ONE EGG Scan for September 10th

Apple dominates the headlines and helps the major indexes end the day on the downside. It is easy to want and make more of the selling on Tuesday than we should… after all the chatter and talk has been continuous about the market valuations and the coming correction that many have been predicting is now coming… right? KIDDING! We have to let this take its course and manage our risk in accordance with the moves going forward. Tomorrow will shed more light on today’s selling so don’t make any assumptions.

Running the EGG Scans – First the daily winners…

The downside made a statement on the day and the biggest came in the Russell 2000 Small Cap index. The move was only 0.65% on the downside, but it was enough to take us to the first key level of support at $115 on IWM. Watch to see how that unfolds tomorrow.

Energy (ERY) short side was the winner Monday and it added to that picture on Tuesday. The weakness in oil continue to weigh on the sector overall. We are testing the support of the August lows and May highs. Break and short side becomes attractive assuming the commodities continue to struggle.

Short Crude Oil (SCO) the downside has been in play for oil for awhile and the test of support on the low continues. Entry of $31 on SCO would be of interest as it would confirm the downside continuation.

Short Yen (YCS) we haven’t discussed this trade specifically, but the downside move in the yen against the dollar has made this an attractive trade short term.

GDXJ and GLD – both benefitted from a small positive move in gold on a slow mixed day in other sectors and the positive move showed up on the scan. Downside interest me more than the upside. Watching to see how this unfolds going forward.

Natural Gas (UNG) Monday bounced 1.8% off support at the $20.60 level.  Another commodity that lacks direction trading on adrenaline for now. Watching the bounce trade opportunity at the $21.15 level. Gapped through the trade on the open Tuesday. Move above $22 or test of the $22.15 level are the entry opportunities for a trade.

Trade Considerations: 

Downside shift put everything in check. Watching to see how this unfolds before making any short calls from the current setups. Patience as the chop defines itself yet again.

Current EGG:

Financials continue to hold the upside and if we are going to take another leg higher they will be a key part of the leadership. As we have discussed a test of $23 was a potential. The entry level for a trade on the upside is $23.50. The setup for the trade is in place and the upside momentum on Friday was a positive. Watch for follow through on the upside and don’t chase in the event of a gap open.

Took the entry on Monday for the trade and the selling commenced today on the news that the Federal Reserve and Treasury Department want the banks to consider reducing their size. Not what you want to hear currently… more government intervention into the banking system. They have done so well managing things to this point of course they are qualified. Watching to see how it responds on Wednesday.