ONE EGG Scan for September 26th

Durable goods data trumps housing data and the sellers return. The break of support and the 50 DMA on the S&P 500 index was a big negative from my view. Tomorrow will be interesting relative to a follow through on the downside or do the buyers have anything left? I am looking at 1910 as the target on the downside move short term. You can read tonight update on the notes and tomorrow mornings trading notes to get more on what the outlook is for broader trading.

I stated the week following options expiration in September historically has not been positive. That¬†has been validated again with the selling on Thursday. Wednesday’s move higher didn’t play out and the sellers returned to dump stocks and sit on the sidelines.¬†Only one more day in the¬†trading week and we will see how this plays out. I stated last night I was still looking for¬†a¬†pullback of 3-5% that we¬†discussed 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 being proactive. This dance isn’t over yet.

Running the EGG Scans¬†– First the daily winners…

Bounce failed and the sellers assert themselves again. The challenge remains speculation more than data and investors are too emotionally charged currently to listen to reason. Looking at the downside to control direction for now.

Volatility Index (VIX) clear winner on the day with a spike to 16.7 intraday and closed at the 15.6 mark. This is showing more like the early August jump in volatility as stocks sold to the August 7th low and then reversed. Watch how it unfolds tomorrow and what opportunities it presents on VXX or the leveraged trades on volatility.

Russia (RUSS) sellers return to the downside trade. more below.

Emerging Markets (EDZ) the sellers dumping stocks as this moves even lower.

Small Caps (TZA) short term working well (Pattern Trading Model)

Energy (ERY) short energy trade working well also (Pattern Trading Model)

Natural Gas (UGAZ) the long side moved higher today and still in the trading range or base short 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. The short trade is working well for now. Small test as gold moves on politics… tight stops on this trade if you have position. Watch the optimism the media has for stocks based on the current sentiment towards stocks.

Gold (DZZ) short side continues in the uptrend established off the August lows. (High for gold) Watch base to build short term.

Healthcare (CURE) bounced back to a new high and resumed the uptrend.¬†Tested on Monday and Tuesday, but nice bounce back to highs on Wednesday… still a leader. Not so fast as the sellers showed up on Thursday. Watch to see how it unfolds.

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. It did follow through on Wednesday with the buyers stepping into the country ETF.

Technology (TECL) Testing lower and back towards the bottom of the current trading range. watching for some clarity short term. No clarity on Wednesday, but we did bounce back near the high of the trading range. Thursday broke support on the downside and now we have to look at TECS on the break above $13.60.

Semiconductors (SOXL) testing the conviction of the buyers currently. Watch. Nice bounce on Wednesday. Failed to follow through and a break of the 50 DMA look at short trade. SOXS  $19 entry.

Financials (FAS) testing the move higher and causing questions. At support again? Small bounce on Wednesday. Broke support on Thursday and now we have to look at FAZ to capitalize on the downside.  $16.50 entry.

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 opened lower with the broad market and attempted to hold up during the day, but in the end we hit our stop and took the exit on the trade. Too much negative sentiment on the day to overcome and now we will watch to see how this unfolds going forward. As stated above we are looking at the short trade opportunities on the move lower. I will update further in the AM when we get a picture on the futures and sentiment heading into the trading day.