The Wagner Daily - December 28, 2011
Concise technical analysis and picks of the leading global ETFs
In a sleeper of a session, stocks ended mixed, on mixed trade. The small-cap Russell 2000 closed 0.5% higher while the S&P MidCap 400 and the Nasdaq both added 0.3%. The S&P 500 advanced a meager 0.01% while the Dow Jones Industrial Average ended the day fractionally lower.
For the fourth time in as many sessions market internals were mixed. Volume rose by 1.6% on the NYSE but fell by 1.4% on the Nasdaq. Interestingly, both exchanges saw declining volume slightly outpace advancing volume. By the closing bell, the spread ratio stood at -1.4 to 1 on the NYSE and -1.1 to 1 on the Nasdaq. Yesterday's lackluster trade points to an absence of institutional participation in the day's action.
Since Breaking above resistance of the 200-day MA on December 14th, the Direxion Gold Miners 3X Bear ETF (NYSEARCA:DUST), has been consolidating above this key mark, as its price action has tightened. Twice over the past three sessions, DUST has found resistance near $42.60. Ideally, we would like to see DUST form an inside candle as this could serve as a launching pad for a move higher. A breakout above the three day high of $42.65 on an uptick in volume, could present a buying opportunity in this ETF.
Yesterday, on a burst in volume, the PowerShares Emerging Markets Sovereign Debt ETF (NYSEARCA:PCY) formed a reversal candle as it undercut its 50-day MA, but reversed to close near session highs. A volume powered move back above yesterday's high of $27.30 could provide a buying opportunity in this ETF. We are tracking PCY closely for a possible long entry.
The market showed little signs of life during yesterday's post holiday session. However, it is promising that all of the major indices are consolidating at the two day high. Nonetheless, if we are to move higher from the current levels, it is likely that we will need to see institutions re-enter the market. We would not be surprised to see choppy price action until after the New Year.
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.
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).
Â© 2002-2010 Morpheus Trading, LLC
Reproduction without permission is strictly prohibited.