The Wagner Daily - December 16, 2011
Concise technical analysis and picks of the leading global ETFs
Stocks snapped a three day losing streak, as they closed modestly higher on Thursday. However, trade was light. The major indices all closed in the black. The small-cap Russell 2000 showed the most strength on the session, as it tacked on 1.1%. The S&P MidCap 400 added 0.8%, while the S&P 500 and the Dow Jones Industrial Average improved by 0.3% and 0.4% respectively. As has been common lately, the Nasdaq struggled, as it ended the day just above break even.
Market internals were mixed on Thursday. Volume fell on the Nasdaq by 2.4% and on the NYSE by 9.8%. On the NYSE advancing volume outpaced declining volume by a ratio of 1.7 to 1. However, on the NYSE, advancing volume finished at par with declining volume. The light volume casts a shadow over yesterday's positive price action and points to an absence of institutional participation in the day's action.
On December 12th, on a massive spike in volume, the S&P Select Technology SPDR ETF (NYSEARCA:XLK) gapped down and tested support at its 20-day EMA. On December 13th, XLK formed a bearish engulfing pattern and closed at session lows, just below support of the 50-day MA. Over the past two sessions this ETF has been consolidating at its two day lows, below support of its 200-day MA. A volume fueled move below the two day low of $24.99 could provide a short selling opportunity in this ETF.
Over the past four trading sessions, the Direxion Daily Emerging Marktes Bear 3X Shares (NYSEARCA:EDZ) has worked its way back above all of its key moving averages. Further, EDZ in now positioned just above the downtrend line and has been consolidating above this level for the past two days. Also notice the bullish divergence between the price the recent action and the Accumulation-Distribution indicator. A move above the two day high of $22.33 could provide a buying opportunity in this ETF. We are placing EDZ on the watchlist. Trade details are available to our clients in the watchlist segment of the newsletter.
The market continues to struggle to find any positive momentum. Despite the move higher, yesterday's action was far from impressive. If the market doesn't recover from the current levels quickly, another precipitous fall may be in store.
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: firstname.lastname@example.org.
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).
Â© 2002-2010 Morpheus Trading, LLC
Reproduction without permission is strictly prohibited.