ONE Egg Scan for June 25th

Markets do an about-face following positive economic data that led the indexes to new highs. The issues in Iraq got the blame, but it seems investors were more than anxious to lock in gains and watch from the sidelines. There was a pause late in the day into the close to hold some lines of support, but we will see how this looks in the AM relative to the futures and sentiment.

We exited our EGG position in TAN today as posted last night.

Gold (GDX) and Silver (SIL) both dropped more than 2% on the trading day to join in on the selling following a positive open on the day. Watching to see how this unfolds tomorrow.

First sign of negative sentiment in seven days on the charts. Meaningful or hiccup? Therein lies the question of the day. What was the true catalyst and will it be anything more than a one day event? If Iraq truly was the cause it isn’t over as that situation is far from over. Tomorrow will give further insight, but for now we tighten our stops and manager our risk.

Scans didn’t turn up much on the downside worth trading currently, but depending on how tomorrow plays out… there could be some interest in short plays. Watch, scan and act according to the direction established.

Running the EGG Scans – First the daily winners…

Shift in sentiment after lunch changed the outcome of the daily scans. The Volatility Index (VIX) jumped 10% on the uncertainty and VXX rose 3.6% on the day as trade opportunity on move above $29.44 in afternoon trading. A tight stop at $29.05 currently to see if the uncertainty picks up a follow that last longer than one afternoon. RUSL (Russia) remained on the positive side of the tape with a nice gap open than held into the close. BIB (biotech) was higher, but faded as the day progressed, still posted a positive upside on the day. TMF (treasury bonds) was up as you would expect with a shift in sentiment towards safety from risk. EWY (South Korea) posted a solid gain on the day from the global side.

Below are the scans from the last couple of weeks as we watched the breadth expand in the market overall. The question now is how much do we believe the upside will hold versus how much the bears like having a foot in the door. Energy (dropped 2% on the day with worries overall), Alternative Energy (equally fell more than 2% on the day), Precious Metals(metals flat and miners down 2%), Utilities (still makes sense as a defensive play), Healthcare (gave up early gains to close flat.) and Short VIX (drops 3.5% on decline in sentiment). All are worth watching for confirmations tomorrow.

  • Monday’s leaders – DGAZ (short natural gas) UNG broke support and the selling is gaining momentum. NUGT (gold miners still pushing higher), SVXY short volatility posted nice gain on the day, RUSL (Russia) making move higher? watching to see how it unfolds. AMJ (MLPs) making move to continue the uptrend.
  • Friday’s leaders – BIB (Biotech) broke from trading range, PJP (Pharma) continuation of move higher, TAN (Solar) continuation of uptrend, IEZ (Oil Services) acceleration in uptrend and Cooper (JJC) base metals moving off lows. Healthcare sector was primary leader on Friday and showing some renewed strength in the current move.
  • Thursday’s leaders – NUGT/GDX/GDXJ – (Gold Miners) gold jumps 3.5% and the miners 16%, USLV/SIL (Silver) up 13.8%,  TBT (Short Treasury bonds) up on yields rising, EWJ (Japan) nice follow through on continuation breakout, and EPU (Peru) breakout from consolidation,
  • Wednesday’s leaders – RUSL (Russia) bounced back 7.5%, NUGT (Gold Miners) jumped 7.6%, SVXY (volatility disappears again), EDC (Emerging Markets) Nice bounce, GREK (Greece) nice bounce off test in move higher. Honorable mention XLU (Utilities) nice bounce through resistance.
  • Tuesday”s leaders – TAN (Solar), PBW (Clean Energy), SVXY (short VIX), TNA (Small Caps) and FAS (Financials). Honorable mention KRE (Regional Banks) & KRE (Banks).
  • Monday’s leaders – UPW (Utilities), XBI (biotech), IHI (Medical Devices), TAN (Solar) and DIG (Energy). IHI benefited from the acquisition in the sector. TAN is EGG today.
  • Friday’s leaders – YINN (China), ERX (Energy), TAN (Solar), SOCL (Social Media), USLV (Silver) and RUSL (Russia).
  • Thursday’s leaders – UCO (Crude Oil), SIL (Silver miners), GDXJ (junior gold miners), TAN (solar power) UGAZ (natural gas), and DBE (energy).
  • Wednesday’s Leaders – RUSL (down 4%), SOCL (down 0.7%), PALL (down 4.5%), FCG (up 1.4%), JMF (down 1.3%) I stated they gave a different look, and that look didn’t last for more than one day.

EGG Model Watch List:

EGG Tracking… Stock recommendation follow up: None currently as all stops hit.

Current EGG:

TAN is the Egg Model at $42.30. Solid move higher on Tuesday and followed by some testing and closed higher on Friday. The interest in the sector invited money short term. The bounce off support near the $43.70 mark was of interest and the level we watch going into this week of trading. Held our positions and watching to see if we need to lessen our exposure Monday. Down 1% today and looking at taking an exit at $44.15 if we don’t show some positive signs into the start of the trading day.

As we stated above last night we did take our exits this morning after a shaky start to the trading day for the Solar ETF. It did rally to $44.60 after the economic data, but then gradually drifted lower on the day. On to the next position as the indexes look for stability heading into tomorrow’s trading day.