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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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  • Bears Bust Bulls (EWM) - August 19, 2011 0 comments
    Aug 19, 2011 9:08 AM | about stocks: EWM, VNQ
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    The Wagner Daily - August 19, 2011
    Concise technical analysis and picks of the leading global ETFs


    Thursday was a horrendous day on Wall Street as stocks took a beating on a surge in trade. All five major indices lost more than 3.5% with higher beta issues showing the most weakness. The small-cap RusseIl 2000 lost almost 6.0% while the S&P MidCap 400 and Nasdaq plummeted by 5.5% and 5.1% respectively. The S&P 500 dropped 4.5% and the Dow Jones Industrial Average fell 3.7%.

    Thursdays plunge was aided by very weak market internals. As volume spiked by 43.0% on the Nasdaq and 63.5% on the NYSE, declining volume overwhelmed advancing volume across the board. The spread ratio ended the session at 33 to 1 on the NYSE and 41 to 1 on the Nasdaq in favor of declining volume. This combination of price action and volume clearly points to institutional distribution.

    The iShares MSCI Malaysia Index ETF (NYSEARCA:EWM) has begun to lose some of its luster over the past several weeks. On August 7th and 8th this ETF undercut and lost support of its 200-day MA and its two year uptrend line. Since bottoming on August 8th EWM rallied back into these key marks and yesterday, on a dramatic increase in volume, EWM once again lost support of its 200-day MA. A move back below yesterday's low of $14.21 may provide a shoring opportunity in this ETF. We are placing EWM on the watchlist. Details of this trade are available to our members in the watchlist segment of the newsletter.

    After attempting to reclaim its 20-day EMA on August 16th and August 17th the Vanguard REIT ETF (NYSEARCA:VNQ) formed a breakaway gap on a spike in volume yesterday. A volume fueled move back below yesterday's low of $53.65 could provide a short entry trigger for this ETF.


    Following a five day bounce, bears once again asserted their dominance over the market. Yesterday's price and volume action suggests that fear is alive and well in the broad market. Market internals continue to erode and we maintain our bearish bias. Until the market proves us wrong we will continue to focus our research on the short side of the market.

    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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    © 2002-2010 Morpheus Trading, LLC
    Reproduction without permission is strictly prohibited.
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