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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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Morpheus Trading Group
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Advanced Technical Analysis of ETFs
  • Bullish Trend Reversal Entry Into UltraShort 20+ Year T-bond ETF ($TBT) 0 comments
    Apr 4, 2012 7:09 AM | about stocks: TBT

    Stocks pared early losses into the close on Tuesday, to finish well off session lows. Four of the five major indices lost ground, with midcap stocks being the sole holdout. By the closing bell, the S&P MidCap 400 managed to eke out a 0.2% gain. The small-cap Russell 2000 was the day's biggest loser, as it posted a 0.7% loss. The Dow Jones Industrial Average, S&P 500 and Nasdaq dropped 0.5%, 0.4% and 0.2% respectively. Brewers, precious metals, gold miners and coal all had a very rough day. Travel and Tourism, airlines and computer hardware were the big winners on the day.

    Market internals were negative but far from bearish. Volume increased on the Nasdaq by 1.0% and on the NYSE by 4.9%. Declining volume outpaced advancing volume on the Nasdaq and NYSE by 2.2 to 1 and 2.5 to 1 respectively. Despite the negative internals, we would not classify yesterday as a distribution day for the broad market. All of the major indices formed distinct reversal candles. This suggests that bulls wrestled control of the market from bears into the close. This type of price action is considered bullish and nullified what could have been a day of distribution on Wall Street. It is also noteworthy that leadership stocks performed extremely well yesterday and this is also considered a good sign of market health.

    Yesterday, via an intraday alert, we opened a long position in the ProShares UltraShort 20+ Year Treasury (NYSEARCA:TBT). Since breaking out of a six month trading range and setting a new swing high on March 19th, TBT pulled back into support of its 20-day EMA. On March 30th, TBT formed a reversal candle as it undercut its 20-day EMA but recovered to close near session highs. The March 30th high provided the perfect entry point for a long entry in TBT. Trade details are available to our subscribers in the open positions segment of the newsletter.

    (click to enlarge)$TBT

    Yesterday, we sent out an alert that we were selling one-quarter of our position in IYR and one-third of our position in EPU. We wanted to lock in some profits since IYR was approaching a big resistance level and EPU had just staged a massive three day rally. For the moment, we intend on staying in remaining shares of both positions through their next pullback. The market continues to show resiliency, as we once again averted a distribution day. We would not be surprised if the market were to spend several more days consolidating at the current level before attempting another move higher.

    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 trading strategy, please visit our swing trading blog.

    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.

    © 2002-2012 Morpheus Trading, LLC
    Reproduction without permission is strictly prohibited.

    Stocks: TBT
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