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EUO Ready To GO? (EUO) - December 27, 2011

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The Wagner Daily - December 27, 2011
Concise technical analysis and picks of the leading global ETFs


Stocks moved higher on Friday but on extremely light volume. All five major indices closed in the black, with large cap issues leading the advance. Twenty eight of the thirty DJIA issues closed higher. By the closing bell the Dow Jones Industrial Average had tacked on 1.0%, while the S&P 500 added 0.9%. The Nasdaq managed a 0.7% advance, as the S&P MidCap 400 and the small-cap Russell 2000 improved by 0.6% and 0.3% respectively.

Market internals closed mixed for a third straight day. Turnover was down sharply across the board. On the Nasdaq volume plunged by nearly 36.0% and on the NYSE it dropped 33.2%. Advancing volume outpaced decling volume by a factor of 3.7 to 1 on the NYSE and 2.1 to 1 on the Nasdaq. As is typical for a pre-holiday session, institutional players were absent from the market, as evidenced by the meager volume.

Since finding a bottom on December 14th, the ELEMENTS Rogers International Commodity Agriculture ETN (NYSEARCA:RJA) has rallied back into resistance of its 20-day and 50-day moving averages. RJA could offer a potential short setup if it forms a reversal candle at the current level, or on a breakdown below the two day low of $8.64. We are monitoring this ETF carefully for a possible short entry.

Over the past five sessions the Market Vectors Oil Services ETF (NYSEARCA:OIH) has rallied back into resistance of its 20-day EMA. A move above this key mark followed by a sharp reversal could provide a shorting opportunity in this ETF. Ideally, we will be looking for a reversal candle to form similar to the one described for RJA.


The ProShares UltraShort EURO ETF (NYSEARCA:EUO) has been consolidating in a tight bullish pennant like formation over the past eight sessions. This ETF now appears ready to break out to new highs. A move above the three day high of $20.07 should provide a buying opportunity in this ETF. We would also consider adding to EUO above $20.21 and the recent swing high of $20.32. We are placing EUO on the watchlist. Trade details are provided for our subscribers in the watchlist segment of the newsletter.

Friday's pre holiday session was unimpressive as stocks moved lethargically higher on light volume. ZSL appears primed to break to new highs, as its price action continues to tighten. We may consider adding to our ZSL position above the two day high. We remain cautious about the market but feel reasonably confident with our current open positions.

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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Stocks: RJA, OIH, EUO