The Wagner Daily - February 8, 2011
Concise technical analysis and picks of the leading global ETFs
Stocks moved higher Monday, but trade was light. The small-cap Russell 2000 and the S&P MidCap 400 led the rally, as both rose by 0.9% on the day. The Dow Jones Industrial Average and the S&P 500 both climbed by 0.6%, while the Nasdaq ended the session higher by 0.5%. However, there was selling pressure into the close.
Volume was down on Monday. Turnover slid by 11% on the NYSE and by 3.2% on the Nasdaq. On a positive note, the advancing to declining volume ratio finished the day positive on both indices. The ratio on the NYSE was 3.1 to 1, and on the Nasdaq 2.4 to 1.
UNG gapped down yesterday and eventually hit our stop. The trade was exited at a loss. IJT hit its trigger early in the session and we entered the position. After a false breakout on Friday, PALL consolidated in a tight range on light volume. Following a failed breakout, this type of price and volume action is generally considered bullish. ILF and ECH continue to demonstrate relative weakness to the broad market.
The Ultra Real Estate ProShares ETF (NYSEARCA:URE) appears to be ready for a move to higher ground. On a volume fueled advance back above yesterday's high of $55.25, URE may provide a buying opportunity. We are maintaining close watch of URE for a possible long entry.
The S&P Select Utilities SPDR ETF (NYSEARCA:XLU) has been consolidating for the past twelve sessions in a bullish flag like formation. A move above $32.05 could present a long trigger for this ETF.
Despite a fairly good move in the market on Monday, the action seemed to lack conviction. The light volume and end of day selling muted what could have been a very strong day on Wall Street. We suggest caution due the overall lack of follow through in the broad market.
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: email@example.com.
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 (tradestation.com).
© 2002-2010 Morpheus Trading, LLC
Reproduction without permission is strictly prohibited.