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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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Advanced Technical Analysis of ETFs
  • Breakout buy entry in (PALL) - February 7, 2011 0 comments
    Feb 7, 2011 9:36 AM | about stocks: PSP, IWC, SCHE
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    The Wagner Daily - February 7, 2011
    Concise technical analysis and picks of the leading global ETFs



    Commentary:

    For the second consecutive day Stocks closed modestly higher. After an early morning dip, the broad market recovered and finished the session near the day's high. The Nasdaq and the S&P MidCap 400 led the advance, as both indices posted a 0.6% gain. The S&P 500 and the Dow Jones Industrial Average both gained 0.3%, while the small-cap Russell 2000 posted a 0.2% improvement.

    As has been common lately, market internals ended the session mixed. In Friday's session turnover on the Big Board dropped by 9.0%, while it increased by a modest 1.5% on the Nasdaq. The ratio of advancing volume to declining volume was 2.1 to 1 on the Nasdaq, and 1.1 to 1 on the NYSE.

    On Friday, both FDN and PALL hit their triggers and we entered both long positions. FDN performed well on Friday, as it closed near the high of the day on a nice pop in volume. On the other hand, PALL showed early promise but fell victim of a false breakout and closed near the low of the day.

    The PowerShares Listed Private Equity ETF (PSP) is on the cusp of a possible move to higher ground. A rally above $11.27 may signal a buying opportunity for PSP. We have PSP on the radar but we are hesitant to make an official call, since false breakouts (to new highs) have been common lately.



    On Friday, the iShares Russell Microcap Index ETF (IWC) saw a bullish inside day (Friday's candlestick traded within the range of the previous day's candlestick) accompanied by a contraction in volume. This combination of price and volume movement is often a bullish signal. A move above the three day high of $50.72 could result in further upside for this ETF.



    After losing support of the 20-day EMA, the 50-day MA and the uptrend line, the Schwab Emerging Markets Equity ETF (SCHE) has rallied back into resistance at these key moving averages. A drop below the four-day low of $24.90 could present a short trigger for SCHE.



    The week ended with the Dow and the S&P 500 at new highs, while the Nasdaq, the Russell 2000 and the S&P Midcap 400 all basically remained in their respective trading ranges. We expect to see further buying in the market with emerging market ETFs being one notable exception.


    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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