ONE EGG Scan for September 11th

Buyers return to buy the dip as the selling tested the support levels again early and then rallied to close on the upside Wednesday. The downside test again is short lived… assuming the buyers will stay engaged the balance of the week. The leadership from the financial sector early in the trading day set the tone for the sector as well as the broad markets. We will keep taking this one day at a time and confirm that the chop is going to head for the exits and the trend resume on the upside. That is the bias at least for today. Manage your risk relative to the time horizon for the holdings.

Running the EGG Scans – First the daily winners…

I would liek to say today was an upside statement, but it was more of the same with the buyers looking at the dip as an opportunity. No major changes and no real wow moments on the day, just a steady move back to the upside off support.

Biotech (XBI) up 3.2% to lead the scans and recover from the drift lower the last two weeks. Leadership remains with the sector along with the healthcare stocks overall. XLF and XLV both drifting higher as well.

NASDAQ 100 index (QQQ) very positive day and the leveraged version of the index has solid returns on the day.

Short Gold Miners (GDX) down 1.8% and DUST up 5.6% as a result. This put the sector at support and a follow through lower only reinforces the trade in short side. Gold was flat on the day, but GLD closed lower as it continues to trade beyond the NYNEX close at 2pm. Not pretty and at support watch to see how this unfolds.

Short Crude Oil (SCO) up 2% as oil falls below $92. The break of support opens the door for more downside short term. $86 is a possibility going forward.

Solar (TAN) reversed the selling on Tuesday and held the upside trend. Alternative energy is showing solid strength short term. PBW is another clean energy ETF.

Banks (KRE & KBE) both bounced back and resumed the upside move. I like the financials as this is the EGG trade below.

Trade Considerations: 

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. Still looking for the trade opportunity here.

SMIN – India Small Cap ETF broke higher and maintaining the uptrend. Thin volume.

DSLV – Short Silver ETF steadily climbing as the commodity falls in price.

SOXL – Semiconductor ETF is testing the move to resistance at the Jun highs. A move through the $120 level would be positive.

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, the Fed and Treasury  have done so well managing things to this point of course they are qualified.

We got a nice bounce on Wednesday to help smooth over the selling and we continue to look for our original move on the upside from the sector short term. Watching to see how it responds on Thursday.