The Wagner Daily - November 23, 2011
Concise technical analysis and picks of the leading global ETFs
Stocks edged lower on Tuesday on light trade. All of major indices dropped on the day, with the small-cap Russell 2000 leading the move lower. The high beta index fell 0.8% yesterday. The S&P MidCap 400 shed 0.6% while the Dow Jones Industrial Average and the S&P 500 lost 0.5% and 0.4% respectively. The Nasdaq exhibited the most relative strength on the day as if fell only fractionally.
For the third day in a row market internals closed mixed. Volume was down on both exchanges. By the closing bell turnover faded on the Nasdaq by 12.5% and on the NYSE by 6.2%. Declining volume outpaced advancing volume by a ratio of 2.8 to 1 on the NYSE and 1.2 to 1 on the Nasdaq. Institutions were not involved in the day's action as is evidenced by the light turnover across the board. Due to the holiday shortened week, we expect to see light volume Wednesday and Friday.
Over the past six days, the ProShares UltraShort Euro ETF (NYSEARCA:EUO) has been consolidating in a tight trading range just above its 20-day and 50-day moving averages. Yesterday, EUO held the two day low and formed a doji candlestick. A volume fueled move above yesterday's high of $18.81 could provide a long entry trigger for this ETF. We are placing EUO on the watchlist. Trade details are available to our subscribers in the watchlist section of the newsletter.
The Market Vectors Junior Gold Miner ETF (NYSEARCA:GDXJ) recently lost support of its short term uptrend line and was unable to reclaim support of its 20 and 50-day moving averages. Over the past two sessions GDXJ appears to be stabilizing from its recent decline. A rally back into resistance near the declining 20-day EMA and 50-day MA could provide a shorting opportunity in GDXJ.
Due to the holiday shortened week, we don't expect a lot of volume or significant price movement in the market over the next two sessions. Consequently, we don't plan on trading much, but if opportunities present themselves, we are inclined to take on small position size. As a reminder, there will be no newsletter on Thursday since the markets will be closed in observance of the Thanksgiving holiday. Normal publication will resume on Friday, November 25. Have a great Thanksgiving!
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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