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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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Morpheus Trading Group
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Advanced Technical Analysis of ETFs
  • Why We Are Stalking This Shipping ETF For Pullback Buy Entry 0 comments
    Feb 8, 2013 7:51 AM | about stocks: SEA

    After breaking out from a tight, seven-month long base of consolidation, the Guggenheim Shipping ETF ($SEA) has pulled back over the past few weeks to near-term support of its 20-day exponential moving average. The longer-term weekly chart below details the prior base of consolidation from which $SEA broke out above (around $16):

    (click to enlarge)

    Drilling down to the daily chart interval below, we see the 50-day moving average (teal line) now trading above the 200-day moving average (orange line), and both indicators are moving higher. This is a bullish trend reversal signal. Furthermore, notice how the orderly pullback from the recent highs has enabled the price to find support at its 20-day exponential moving average (beige line):

    (click to enlarge)

    The breakout above resistance on the weekly chart, combined with the pullback on the daily chart, provides for a positive reward-risk ratio for this ETF trade setup. As such, we are stalking $SEA for potential swing trade entry going into today's session. Regular subscribers of The Wagner Daily newsletter should note our exact trigger, stop, and target prices for this trade in the ETF Watchlist section above.

    We have seen some institutional sector rotation lately, with a few strong stocks and ETFs pulling back sharply over the past few days ($EWI, $EWP, and $FXI are a few such ETFs). But overall, leadership stocks have held up well and the market has been quite resilient in fighting off distribution (higher volume selling. Although we continue to see the number of new, low-risk buy setups drying up, that is be expected at some point because many stocks and ETFs were rather extended from the January rally.

    To learn more about our short-term technical trading strategies, check out the educational stock market videos, technical analysis articles, and trader resources on our popular swing trading blog.

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