ONE EGG Scan for September 18th

More bounce, more chop, more of what we saw last week is the outlook with the Fed out of the way. Nothing stated worthy of change at this point. Unless investors find some nugget of gold in the comments, the interview and the post comments from analyst, I don’t expect much in terms of change. That is why we take it one day at a time for now. If tomorrow pans out to be pivot point for the broad indexes we will make the necessary changes based on the confidence in the data presented. Otherwise patience remains the theme song.

Running the EGG Scans – First the daily winners…

Small follow through on the upside for most and not much in terms of change on the outlook for now.

Clean Energy (PBW) still showing up on the scans as a positive component to watch. Need to clear the $7 resistance level for me to be interested short term.

Semiconductors (SOXL) nice gain for the sector overall today and puts it back in positive mode and heading back near the previous highs. Still has work to do convincing investors to put money to work in the growth sector.

Financials (FAS) nice gain and finding its way higher short term. I still like this sector as it is the EGG currently.

Transports (IYT) broke to new highs on the day and remains a leaders currently. This is a positive for the broad markets looking forward.

As I stated in the market notes tonight… patience and let this unfold.

Trade Considerations: 

Energy (ERY) reversed the selling on Tuesday, but the downside pressure remains from my view short term (down slightly on Wednesday). 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. Regained 1% on Wednesday and I like the upside still if you are willing to be patient with the volatility short term. 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.

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.