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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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Advanced Technical Analysis of ETFs
  • Are the Bears Back? (KBE) (EMB) - December 15, 2011 0 comments
    Dec 15, 2011 8:52 AM | about stocks: KBE, EMB

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    The Wagner Daily - December 15, 2011
    Concise technical analysis and picks of the leading global ETFs

    Commentary:

    Stocks dropped for a third consecutive session yesterday, on mixed trade. All five major indices closed near session lows. High beta stocks once again led the decline. Leading the decline were the S&P MidCap 400 and the Nasdaq, as both slid 1.6%. The small-cap Russell 2000 fell 1.4%, while both the S&P 500 and the Dow Jones Industrial Average shed 1.1%.

    Market internals ended the day mixed, but barely. Turnover rose on the Nasdaq by a modest 1.7% but dropped fractionally on the NYSE. Still, declining volume once again dominated the landscape. At the closing bell, the ratio of declining to advancing volume stood at 3.7 to 1 on the NYSE and 6.3 to 1 on the Nasdaq. The uptick in volume on the Nasdaq suggests that institutions were once again in sell mode. Wednesday marked the third time in five days that the Nasdaq has seen distribution. Given that the NYSE closed virtually at the lows of the session and volume was just fractionally lower, we would also classify Wednesday as a distribution day for this index.

    Since undercutting its 20-day EMA on December 8th, the iShares JP Morgan US Dollar Emerging Market ETF (NYSEARCA:EMB) has been consolidating along this key mark for the past four sessions. A move above the two day high of $109.25 may present a buying opportunity in this ETF.



    Over the past two sessions, the SPDR S&P Bank ETF (NYSEARCA:KBE) has attempted to reclaim its 20-day and 50-day moving averages. However, on both occasions, KBE has reversed to close near session lows below these key marks. A move below the two day low of $18.65 could present a shorting opportunity in this ETF.

     



    Yesterday, GLL gapped up, rallied strongly and hit our target. We exited the trade with over a 1.0% gain in the model portfolio. We are still in AGA, which also gapped up yesterday. Further, AGA broke above the nine month resistance level of $20.39.

    Although the market suffered a third straight losing session yesterday, the move is not what we would consider outright carnage. Some sectors are still holding up (Retail, Pharma, Real Estate), and we have not seen many stocks closing down four percent or more. Nonetheless some former leadership stocks have been taking a beating lately. Nasdaq leaders such as PCLN, LULU, WYNN and AMZN have suffered as of late. Our market bias is now modestly bearish, as we have seen six distribution days in the past twenty.


    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: KBE, EMB
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