The Wagner Daily - February 17, 2011
Concise technical analysis and picks of the leading global ETFs
All five major indices moved higher on Wednesday, as trade increased. The small-cap Russell 2000 led the charge by posting an impressive 1.0% gain on the session. The Nasdaq and the S&P MidCap 400 both advanced by 0.7%, while the S&P 500 posted a 0.6% improvement day over day. The Dow Jones Industrial Average lagged the other averages as it ended the day only 0.5% higher.
Wednesday brought with it a vast improvement to market internals. Turnover improved across the board yesterday. Volume was higher on the Nasdaq by 12.3% and on the NYSE by just under 1%. The ratio of advancing to declining volume was 2.7 to 1 on the Big Board, and 2.5 to 1 on the Nasdaq.
The SPDR Series KBW Bank ETF (NYSEARCA:KBE) has been consolidating for the past three days on declining volume. Further, this price action follows a big breakout on February 11th. A move above the February 15th high of $27.77 should present a buy trigger for this ETF. We are placing KBE on the watchlist. Our subscribers can find position details in the watchlist segment of the newsletter.
Our position in the ETFS Physical Palladium Shares ETF (NYSEARCA:PALL) continues to consolidate near its all time high. We may look to add to the position above yesterday's high (we will send an intraday alert if any action is taken).
The broad market continues to demonstrate bullish resiliency. However, the majority of ETFs breaking to new highs have not met our strict technical criteria or risk/reward parameters. On a separate note, we are keeping a close eye on Emerging Market, Gold and Gold Related ETFs for potential short entries. All of these ETF classes are approaching resistance (support for inversely correlated ETFs) and may soon provide short opportunities.
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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