ONE EGG Scan for September 9th

Mixed reviews based on the broad indexes. Small caps respond to the selling from Friday and close higher on the day. The NASDAQ was close to clearing the 4600 resistance level, the Dow was at 17,150, and the S&P 500 closed lower on the day, but held the 2000 level. The buyers remain in control relative to the bias of the broad markets and until there is a catalyst on the downside stick with what brought you to the dance.

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

Small caps show some bounce in their steps recapturing the upside on Monday. We have trade in ONLY ETF model for this sector and still like the opportunity on the upside short term.

Energy (ERY) short side was the winner today, but the struggle relative to declining commodities prices is to be expected. The bigger question is will this become the new trend for the sector near term.

Short Gold Miners (DUST) rested on Friday, but resumed the downside today. Broke support from the trading range on the miners (GDX) and accelerated to $24.15 support. Negative sentiment remains for gold.

Gold Short (DZZ) The downside pressure on gold is building and $119.70 is the next stop for GLD. Short side is the trade short term.

Russia (RSX) gave up 1.1% and the and the short fund (RUSS) was up 4.2%. This is the news driven sector and once again we reverse directions. News is driving.

Natural Gas (UNG) bounced 1.8% off support at the $20.60 level.  Another commodity that lacks direction trading on adrenaline for now. Watching the bounce trade opportunity at the $21.15 level.

Solar (TAN) broke above the $45 resistance and holding for now. The rotation in the sector has been consistent since the August lows. Would put the EGG in except for volume is a challenge.

Trade Considerations: 

Natural Gas (UNG) testing support again at the $20.50 level. The trend is down into the consolidation and thus the bias is to break lower. That would set up a short trade on the commodity. A reversal and move above the $21 level opens way to an upside trade in the range back to $22. I like this setup… (Got the move on Monday and looking for the follow through on Tuesday.)

Energy (XLE) has been showing weakness since hitting the highs in June. Support remain in the $95.10 level and the micro trend is lower (tested today). The short and intermediate term trend is higher… something must give. Either we get a trend reversal and break below support or a bounce move back towards and beyond the previous high.

Brazil (EWZ) this is a set up for a test and upside continuation trade. Down 3.7% on Monday? Emerging markets react and sell on global picture.

Latin America (ILF) this is a set up for a test and upside continuation trade. Down 2.3% on Monday. Emerging markets are being challenges near term.

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 on Monday for the trade and we will see how it follows through balance of the week.