ONE EGG Scan for September 3rd

Strong dollar, weak gold, selling in crude and flat broad market indexes summarize the day. The sector were more active than the overall finish investors react to the global economic data. Volatility picked up intraday and worries in Russia remains with more activity brewing. Another attempt by the sellers to take the indexes lower was dusted off and ignored. Today will be of interest relative to the upside and any momentum gained by the buyers.

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

Monday rallied to end flat, but left some positive sentiment when it was all said and done. The parts were much more active than the whole. Short side ETFs jumped in the lead for the day, but the bigger question is sustainability. We start with Russia now on the third day of selling

Russia Short (RUSS) continued the downside trek on worries about the actions being taken and threatened. The stocks continued to fall more than 1.2% (RSX) and the leveraged short ETF jumps more than 3.5% on Monday. News driven and difficult to trade. No positive developments on the day still looking at downside momentum even though it is lessening some.

Natural Gas (DGAZ) was doing well on the upside and gets rocked by the worries relative to demand in light of the economic data on Monday in Europe and China. The same was true of crude oil (SCO) dropping on identical worries. This is setting up a short trade if we follow through on the worries, but still a news game no fundamental data to validate at this time. High risk trade.

Energy (ERY) reacted to the selling in commodities as well dropping back below support on the day. This is developing a trend of worry on the charts and watching for the downside trade opportunity if this follow through.

Treasury bonds (TMF or TLT) were the leaders last week hitting a new 12 month high. Monday shifted gears with some selling as bond yields rose worries globally. The ten-year was up eight basis points and the bond was down 0.8% and the thirty-year fell 1.95%. First signs of downside risk in the bond short term. Watch to see if the sellers continue today especially in the long bond. TBT is the trade for the short side play.

Some positives as well on the day…

Small Caps (TNA) made a key move above the 1177 mark we were watching on Monday . This is still one to watch for more upside should the broad markets remain in the micro term uptrend. Trade remains in play for now.

China (YINN) bounced back and remains in the consolidation range near the highs. India (PIN)) breaking from the trading range to higher ground look positive, Vietnam (VNM) continues to lead the emerging markets, internet (FDN) and financials were on the positive side as they attempt to break through the current consolidation.

Still interesting: 

Biotech (XBI) jumped through resistance last week and followed it up on the upside. A follow through on this large cap ETF or the multicap ETF, IBB are two to watch for the follow through leadership in the healthcare sector. Flag or pennant setup still in play.

Financials (XLF or FAS) held the upside move with modest follow through and a flag setup on the close still in play. It is still up to the banks and brokers to lead the sector to higher ground. It will require patience going forward.

Brazil (EWZ) solid break from the trading range and move higher. The country is giving the emerging markets a lift overall. Watch for the opportunities in the specific country ETFs.

Latin America (ILF) more focus on the emerging market growth. Positive upside and break higher.

Energy MLPs (FEI) add this to the list of upside plays with plenty of potential upside.

Utilities (XLU) tested lower on Monday after hitting resistance and reacting to the selling in the bond sector on high yields. Could test lower if the yield issues persist.

Natural Gas (UNG) was breaking out, but failed again on the selling in commodities. Watch to see how it responds today.

Current EGG:

Added ITB (homebuilders)¬†last week. The disappointing news from the new home sales pulled the ETF lower, but the news was not a bad as the headlines prompted. Got more testing on Monday despite more positive data in the housing sector. Watch today and we will look for other opportunities if we don’t a break on the upside shortly.