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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
  • Cautiously Pessimistic? (EUO) (REM)- December 20, 2011 0 comments
    Dec 20, 2011 9:36 AM | about stocks: EUO, REM
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    The Wagner Daily - December 20, 2011
    Concise technical analysis and picks of the leading global ETFs



    Commentary:

    Stocks closed lower on Monday on light trade. Despite posting early gains, all five major indices ended in the red, with higher beta issues leading the decline. The small-cap Russell 2000 dropped 1.9% while the S&P MidCap 400 lost 1.7%. The Dow Jones Industrial Average, S&P 500 and Nasdaq all lost support of their respective three day lows, as they closed near session lows. By the closing bell these three indices posted losses of 0.8%, 1.2% and 1.3% respectively.

    Market internals were mixed on Monday. As might be expected following a quadruple witching options expiration day, market volume was considerably lighter. Turnover dropped by a whopping 38.0% on the Nasdaq and 39.0% on the NYSE. Declining volume was higher than advancing volume on both exchanges. By the closing bell the ratio of down to up volume stood at 10.3 to 1 on the NYSE and 3.8 to 1 on the Nasdaq.

    Since its big breakout move on December 12th, the ProShares UltraShort Euro ETF (NYSEARCA:EUO) has been consolidating for the past four days at the highs of the move. EUO has also formed a pennant like formation as it has held support at the 20-period EMA on the 60-minute chart. A move back above the three day high of $20.21 could provide a buy entry trigger in this ETF. Above this key mark a partial trade position could be entered and the remainder of the position above the four day high of $21.32. Alternatively, EUO offers a possible entry on a pullback into its 20-day EMA.



    Yesterday, on a massive spike in volume, the iShares FTSE NAREIT Mortgage REITs ETF (NYSEARCA:REM) formed a reversal candle as it failed to break above resistance of its nine day high. Also, notice the bearish divergence between the price action in REM and the Accumulation-Distribution Histogram. A move below the eight day low of $12.83 could offer a short entry trigger for this ETF.

     



    The market continues to struggle to find a bid. However, as we stated in Friday's newsletter, we have still not witnessed wholesale carnage during this selloff. Some sectors are still holding up. On the other hand, many more stocks that have been basing near their 52-week highs have begun to roll over. For the moment, it appears that we are headed lower but we still remain cautious.


    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.
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