Seeking Alpha

Morpheus Tradin...'s  Instablog

Morpheus Trading Group
Send Message
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
My company:
Morpheus Trading Group
My blog:
Morpheus Trading Group - swing trading blog
My book:
Advanced Technical Analysis of ETFs
  • Potential short setup in Gold Miners ETF (GXD)- February 11, 2011 0 comments
    Feb 11, 2011 10:26 AM | about stocks: EXG, EEV, PEY
    MTG logo

    The Wagner Daily - February 11, 2011
    Concise technical analysis and picks of the leading global ETFs



    Commentary:

    Stocks opened Thursday's session sharply lower and appeared ready roll over. However, at 10:00 am the market "caught a bid" and the market rallied into the close, erasing most of the day's losses. Still, results were mixed among the major indices. The S&P MidCap 400 was the shining star of the day, as it climbed 0.6%. The Nasdaq and the S&P 500 ended the day slightly above breakeven. The small-cap Russell 2000 ended the day flat, while the Dow Jones Industrial Average slid 0.1%.

    Volume spiked significantly on Thursday. Turnover soared 31.4% on the NYSE and 10.5% on the Nasdaq. Still, market internals ended the day mixed, as declining volume outpaced advancing volume by 1.2 to 1 on the Big Board and 1.3 to 1 on the Nasdaq.

    Both our short and long positions continue to act well, demonstrating the divergence among ETF classes. Yesterday we sent out an intraday alert that we were shorting the Market Vectors Gold Miners ETF (NYSEARCA:GDX). For our subscribing members, trade details can be found in the watchlist segment of the newsletter. As discussed in the intraday alert, "We are keeping a tight stop (on GDX). If the trade does not go in our favor quickly, we prefer to exit and wait for a better entry if presented".

    Over the past two days we have been tracking the progress of GXG. In yesterday's newsletter we commented: "(referring to Wednesday's newsletter) Emerging Market ETFs continue to exhibit relative weakness. The Global X/InterBolsa FTSE Colombia 20 ETF (NYSEARCA:GXG) is no exception. GXG could present a quality short setup if it finds support at the 200-day may and rallies back into resistance". "(referring to Thursday's newsletter) A quick glance at the chart below shows that GXG did find support at the 200-day MA. Two possibilities now exist for a potential short entry. The first would be as described above and the second would be a quick reversal back below Wednesday's low. This second potential option is now on the table due to the weakness in emerging market ETFs". Yesterday, GXG followed the second of the two options presented (see charts below).







    Yesterday we received an email from one of our subscribers stating: "Regarding GXG short: a 30 day chart of EEV shows a pretty classic channel with EEV being in the upper third at present. I would guess that a signal for the GXG short should coincide with EEV breaking out above the channel. My interest stems from trading an IRA account and it's difficult to play the short side at times" - Paul. Obviously Paul was correct. The inversely correlated EEV should normally serve as a good alternative to shorting an emerging market ETF. There are two caveats however. The holding period for 2x inversely correlated ETFs would generally be shorter due to the daily resets. Further, Country specific ETFs can and do sometimes perform differently than a broad market ETF. Thanks for your question and observations Paul.



    The PowerShares Hi-Yield Equity Dividend Achievers ETF (NYSEARCA:PEY) has undercut and is consolidating just below the 50-day MA. With cooperation from the broad market, a move back above the 8-day high of $8.76 may serve as a trigger for a long entry in this ETF.



    Yesterday, the Dow closed lower for the first time in 9 days. Of interest was the lackluster performance by the Dow in light of a major 1.4% gain in the Dow Jones Transportation Average. Given the stellar performance by the transports, it was unusual to see the DJIA underperform.


    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.
Back To Morpheus Trading Group's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.