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Deron Wagner is the founder and portfolio manager of Morpheus Trading Group. His daily focus is managing and trading the Morpheus Capital Hedge Fund, which he founded in April of 2004. He also teaches his swing trading strategy with The Wagner Daily newsletter, which provides exact entry, exit,... More
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  • Bitoech ETF (IBB) is setting up for a potential buy entry - November 19, 2010 0 comments
    Nov 19, 2010 8:34 AM | about stocks: IBB, SRS, XES
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    The Wagner Daily - November 19, 2010
    Concise technical analysis and picks of the leading global ETFs



    Commentary:

    The major indices surged on Thursday, snapping an eight day selloff. The session began with a strong opening gap and the market rallied until 10:15 am. For the remainder of the day the market consolidated and closed near the highs of the day. The advance was impressive in light of Tuesday's heavy distribution. On strong volume, the Dow Jones Industrial Average, S&P 500 and Nasdaq all realized 1.6% advances in Thursday's trading. The small-cap Russell 2000 and the S&P MidCap 400 posted gains of 1.9% and 1.4% respectively.

    Turnover increased significantly during Thursday's session. Nasdaq volume surged 12%, while turnover on the NYSE improved a whopping 30% day over day. Advancing volume easily outpaced declining volume on both the NYSE and the Nasdaq. The ratio was positive on the NYSE by a margin of 5.7 to 1. On the Nasdaq, the ratio was slightly lower but still an impressive 4.3 to 1. Although not as powerful as Tuesday's distribution day, Thursday's buying was significant.

    As anticipated, ETFs that exhibited the most strength during the selloff were quick to recover yesterday. ETFs showing the most relative strength include oil services/related, emerging markets, energy and biotechs. Weakness was evident with bonds, homebuilders and regional banks. European market ETFs also appear to be weakening.

    The iShares Nasdaq Biotechnology ETF (NASDAQ:IBB), performed well during the recent carnage. In fact, during the height of the selling frenzy on Tuesday, IBB barely broke below the five day trading range. Further, volume was decreasing during the selloff and has been increasing over the past two days. A rally above yesterday's high provides a possible buy entry for this ETF. We will send an alert should we decide to enter IBB



    In the event the market is met with more selling pressure, the ProShares UltraShort Real Estate ETF (NYSEARCA:SRS), is poised to break its downtrend. This is a countertrend play. As such, should we decide to enter this setup it would be as a short term scalp. SRS is showing all of the signs of a trend reversal. Over the past two weeks, this ETF has seen a spike in accumulation volume. The big volume days have resulted in significant price advances. SRS rallied through the 20-day and 50-day MAs and briefly probed above the downtrend line. Over the past two sessions SRS has retraced its recent advance on very light volume. Today SRS gapped down, but held support at the 50-day MA and closed at the highs of the trading range. A volume fueled rally above the two day high provides a potential buy trigger for SRS. Note the resistance levels at $24.00 and $26.00.



    The SPDR S&P Oil & Gas Equipment & Services ETF (NYSEARCA:XES) has demonstrated great resiliency during the recent downturn. Despite the heavy selling pressure XES held its 20-day EMA. Further, XES began rallying on huge volume a day before the broad market reversal. Due to the "whipsaw" action in both the market and XES, we are not yet inclined to make it an official setup.



    The market recovered nicely today, but volatility and the accompanying price reversals suggest a cautious approach to trading. A period of consolidation would be healthy before another advance.


    The commentary above is an abbreviated version of our daily ETF trading newsletter, The Wagner Daily. Subscribers to the full version receive specific ETF trade setups with detailed trigger, stop, and target prices, as well as daily updates on all open positions. Intraday Trade Alerts are also sent via e-mail and/or text message, on as-needed basis. For your free 1-month trial to the full version of The Wagner Daily, or to learn about our other services, please visit morpheustrading.com.

    Deron Wagner is the Founder and Head Portfolio Manager of Morpheus Trading Group, a capital management and trader education firm launched in 2001. Wagner is the author of the best-selling book, Trading ETFs: Gaining An Edge With Technical Analysis (Bloomberg Press, August 2008), and also appears in the popular DVD video, Sector Trading Strategies (Marketplace Books, June 2002). He is also co-author of both The Long-Term Day Trader (Career Press, April 2000) and The After-Hours Trader (McGraw Hill, August 2000). Past television appearances include CNBC, ABC, and Yahoo! FinanceVision. Wagner is a frequent guest speaker at various trading and financial conferences around the world, and can be reached by sending e-mail to: deron@morpheustrading.com.



    DISCLAIMER: There is a risk for substantial losses trading securities and commodities. This material is for information purposes only and should not be construed as an offer or solicitation of an offer to buy or sell any securities. Morpheus Trading, LLC (hereinafter "The Company") is not a licensed broker, broker-dealer, market maker, investment banker, investment advisor, analyst or underwriter. This discussion contains forward-looking statements that involve risks and uncertainties. A stock's actual results could differ materially from descriptions given. The companies discussed in this report have not approved any statements made by The Company. Please consult a broker or financial planner before purchasing or selling any securities discussed in The Wagner Daily (hereinafter "The Newsletter"). The Company has not been compensated by any of the companies listed herein, or by their affiliates, agents, officers or employees for the preparation and distribution of any materials in The Newsletter. The Company and/or its affiliates, officers, directors and employees may or may not buy, sell or have positions in the securities discussed in The Newsletter and may profit in the event the shares of the companies discussed in The Newsletter rise or fall in value. Past performance never guarantees future results.

    Charts created by TradeStation (tradestation.com).

    © 2002-2010 Morpheus Trading, LLC
    Reproduction without permission is strictly prohibited.
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