ONE EGG Scan for September 22nd

Rally to open followed by selling left the scans once again on the negative side. The positive flip following the FOMC meeting turned around on Friday. The market remains one big chop and the only real trends currently are on the negative side in sectors like commodities. The key is to take what the market gives without questioning the trends as they develop. The chop is to be avoided and patience exercised. Plain and simple.

Running the EGG Scans – First the daily winners…

Split personality of the markets remain in place. Take the simple trades and let the complex work through the process one day at a time. Short side dominated the leaders on Friday

Gold miners (DUST) short side is exerting itself as the selling gains momentum once again. Gold and silver continue to push lower and little optimism in terms of the upside returning near term.

Gold (DZZ) short side continues in the uptrend established off the August lows. (High for gold)

Small Caps (TZA) short side winner on the day jumping as the selling in small caps returned.

Emerging Markets (EDZ) short side winner again with the sellers stepping back into the sector.

Russia (RUSS) short side of Russia back as the pattern attempts to complete a move and establish the short trade for now.

Positive side hangs in for now…

Healthcare (CURE) bounced back to a new high and resumed the uptrend. Still a leading sector in the current outlook.

Technology (TECL) Semi’s below was the primary leader in the sector, but the growth side of the outlook is regaining money flow for now. Watch the selling from Friday?

Semiconductors (SOXL) continued the upside from Wednesday and resumes the upside leadership hitting a new high. The fear related to the growth stocks subsided for a couple of days, but returned on Friday. Watching to see if the upside resumes.

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 Wednesday and remains a leader currently. This is a positive for the broad markets looking forward.

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

Trade Considerations: 

Energy (ERY) as we stated the downside pressure remains from my view short term (down again on Thursday). 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 2.5% the last two days 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. Now looking at the June highs as the next target. Patient with any trades and expect volatility.

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

Current EGG:

Financials continue to hold the upside and as we make an attempt at another leg higher they will be a key part of the leadership. As we have discussed a test of $23 was a potential, but has not materialized. The entry level for a trade on the upside is $23.50. The setup for the trade is in place and the upside momentum is a positive. Watch for follow through on the upside and don’t chase let it unfold.

Making progress with a nice gain on Thursday, but some selling on Friday with the broad markets. We will take what it gives. Patience as this all unfolds and the broad markets defines direction.