ONE EGG Scan for September 12th

Not much changes on the day, but we are seeing the leaders continue to lead and the balance struggling to define any upside breaks worthy of attention. Utilities continued to bounce back from the selling on Monday and Small Caps returned to the upside move following a test of the gains. The up and down chop this week has been a bit maddening, but we have to learn to take the chop until the trend is established up or down. Patience is the name of the game and attempting to trade too much in the choppy waters will only make seasick or worse yet poorer.

Running the EGG Scans – First the daily winners…

Still looking for the upside statement to emerge in one of the indexes versus the consolidation top that has formed the last three weeks. Exercise patience and let the opportunities present themselves versus chasing them.

Small Caps (TNA) showed modest gains, but a definitive reversal back on the upside. We hit our stops in trade, but it is still a potential trade depending on how we open in the morning.

Biotech (XBI) was not a leader on the day, but it did test lower today and managed to get back near even on the day. Leadership remains with the sector along with the healthcare stocks overall.

NASDAQ 100 index (QQQ) was another that didn’t lead on the day, but held its own against the selling on the day. Break above the $100.35 mark is of interest on the continuation of the uptrend.

Gold sold lower on the day and GLD is testing the $119.50 lows again. This continues to be a tough trade on the upside… despite what every gold bug is saying, not the best looking chart to buy. The miners were flat today, but equally have been on the downside.

NASDAQ is still holding the leadership torch for the broad markets. Some early selling ended with upside move in the index. I like the strength the index continues to display overall.

Trade Considerations: 

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 (KBE & KRE) broke through first level of resistance and are in position to add to the upside again. Patient with any trades and expect volatility.

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 again on Thursday 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 Friday.