ONE EGG Scan for January 27th

The markets are set to gap lower at the open… MSFT missed and guided with big negatives, Europe was lower, CAT missed pre-market to add to the downside, and simply put worry is back… Stops managed at the open and look for how it trades out in the first hour. Don’t assume anything in this choppy environment.

Sectors to Watch: 

Emerging Markets (EEM) set to trade lower on the downgrade to Russian debt and other worries in the global market this morning. looking for the $40.25 mark to hold support.

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. WATCH the open with futures down nearly 0.8%…. manage your stops on the trades.

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

S&P 400 Midcap sector is taking on some leadership on the upside. This needs to validate, but I like the short term setup. Watch for the impact of the lower open on the sector today.

Result for the Daily EGG Scan: 

Top of List 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.

TAN jumped 3.5% on Monday and worth watching for a break from the base short term$35 is level of interest going forward.

MDY is near the previous highs and in position to break higher and continue to lead on the bounce. Watch how this unfolds today.

IYR is still moving higher as money flow continues to where it believes it will be treated the best short term.

TUESDAY:¬†Watch the futures for indication of the opening direction¬†on the downside.¬†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.