 500 index. The last hour and a half of trading was just flat ugly! The sellers are in control and we go to the FOMC minutes tomorrow and what impact will they provide the sellers? End of QE and outlook for rate hikes? This is getting more interesting by the day.

Running the EGG Scans – First the daily winners/losers…

The sellers are back in control and the downside acceleration is of interest heading into earnings… Scans show the jump in volatility on the day and aggressive selling in the previous leaders. Watch and follow the trend.

Small caps (TZA) followed through on the reverse back to support Monday and break lower again today and down to the support of 1080 on the index again. Biotech again was the downside catalyst in the sector along with the semiconductor stocks.

Volatility Index (VXX) nice bounce as the volatility returned on Monday and accelerated today with the intraday moves. VXX closed at current high at $32.25. Upside still in play.

Gold Miners (DUST) short side back in play as the miners fell more than 3% on the day. $20.40 is support on GDX and break of that level would open the door for further corrections.

Treasury Bonds (TMF) jumped on the news about Europe, but that is only temporary and the run higher will have to balance out the FOMC meeting news and what was actually stated to

Russia (RUSS) short side returns with bump towards the previous highs. Emerging market weakness returned today adding to the downside pressure.

Dow Jones Industrial Average (SDOW) the short side returns with move through the resistance at the $25.25 mark.

S&P 500 index (SDS) the short side returns as well with the move back above the $24.85 level today. Added to our short positions on the move.

NASDAQ 100 index (QID) the short side returns as well with the move above $45.30.

Crude Oil (DTO) was looking like it wanted to go higher, but reversed on Friday moving back below $90 barrel. Monday moved to $90.49? Volatility making it tough to trade. Tuesday moved to $88.82 again lower? Patience as the downside plays out along with the volatility.

Financials (FAZ) downside move brings reversal lower into question as broad indexes move lower.

Downside still worth our attention: 

Gold miners (DUST) as we stated the downside bias remains in play. the short trade is trending higher if you are willing to accept the risk of the trade. Note the bounce in gold above helped the miners some on the day.

Energy (XLE) still trekking lower on crude oil back around the $89 mark. Testing the lows short term.

Healthcare (XLV) broke support at the $63.50 level and tested lower. Will it now follow through on the downside short term?

Emerging Markets (EEM) nice bounce off the lows to gain 1.3% on Monday? Selling on Tuesday and downtrend remains in play short term.

Current EGG:

The sellers assert themselves again and push the indexes back to the previous lows. The short trade on QID set up early with the gap above our entry point and then traded sideways until the last hour of the day. The acceleration was there, but we didn’t act on the trade based on the intraday activity. We will look at tomorrow morning to see if the entry is still a possibility. Error on the side of caution as this unfolds.

DBA trade is till posted as well with the entry giving up late in the day. Watching to see how it looks early as well.