ONE EGG Scan for September 24th

More selling from worries over politics relating to the inversion of corporations. More taxes? Wall Street doesn’t like the attitude building around the beltway and that prompted more selling. Remember with a lack of clarity relative to the horizon investors look for reasons to sell and Washington just provided another along with the concerns over both global and domestic economic growth. Worries are gaining strength with the sellers giving them the opportunity to take directional control this week.

The week following options expiration in September historically has not been positive. So far we are proving that statistic to be true. The balance of the week will be of interest as we find more sectors rolling over and setting up the pullback of 3-5% we discussed last night in the update. Stops are a must if you are still long short term positions. Longer term holding need to be evaluated in light of the moves. Manage the risk before the anxiety of selling makes you reactive versus be proactive.

Running the EGG Scans – First the daily winners…

Follow through on Friday’s selling leads to a new level test of support at 1980. The choppy markets are still too much risk for me and I am unwilling to take the risk exposure short term in attempting to pick the direction of the day. Exercise patience as this all plays out. The short trades we posted on Friday are still leading and working with the third day of selling.

Volatility (VXX) gained 3.8% on top of yesterday’s move higher. VIX index clears 14 and move to 15… break through and game on for the sellers. The negative sentiment is building momentum and could spike the VIX index.

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

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

Treasury Bonds (TMF) bounce the last three days? At resistance and if we move through it would off short term upside trade.

Japanese Yen Short (YCS) dollar remains strong for now, but a test of the move should be in order near term.

Continued Watch Points: 

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. Short trade is working well for now. Small test as gold moves on politics… tight stops on this trade if you have position.

Gold (DZZ) short side continues in the uptrend established off the August lows. (High for gold) Watch the test from Tuesday?

Healthcare (CURE) bounced back to a new high and resumed the uptrend. Tested on Monday and Tuesday follow through is negative.

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

Technology (TECL) Testing lower and back towards the bottom of the current trading range. watching for some clarity short term.

Semiconductors (SOXL) testing the conviction of the buyers currently. Watch

Financials (FAS) testing the move higher and causing questions. At support again?

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

Trade Considerations: 

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

Current EGG:

Financials continue tested the last two days and led the downside move on Tuesday. If we cannot hold near term support we will take our exit and watch how it unfolds. I like the sector, but the negative sentiment is focused on throwing all the sectors lower. Patience is what we will exercise as we start the trading tomorrow.