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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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  • Too Far Too Fast? (IDX) (KBE)- October 6, 2011 0 comments
    Oct 6, 2011 9:29 AM | about stocks: IDX, KBE
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    The Wagner Daily - October 6, 2011
    Concise technical analysis and picks of the leading global ETFs



    Commentary:

    Stocks posted solid gains for a second straight day but trade was light. The Nasdaq led the advance as it posted a 2.3% gain. The S&P 500 gained 1.8% while the S&P MidCap 400 improved by 1.6%. In a follow up to Tuesday's impressive six percent advance, the small-cap Russell 2000 added another 1.4% yesterday. The Dow Jones Industrial Average was the day's laggard as it added just over 1.2%.

    Market internals ended the session mixed. Volume plummeted across the board. On the Nasdaq trade dropped by over 18.0% while on the NYSE it fell nearly 28.0%. However advancing volume topped declining volume by a factor of 5.1 to 1 on the NYSE and 7.7 to 1 on the Nasdaq. Yesterday's rally was subdued by the absence of volume. The lack of volume suggests institutions were not committed to yesterday's price action.

    The Market Vectors Indonesia ETF (NYSEARCA:IDX) has shown relative weakness to the broad market over the past several weeks. On Tuesday when the market reversed dramatically on massive volume, IDX reversed on relatively light volume. Further, yesterday's move higher occurred on very light volume. A move back into resistance near declining 20-day EMA ($27.00) could provide a short entry trigger for this ETF. We are monitoring IDX closely for a potential short entry.


    Over the past six weeks the SPDR Series KBW Bank ETF (NYSEARCA:KBE) has been met with resistance every time it has attempted to reclaim its 20-day EMA. During this time KBE has been setting a sequence of lower highs each time it probes above this key mark. Further, the banking sector has been one of the weakest sectors in the market during the most recent two month selloff. An overcut of the 20-day EMA could provide a shorting opportunity in KBE.


    Although we are wary to get aggressive on the short side of the market, the abrupt nature of the current two day rally could provide a quick shorting opportunity as many ETFs have found their way back near resistance. If we do decide to enter any short positions we will likely take smaller position size and look to cut losses and/or take profits quickly.


    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 morpheustrading.com.

    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: deron@morpheustrading.com.



    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.

    Charts created by TradeStation (tradestation.com).

    © 2002-2010 Morpheus Trading, LLC
    Reproduction without permission is strictly prohibited.
    Stocks: IDX, KBE
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