ONE EGG Scan for week of September 29th

The day-to-day swings in the broad market indexes creates a challenge for trading strategies that look longer than 1-2 days. The EGG Scans are not designed to to find day trades, but momentum in sectors. Based on my scans that is not existing currently except in outliers that have elevated risk. They do show up in our scans, but we evaluate the risk of putting our money into high volatility positions in a high volatility market, and take note that if we are wrong the cost or loss is to great potentially to take on the risk of the trade. Simply put, this is not an environment that is conducive to how we trade the ONE EGG Model.

With that in mind we look at the activity on Friday in light of looking forward this week.

Running the EGG Scans – First the daily winners…

Bounce returned, but failed to recapture some levels that would have given the upside the momentum need coming into this week of trading. Thus, the bias (my opinion) remains on the downside or with the sellers. I am going to say that Friday was a oversold bounce in the small caps and other growth sectors. We proceed with caution.

Volatility index (VIX) calmed on the buying, but remains one piece to watch this week.

Gold miners (DUST) as we stated on Thursday the downside bias remains in play.

Financials (FAS) bounced on Friday, but the damage of the selling remains a watch and see.

S&P 500 index (SPXL) bounced on Friday, but the downside damage from the week remains a concern.

NASDAQ 100 index (QQQ) bounced on Friday, but the downside remains a concern.

Downside from Thursday still worth our attention: 

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 and Friday was a wash. 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 Friday bounced back to support. 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 bounced on Friday. We have to look at FAZ to capitalize on the downside if it unfolds.  $16.50 entry. But, don’t rule out the upside at this point. Patience.

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.$60 stop is advisable on the verticle move now.

Current EGG:

No Egg as we stopped out of the XLF positions. Watching for the volatility to calm and offer some clarity.