The Wagner Daily - March 30, 2011
Concise technical analysis and picks of the leading global ETFs
Stocks posted solid gains on Tuesday on mixed trade. The market sold off briefly at the open, but buyers entered the market around 10:00 am, fueling a bullish move all the way to the close. The Nasdaq and the small-cap Russell 2000 led the move, as both posted gains of 1.0% on the day. The S&P MidCap 400 improved 0.9%, while both the Dow Jones Industrial Average and the S&P 500 ended higher by 0.7%.
Volume was mixed on Tuesday. Volume fell by 3.2% on the Nasdaq but rose by 3% on the NYSE. Advancing volume outpaced declining volume on both indices. The advancing to declining volume ratio ended the session at 2 to 1 on the NYSE and 2.6 to 1 on the Nasdaq. The drop in volume on the Nasdaq prevents us from calling Tuesday an accumulation day in the market.
OIH performed admirably yesterday, as it tacked on almost four points. We decided to cover 200 shares of our short position in RTH due to strength in the broad market. We are still holding 100 shares of the original position in RTH. Via intraday alert, we entered a long position in IHI and placed a buy stop order for a potential long entry in SLV.
In Tuesday's newsletter we discussed the importance of the Nasdaq reclaiming its 50-day MA. In yesterday's action, the Nasdaq did manage to claw its way back above the 50-day MA. The next test will be whether or not the $COMPX can pierce through resistance at the three day high. A substantive move above this key mark by the Nasdaq should result in the continuation of the broad market rally.
After consolidating for two days in a pennant-like formation, the iShares Dow Jones US Medical Devices ETF (NYSEARCA:IHI) broke through resistance yesterday. We sent an intraday alert announcing that we were buying IHI at the market. For our subscribers, full trade details are available for review in the open positions section of the newsletter.
Yesterday we also sent an email alert that we were placing a buy stop order for the iShares Silver Trust ETF (NYSEARCA:SLV). Silver has been in an extremely bullish uptrend for over six months now. Over the past two days SLV has been consolidating in a tight sixty cent range. Further, over the past four sessions this ETF has been forming a bullish flag-like pattern. A move above the two day high of $36.35 may provide a buy trigger for SLV. Trade details are available for review in the watchlist segment of the newsletter.
Tuesday's rally points toward another advance in the broad market. All five major indices face resistance at the three day high. However, as of this writing, both the Nasdaq and the S&P futures are up approximately 0.5%.