ONE EGG Scan for September 17th

Follow the bouncing ball… nice push higher today after selling on Monday. The catalyst for the move? Analyst comments that the Fed would leave the language alone relative to the time line for the hike in interest rates. Amazing that such comments yesterday didn’t have any influence, but today they did. That is why choppy markets will make you bang your head against the wall. I still say the name of the game is patience and focus on what you are attempting to accomplish. One day at a time for now.

Running the EGG Scans – First the daily winners…

Flip everything over from Monday and you have today’s results. We still have to be patient here and let the moves confirm and the momentum be defined. Otherwise we will only chase our tail.

MLPs (MLPL) positive day in the energy sector resulted in a positive shift in the MLPs. Worth watching, but not overly optimistic about the trading side of the sector, but I like the opportunity for the dividend plays.

Volatility Index (VXX) Big dump in volatility on the rally and SVXY made a nice recovery on the short side trade.

China (FXI) positive bounce, but still not overly optimistic relative to the upside trade.

Emerging markets (EEM) Nice bounce on the upside off the recent lows. Still need to watch to see if bounce of reversal.

NASDAQ 100 (QLD) nice bounce for the broad index. Will it continue is the bigger question mark.

Not a day to put much stock in the move, but it is worth our attention to see how this will play out in the near term. Remember the FOMC meeting concludes tomorrow and the news will be driving the direction and speculation will be rampant no matter what the Fed decision is on rates. Stay focused and disciplined.

Trade Considerations: 

Energy (ERY) reversed the selling on the day, but the downside pressure remains from my view short term. The longer term view lacks clarity as it pertains to the supply and demand. That has a longer term implication to the sector if the erosion in price continues in crude following the current bounce. The stronger dollar remains and any action to hike rates by the Fed will on reinforce the stronger dollar. Small bounce for the sector as buyers step in on what they perceive as opportunity.

Solar (TAN) dumped 4% as the advancing stocks in growth sell off. The Fed story is hurting the sector. No bounce on Tuesday either. Watching to see how it unfolds.

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.

Gold miners (DUST) sellers dump the miners as the weakness in gold remains. This trend is gaining momentum as well in both the commodity and the stocks.

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 for the trade and the news that the Federal Reserve and Treasury Department want the banks to consider reducing their size caused some grief, but the upside is still in play. We remain patient with the this sector as the story unfolds. Watching to see how it responds this week.