The Wagner Daily - March 3, 2011
Concise technical analysis and picks of the leading global ETFs
Stocks ended Wednesday's session modestly higher but volume was lower. All five major indices closed in the black with the S&P MidCap 400 leading the way (up 0.5%). The Nasdaq and the small-cap Russell 2000 both tacked on 0.4% gains, while the S&P 500 ended the day up 0.2%. The Dow Jones Industrial Average was the day's laggard as it sputtered to finish just above par. The blue chip index rose by just under 0.1% for the session.
Market internals were mixed on Wednesday. Volume dropped by 10.3% on the Nasdaq and by 10.8% on the NYSE. However, the advancing volume to declining volume ratio finished positive on both indices. The ratio ended the day at 1.6 to 1 on the NYSE and 1.4 to 1 on the Nasdaq. Wednesday's mixed internals point to a lack of institutional involvement in the market.
Yesterday we opened a short position in the Retail HOLDRS ETF (NYSEARCA:RTH). An intraday alert was sent to our membership outlining the trade details. Both EWY and XHB remain on the watchlist as potential short setups.
Over the past nine sessions the SPDR Series KBW Bank ETF (NYSEARCA:KBE) has been under enormous selling pressure. This ETF is now trading well below its 20-day EMA and 50-day MA. A move below yesterday's low of $25.76 may provide a shorting opportunity in KBE.
The Global X Uranium ETF (NYSEARCA:URA) has recently lost support of a three month uptrend line. On February 22nd this ETF plummeted on a big spike in volume. Since then it has rallied back into resistance at the 20-day EMA and the 50-day MA. A move back below the 2 day low of $20.63 could provide a short entry trigger for this ETF.
Following a big distribution day in the market, it is not surprising that Wednesday's action was somewhat muted. On the aggregate market leaders appear to be struggling, as our daily research has been uncovering very few long setups.
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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