Potential breakout entry in (DBC) - April 20, 2011
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The Wagner Daily - April 20, 2011
Concise technical analysis and picks of the leading global ETFs
Stocks were up on Tuesday but volume was light. The market gapped up at the open and slid into lower territory before finding a bid early in the afternoon session. All five major indices closed near the session highs. The S&P 500 rose 0.6% on the session, while the Dow Jones Industrial Average, S&P MidCap 400 and the small-cap Russell 2000 all ended the session up by 0.5%. The Nasdaq was the day's laggard as it posted a 0.35% improvement.
Market internals were mixed on Tuesday. Advancing volume outpaced declining volume on both indices. The ratio ended the day at 2.4 to 1 on the NYSE and 1.2 to 1 on the Nasdaq. Volume was down considerably on the day. On the Big Board turnover slid by 20%, while on the Nasdaq it fell by 7.3%. Yesterday's internals point to an absence of institutional participation in the rally.
The DB Commodity Tracking ETF (DBC) has been consolidating for the past six sessions at its 20-day EMA. This exhibition of relative strength places DBC in a strong position to move to higher ground. Further, DBC's consolidation has been accompanied by a contraction in volume. This type of price and volume action is often considered bullish. A volume assisted move back above the 6 day high of $31.27 could present a buying opportunity in this ETF.
The Global X Uranium ETF (URA) has been setting a bearish sequence of lower highs while it has been consolidating below its 20-day EMA. A loss of support at the 2 day low of $14.44 may provide a shorting opportunity in this ETF. We are monitoring URA closely for a potential short entry.
The market has struggled its way back to fill the gap formed by Monday's selloff. Internals were unimpressive during yesterday's rally and the Nasdaq continues to struggle in its attempt to regain the 50-day MA. The current market conditions have been providing very few setups that meet our technical and risk/reward criteria. As such, we are cautious about entering new trades.
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: firstname.lastname@example.org.
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