ONE EGG Scan for January 26th

The markets are still in decision mode. The lack of follow through on Friday gives me reason to pause and let this market validate the move off support.

Sectors to Watch: 

Emerging Markets (EEM) gaining some momentum on the global stimulus. This is a trade setup only as the movement of the stimulus into real impact takes longer term. This is buy on the rumor.

Gold miners testing the micro uptrend. Watching to see how it unfolds the test will either validate the trend or break lower back towards the lows. Upside is the trade, but needs to hold support and resume the rise.

SPY cleared the $204.20 level on the upside to follow through on the bounce and offered a good entry point for short term trade.

Crude oil is testing the two week bottom range. Break lower… short trade is back for SCO.

Semiconductors in position to resume leadership with break through the short term resistance levels.

S&P 400 Midcap sector is taking on some leadership on the upside. This needs to validate, but I like the short term setup.

Result for the Daily EGG Scan: 

Top of List for Monday remains the SOXX – Semiconductors weren’t the best performer on the day, but based on our scans offer the best upside going forward… if the markets continue to move higher. The entry point of $92.80 is the level to watch on follow through today.

Others to note are… XLK – since technology includes the semiconductors it would follow that the broad sector offers upside as well. $41.50 is the next resistance level to move through on the index and one to watch. This offers a way to trade the move with less relative risk due to the diversification of subsectors overall.

Short commodities and long the dollar continue to show up in the scans short term despite the extended trend in both.

MONDAY: Watch the futures for indication on the opening direction and follow through on the upside move from last week. Be patient and don’t force trades.

SOXL – entry $131. stop $128. target $142. Due to the leverage and volatility of the trade we will add 500 shares as trade. (SOXX volume is not enough to give us confidence in the size to trade overall.) If you are trading less shares you can use the unleveraged ETF if you prefer.