The Wagner Daily - March 28, 2011
Concise technical analysis and picks of the leading global ETFs
Stocks began Friday's session with a strong move up, but around 12:30 pm selling pressure entered the market driving stocks well off the day's highs. Still, all five major indices closed in the green led by the small-cap Russell 2000. The small cap index ended the session higher by 1.0%. Closely following the Russell was the S&P MidCap 400, which advanced by 0.8% for the day. The Dow Jones Industrial Average, S&P 500 and Nasdaq closed modestly higher by 0.4%, 0.3% and 0.2% respectively.
Market internals were unimpressive on Friday. Volume slipped on the Nasdaq by 7.6% and on the NYSE by 5.6%. Advancing volume modestly outpaced declining volume by a ratio of 1.8 to 1 on the Big Board and 1.6 to 1 on the Nasdaq.
The PowerShares Listed Private Equity ETF (NYSE:PSP) has made a nice recovery following the recent market turmoil. On Friday, PSP experienced a false breakout on slightly higher volume. This ETF is a potential long entry, but following a false breakout we would like to see a period of consolidation near the breakout highs. The black candles represent the type of price action that would be ideal prior to another move higher. The ideal consolidation could take place over several days to several weeks (or more). We will be tracking PSP closely for as a potential long candidate.
The ETFS Silver Trust ETF (NYSE:SIVR) has been in a strong uptrend for many months now. Since breaking above resistance on March 23rd, SIVR now appears to be forming a bullish flag-like pattern. A move above Friday's high of $37.53 could present a buy trigger for this ETF.
Several short term momentum indicators that we monitor suggest that the market may be over-bought. We would not be surprised to see at least a short term pullback in the broad market over the next few days. The Nasdaq continues to underperform. The technology rich index barely managed to close above its 50-day ma on Friday. A few sectors that might provide shorting opportunities in event of a pullback include: technology (semis), real estate and financials. We will be following ETFs in these sectors for possible short entries.
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.
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