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Potential swing entry in UltraShort Semiconductor ETF (SSG) - April 11, 2011

Apr. 11, 2011 9:00 AM ETSSG, BAL
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The Wagner Daily - April 11, 2011
Concise technical analysis and picks of the leading global ETFs


Trade was down on Friday as stocks closed lower. All five major indices finished in the red with the small-cap Russell 2000 taking the most punishment. The small cap index fell 1.1% on the day. The S&P MidCap 400 shed 0.7% while the Nasdaq lost 0.6%. The S&P 500 and the Dow Jones Industrial Average fared the best on the session as they dropped by 0.4% and 0.2% respectively.

For the second consecutive day market internals remained unimpressive. Volume on the Nasdaq fell by 8.8%. On the NYSE turnover ended the day lower by 8.4%. Declining volume was greater than advancing volume by a factor of 2.2 to 1 on the NYSE and 1.6 to 1 on the Nasdaq. Although the market has been under selling pressure for the past two sessions, the lack of turnover suggests a lack of institutional participation in the decline. Due to the weak volume we must temporarily conclude that the market is just experiencing a typical pullback. For the current retracement to gain bearish credibility, we would need to see a significant uptick in volume.

The ProShares UltraShort Semiconductor ETF (SSG) has been consolidating for the past 3 days above its 50-day MA. On Friday, SSG reversed dramatically on a burst of volume after gapping down at the open. A move above resistance at the two day high of $51.20 may present a buy entry trigger for SSG. We are placing SSG on the watchlist. Trade details are available to our subscribing members in the watchlist section of the newsletter.

The iPath Dow Jones-AIG Cotton ETN (BAL) has been consolidating near its 52 week high since mid March. Further, this ETF has maintained excellent relative strength to the broad market. During the recent market turmoil, BAL has not once closed below its 50-day MA. Over the past three days, BAL has pulled back to its 20-day EMA. Although we like the relative strength of BAL, we would like to see further tightening in the price action (tightening of trading range) before considering a long entry. We are monitoring this ETF closely for a possible buying opportunity.

It is noteworthy that the Dow Jones Transportation Average ($DJT) plummeted almost 2% yesterday. The trucking and airline groups were hit particularly hard. The skyrocketing price of oil and gasoline appear to be weighing on transports. Since the $DJT is widely considered a leading indicator, we always take notice when volatility hits this index.

The commentary above is an abbreviated version of our daily ETF trading newsletter, The Wagner Daily. Subscribers to the full version receive specific ETF trade setups with detailed trigger, stop, and target prices, as well as daily updates on all open positions. 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 morpheustrading.com.

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: deron@morpheustrading.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.

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