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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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Morpheus Trading Group - swing trading blog
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Advanced Technical Analysis of ETFs
  • Main Stock Market Indexes Now Testing Key Technical Support Levels 0 comments
    Apr 9, 2012 7:46 AM | about stocks: SPY, QQQ, DIA, IWM, MDY

    A review of the major indices shows we are at critical support levels across the board. Specifically, the main stock market indexes are not only at key support of major moving averages, but also testing support of important uptrend lines. Both the S&P 500 and the Dow Jones Industrial Average are toying with support of their intermediate and long-term trendlines (On the charts below, the long-term trend is the bold black line. The intermediate-term trendline is dashed). If the market is to eventually head higher from here, it is likely that stocks will first "undercut" these key support levels before the next move up. Such "undercuts" of obvious support levels are often necessary in order to absorb overhead supply (price resistance) by shaking out the "weak hands." However, the possibility now exists that the major indices could alternatively set "lower lows," which could place the broad market in the midst of at least a near-term trend reversal. The annotated daily charts of the main stock market indexes below sum up the current technical situation in the broad market:

    (click to enlarge)$COMPX

    (click to enlarge)$INDU

    (click to enlarge)$SPX

    (click to enlarge)$MID

    (click to enlarge)$RUT

    In addition to the major indices testing pivotal support levels, it's notable that leadership stocks have not shown much follow through over the past several weeks, which is obviously cause for concern. As such, we are now exercising caution under current conditions, and are inclined to take a neutral stance with respect to the market (given that we are at the low end of the recent range). For the moment, we are hesitant to take on new positions unless the market can post an "accumulation day" (higher volume gains) and provide some follow-through.

    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: SPY, QQQ, DIA, IWM, MDY
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