The broad indexes see intraday volatility return with some ups and downs on the day. Nothing resolved with the Russell 2000 index presenting the worst showing on the day. I expect some consolidation near term as this all trades out. We will continue to take this one day at a time and not worry about the noise and focus on the trend.
Running the EGG Scans – First the daily winners/losers…
Small caps reverse back to support, biotech leads the NASDAQ lower, gold finds some buyers to bounce off support, oil moves back above $90 and agriculture bounces to gain 2% on the day. Overall not much changed, but the challenges remain in place looking forward. TZA bounced back on the short side.
Gold (GLD) bounced off suport at the $114.50 level to gain 1.2% on Monday. Still in downtrend, but worth watching near term to see if the bounce holds. Silver (SLV) bounced nearly 3% from the oversold state on Monday as well.
Crude Oil (DTO) was looking like it wanted to go higher, but reversed on Friday moving back below $90 barrel. Monday moved to $90.49? Volatility making it tough to trade. Not interested in the volatility of pricing. Big daily swings are good for day trading.
Agriculture (DBA) we discussed the bounce off the lows setting up last week and we got a nice follow through on Monday. The 2.7% gain breaks the downtrend line and moves back above the 50 DMA. Trade setup in play short term. digging into the sector for the leaders shows the big move in coffee (JO).
Volatility Index (VXX) nice bounce as the volatility returned on Monday with the intraday moves.
Financials (FAS) back on the upside gaining on Friday’s rally. Small bounce on Monday and watching to see how it moves from here.
Emerging Markets (EEM) nice bounce off the lows to gain 1.3% on Monday? Reversal of the downtrend? watching to see.
Downside still worth our attention:
Gold miners (DUST) as we stated the downside bias remains in play. the short trade is trending higher if you are willing to accept the risk of the trade. Note the bounce in gold above helped the miners some on the day.
Energy (XLE) still trekking lower on crude oil back around the $90 mark.
Healthcare (XLV) broke support at the $63.50 level and tested lower. Will it now follow through on the bounce short term?
Mixed bag of buying and selling… this leaves the scans with more risk than warranted. There are trade setups showing, but the risk and volatility of the opportunities are too great for our strategy. The move in agriculture is attractive and we will dig further into that tonight to define the opportunity if any short term.
10/7 am – The futures are pointing lower to start the trading day and DBA shows some downside as well. This could set up test of the break higher and a opportunity. Watching to see how it sets up in the first hour of trading. $26-26.12 is the level to hold on the test and then a bounce on good volume.