The Wagner Daily - July 1, 2011
Concise technical analysis and picks of the leading global ETFs
Stocks advanced for a third consecutive day but on mixed trade. The major exchanges also improved for a third straight day. The Dow Jones Industrial Average led the move as it rose by 1.3% on the session. The Nasdaq followed closely by posting an impressive 1.2% gain while the S&P 500 tacked on 1.0%. The small-cap Russell 2000 and the S&P MidCap 400 advanced by 0.8% and 0.7% respectively.
Market internals were mixed on Thursday. Volume was down 0.3% on the NYSE but rose 3.4% on the Nasdaq. The spread ratio ended the day at 3.3 to 1 on the NYSE and 4.3 to 1 on the Nasdaq in favor of advancing volume. Thursday's mixed internals did little to overshadow a strong day for the market. Nonetheless, we wouldn't classify yesterday as an accumulation day for the market.
Given the extent of the recent rally, now would be a good time to evaluate the state of the broad market. A brief look at the S&P 500 ($SPX.X) shows that we are at key resistance of the downtrend line and the 50-day MA. Over the next two trading sessions we would expect to see more short setups begin to develop. In most cases sharp reversals back into resistance following a protracted decline, offer the chance to get short.
The DB Commodity Index Tracking Fund has begun to exhibit signs of relative weakness ahead of the broad market. Yesterday, as the major indices were setting new four day highs, DBC formed a reversal candle by overcutting its 20-day EMA and reversing to close near session lows. A move below the two day low near $28.75 may provide a short entry trigger for this ETF. We are carefully monitoring DBC for a possible short entry.
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.