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  • Potential breakout setup in (ERY) - June 20, 2011 0 comments
    Jun 20, 2011 8:43 AM | about stocks: COW, KRE
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    The Wagner Daily - June 20, 2011
    Concise technical analysis and picks of the leading global ETFs


    Equities closed mixed on the session as volume spiked. With the exception of the Nasdaq the major indices finished higher on Friday. The Dow Jones Industrial Average, S&P 500, S&P MidCap 400 and small-cap Russell 200 posted gains of 0.4%, 0.3%, 0.2% and 0.1% respectively. However, technology stocks continued to get punished as the Nasdaq dropped 0.3% for the day.

    Friday's mixed internals suggest the market may be trying to stabilize. Volume was up across the board. Turnover on the Big Board was up by an impressive 34.0% while it spiked by 22.0% on the Nasdaq. However, declining volume outpaced advancing volume on the Nasdaq by a ratio of 1.6 to 1 as the NYSE saw advancing volume outpace declining volume by a factor of 2.0 to 1. While technology stocks moved lower on increasing volume, large and mid cap stocks moved higher on increasing volume. This price and volume action indicates that distribution was still present on the Nasdaq while the NYSE may have seen an accumulation day. Regardless, the significant increase in volume suggests that institutions were actively participating in the market action yesterday.

    On Friday we opened a long position in the Direxion Daily Energy Bear 3X Shares inverse ETF (NYSEARCA:ERY). We liked both the price action and the risk/reward potential for this ETF so we decided to take a half position on what we considered an early entry. Since there was no definitive buy trigger we reduced our size. We may add to this position should it break above current resistance levels. For our members, trade details are available in the open positions segment of the newsletter.

    The iPath DJ-UBS Livestock Total Return Sub-Index ETN (NYSEARCA:COW) recently lost support of its 10 month uptrend line on May 3rd and sold off sharply. Over the past two weeks COW has recovered from the lows but is now at resistance of its 50-day MA, 200-day MA and the former uptrend line. Now that COW is testing resistance we will be watching carefully for a reversal candle and other signs that the downtrend may continue.


    The SPDR KBW Regional Bank ETF (NYSEARCA:KRE) rallied strongly above its 200-day MA yesterday but was met with stiff resistance and quickly retreated below this key mark. A volume assisted move back below Friday's low of $24.71 may present a shorting opportunity in this ETF.

    Overall the market seems to be having difficulty in finding traction. Nonetheless, it is our belief that the market will likely seek higher ground over the next few days. However, if the market is unable to bounce and continues to consolidate at the current levels we will likely see a significant and rapid selloff.

    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

    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:

    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.

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    Reproduction without permission is strictly prohibited.
    Stocks: COW, KRE
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