The Wagner Daily - February 4, 2011
Concise technical analysis and picks of the leading global ETFs
Stocks finished higher on Thursday after spend most of the session in the red. All five major indices finished the session higher. The small-cap Russell 2000 and the S&P MidCap 400 ended the day up by 0.3%. The Nasdaq, the blue chip Dow and the S&P 500 all posted 0.2% advances.
For a second consecutive day market internals were mixed. Volume on the Nasdaq receded 4.5%, while turnover on the NYSE was higher by 6.4% yesterday. Advancing volume outpaced declining volume on both indices by a factor of 1.4 to 1. Thursday's market internals were indicative of a market that is consolidating.
After a big volume down day on Wednesday, the SPDR S&P Retail ETF (NYSEARCA:XRT) appeared to be on the brink of a major breakdown. However XRT reversed dramatically yesterday, as it gapped up and rallied to close near its intraday high. A volume fueled rally back above yesterday's high of $47.57 provides a possible buy entry for this ETF.
The SPDR Series KBW Bank ETF (NYSEARCA:KBE) has spent the past three days consolidating on declining volume, which is often considered a bullish signal. Further, this consolidation has occurred after KBE broke out from a base at the 50-day MA. A rally above the February 1st high of $27.03 could provide a buying opportunity in KBE.
The ETFS Physical Palladium Shares ETF (NYSEARCA:PALL) has been consolidating in a very tight trading range for the past three weeks, as volume has contracted. A move above the three day high of $81.98 presents a potential long trigger for this ETF. Because of the bullish price and volume activity in PALL, we are placing it on the watchlist. Trade details can be found in the watchlist segment of the newsletter.
For the past three days the broad market has been consolidating in a tight trading range near the 52 week highs. From our nightly research we found long entries to be abundant. The market appears primed for another advance.
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: email@example.com.
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