Stocks closed higher on Monday, but faded into the close. Trade was light. The small-cap Russell 2000 finally set a new 52-week high, as it cleared resistance at 833. By the closing bell, the Russell had tacked on 0.9%. The Nasdaq finished a close second as it added 0.8%. The S&P 500 improved by 0.4%, while the S&P MidCap 400 saw a 0.2% advance. The Dow Jones Industrial Average was the day's laggard, as it closed only fractionally above breakeven. Telecommunications, construction and utilities were among the weakest sectors. Gaming, tourism and computer hardware showed relative strength.
Yesterday marked the fourth consecutive days that internals were mixed. Volume plunged on the Nasdaq by 23.9% and on the NYSE by 44.9%. However, advancing volume held the upper hand over declining volume by a ratio of 1.2 to 1 on the NYSE and 2.0 to 1 on the Nasdaq. Based on Monday's light volume, it is safe to say that institutions were not active in the market. Neither the Nasdaq nor the NYSE posted an accumulation day.
Over the past four sessions, the iShares MSCI Mexico Investable Market ETF (NYSEARCA:EWW) has been consolidating in a tight pennant-like formation. A move above yesterday's high of $61.50 could provide a buying opportunity in this emerging market ETF:
Over the past two sessions, the iShares Dow Jones US Home Construction ETF (NYSEARCA:ITB) has been exhibiting signs that it may be ready to revisit support near its 20-day EMA. An undercut of this key mark could offer a possible buy entry trigger for ITB. We will continue to monitor this ETF as a potential long candidate on a pullback.
The breakout in the small-cap Russell 2000 to a fresh 52-week high was a positive development yesterday and should spur more buying activity in the market. Ideally, we would now like to see the small-cap index hold the breakout and close the gap with the other major indices before pulling back to test its new found support.The commentary above is a short excerpt from The Wagner Daily, our nightly ETF and stock swing trading newsletter. Subscribers to the full version also receive specific entry and exit prices for all swing trade setups, an additional section dedicated to individual stock trades, and access to our Live Trading Room. To learn more about our swing trading strategy, please visit our swing trading blog.
Deron Wagner is a professional hedge fund manager who founded Morpheus Trading Group, a swing trader education firm, in 2002. He is the author of the best-selling book, Trading ETFs: Gaining An Edge With Technical Analysis. His new book, Advanced Technical Analysis of ETFs, will be released in September 2012. Past television appearances include CNBC, ABC, and Yahoo! FinanceVision. Wagner is also a frequent guest speaker at various trading events around the world, and can be reached by sending e-mail to: email@example.com.
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