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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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Advanced Technical Analysis of ETFs
  • Two ETF Buy Setups On Our Radar Screen ($FXH, $ITB) 0 comments
    Jul 5, 2012 10:44 AM | about stocks: FXH, ITB

    Over the past five sessions, First Trust Health Care AlphaDEX ETF ($FXH) has rallied into resistance near its previous swing high of $31.45 (see dashed horizontal line on chart below). Over the past two sessions, FXH has shown signs of pulling back from this key mark. As such, FXH now offers a possible buying opportunity under two scenarios within the next few days. The first would be a pullback buy entry into support of the 20-day exponential moving average (NYSEMKT:EMA) and the uptrend line (ascending black line). An alternative entry could develop if FXH consolidates just below resistance over the next 5 to 10 days, and then breaks out above the horizontal price resistance around $31.45. Under either circumstance, we would only enter a long position in this ETF if it provides an appropriate technical "setup." Typically, we will look to enter above the high of a "reversal candle," much like the one formed on June 18th (annotated below). Given the relative strength exhibited by this ETF (it's near a 52-week high), we will continue to monitor it closely for a possible buy entry:

    (click to enlarge)FXH

    During the market's recent move higher, the homebuilder sector has shown significant strength, as it has led the advance by rallying to fresh 52-week highs. By extension, the iShares Dow Jones U.S. Home Construction ETF ($ITB) now offers a potential buying opportunity on a pullback to support of its 10-day and 20-day moving averages. As with FXH, we will only look to enter a position in ITB if it presents a setup that meets our trading criteria. Jumping the gun by buying stocks or ETFs before technical analysis provides us with our predetermined entry price is never recommended:

    (click to enlarge)ITB

    If either ETF above meets our technical criteria for entry, we will list our preset entry and exit prices for each setup in The Wagner Daily swing trader newsletter. If you are not yet a subscriber, click here to start your 30-day risk-free trial subscription today. No hype, no nonsense -- just consistent trading profits since 2002.

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