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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 - swing trading blog
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Advanced Technical Analysis of ETFs
  • Stalking iShares Silver Trust (SLV) 0 comments
    Apr 14, 2010 8:20 AM | about stocks: SLV, XLV, USD

    After shaking off early weakness yesterday morning, stocks recovered to close slightly higher. However, it was generally another day that lacked enthusiasm, commitment, and momentum. The Nasdaq Composite gained 0.3%. Both the S&P 500 and Dow Jones Industrial Average registered a whopping advance of 0.1%. The small-cap Russell 2000 and S&P Midcap 400 indices were higher by 0.3% and 0.4% respectively. The main stock market indexes finished near the upper quarter of their intraday ranges.

    Perhaps the best thing about yesterday's session was the higher volume across the board. Total volume in the NYSE increased 8%, while turnover in the Nasdaq ticked 23% higher. The higher volume (barely) enabled the Nasdaq Composite to register a bullish "accumulation day," but the tiny gain of the S&P 500 was not really indicative of institutional buying. Volume in the Nasdaq also moved back above 50-day average levels, but was lighter than average in the NYSE.

    Last week, we pointed out the potential breakout in ProShares Ultra Semiconductor (NYSEARCA:USD), and pointed out a similar setup in Semiconductor HOLDR (NYSEARCA:SMH) yesterday morning. Because Intel (NASDAQ:INTC) is so heavily weighted in the semiconductor sector, we intentionally avoided buying USD ahead of their quarterly earnings report, which was released after yesterday's close. In yesterday's after-hours trade, the initial reaction to their earnings report was positive, as Intel was trading substantially higher. This could translate into confirmation of a breakout in the various semiconductor ETFs today, which we were initially hesitant to buy directly in front of Intel's earnings. The daily chart of USD is shown below:


    If USD gaps open above yesterday's high, it could present a valid buy entry on the open. However, on this type of momentum play, traders should consider a tight protective stop, just below the low of the first thirty minutes of trading. Such a stop would keep risk minimal, as the trade would quickly be closed in the event of a failed breakout. Furthermore, we woul also would take reduced share size with this type of breakout trade, perhaps just 50% the normal position. Nevertheless, if USD gaps up and holds through the first hour of trading, odds are good it will continue higher as the day progresses.

    In the April 6 issue of The Wagner Daily, we looked at charts of two popular precious metals ETFs: iShares Silver Trust (NYSEARCA:SLV) and SPDR Gold Trust (NYSEARCA:GLD) Between the two, it was apparent silver was starting to show clear relative strength to gold, and that continues to be the case right now. Upon first analyzing SLV, we said, "At its current price, SLV may be too extended to achieve a positive reward-risk ratio for new position entry. However, a pullback to new support of the prior downtrend line would provide an ideal, low-risk buy point into SLV." Fast forwarding a week later, SLV has not retraced all the way to support of the prior downtrend line. However, it pulled back to short-term support of its 10-day moving average yesterday, and reversed to close near its intraday high. We're still keeping this ETF on our radar screen for potential buy entry, and will send an Intraday Trade Alert if it meets our criteria and we decide to enter. The daily chart of SLV is shown below:


    In yesterday's commentary, we analyzed a bullish setup in the S&P Healthcare SPDR (NYSEARCA:XLV). It closed nearly flat, but remains on our watchlist going into today. With support of its 50-day MA just below, we like the buy entry on a breakout above the hourly downtrend line. Regular subscribers should note our detailed trigger, stop, and target prices for the XLV setup below.

    Open ETF positions:

    Long - IAI
    Short (including inversely correlated "short ETFs") - TBT, BRF
    The commentary above is an abbreviated version of a daily ETF trading newsletter, The Wagner Daily. Regular subscribers receive daily updates on all open positions, as well as new ETF trade setups with detailed trigger, stop, and target prices. 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.

    Charts created by TradeStation (

    © 2002-2010 Morpheus Trading, LLC
    Reproduction without permission is strictly prohibited.

    Disclosure: none
    Stocks: SLV, XLV, USD
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