After opening slightly higher, the major indices drifted lower throughout the morning, then gradually recovered throughout the afternoon. Stocks eventually finished near the flat line and with mixed results. The Nasdaq Composite gained 0.3%, as the Dow Jones Industrial Average declined by the same percentage. The benchmark S&P 500 was down less than 0.1%. Small and mid-cap issues continued to show moderate relative strength. The Russell 2000 advanced 0.5% and the S&P Midcap 400 climbed 0.6%. Although the S&P 500 and Dow Industrials closed near the middle of their intraday ranges, the Nasdaq Composite finished just off its best level of the day.
Turnover picked up across the board, which had mixed implications for the main stock market indexes. Total volume in the NYSE increased 12% above the previous day's level, causing the Dow Jones Industrial Average to register a bearish "distribution day." It was the fourth such day of institutional selling in recent weeks. Volume in the Nasdaq similarly rose 6%, but the index technically scored a bullish "accumulation day" because it advanced on higher volume. Since it was an indecisive day in which the S&P, Nasdaq, and Dow all closed within 0.3% of unchanged, it's fair to say neither the bulls nor bears had the upper hand in yesterday's relatively boring session.
Besides the usual suspects of oil and gas-related issues, which have been going up nearly every day, there are a few less obvious ETFs with bullish chart patterns we're monitoring right now. First is the Market Vectors Russia ETF (RSX), which we initially brought to your attention after it broke out on May 8. Since then, RSX has retained all of that day's strong gain, and is now consolidating in a tight range. On a near-term basis, the 20-period exponential moving average on the hourly chart interval has risen up to provide support. This could enable RSX to make another momentum-driven move higher in the coming days. On the hourly chart of RSX below, the beige line indicates support of the 20-EMA that has caught up to the price. A buy entry could be made above yesterday's high:
Another international ETF poised to breakout higher is the iShares S&P Latin America Index (ILF). After a brief "shakeout" below its 20-day EMA late last month, ILF quickly rallied back to the area of its historical high price a few days later. Since then, ILF has been trading in a sideways range, and the 20-day EMA has risen further to provide price support. In the coming days, watch for a breakout above its base of consolidation, specifically above yesterday's high:
Within the energy sector, oil and gas ETFs have been getting the most attention. However, coal stocks have also been steadily moving higher. One way to capitalize on the strength in coal is through buying the Market Vectors Coal ETF (KOL), which was launched just four months ago. On the daily chart of KOL below, notice that it just broke out above a short-term base of consolidation to a fresh all-time high. Any small pullback in KOL is buyable, as bullish momentum should carry it higher in the near-term:
We're starting to see more divergence in the broad market. The S&P 500 and Dow Jones Industrial Average are still in danger of forming near-term "lower highs" and falling below support of their 20-day EMAs. Such a move would undoubtedly lead to further downside momentum. Conversely, both the Nasdaq Composite and Nasdaq 100 indices are now positioned to breakout to their highest levels of the year. If the Nasdaq Composite breaks out, we must wonder how much resistance the 200-day MA (just overhead) will provide. Conversely, the large cap Nasdaq 100 is already above its 200-day MA, which makes the ProShares Ultra QQQ (QLD) an attractive momentum play on the long side if the Nasdaq 100 breaks out above its recent range. Due to dividend distributions, QLD is actually still below its 200-day MA, but the chart of the Nasdaq 100 Index itself is more important in this case. Notice the bullish consolidation on the daily chart of QLD below:
In case you're not familiar with it, QLD moves in sync with the more popular Nasdaq 100 Tracking Stock (QQQQ), but at a ratio of double the percentage gain or loss of the underlying index. The leveraged ProShares "Ultra" family of ETFs gives traders better profit potential with their buying power, especially when trading ETFs that are tied to broad-based indexes.
If you wish to learn about Morpheus Trading Group's ETF trade entries on the same day they occur, sign up for a free trial to The Wagner Daily or other MTG services by clicking here (limit one per household). Also, remember that all previously published issues of both The Wagner Daily and The Wagner Weekly are available in the MTG archives. If you are new to our services or wish to broaden your knowledge of ETF trading or our general trading style, we recommend you browse the archives because it is educational and free! Click here to visit the Wagner Daily archives or here to visit the Wagner Weekly archives.
Live ETF Trading Seminar with Deron Wagner June 22, 2008 - Los Angeles, California  Shift your ETF trading into high gear in both up and down markets!
For all active traders and investors 
DESCRIPTION
YOU WILL LEARN HOW TO:
Wagner will be presenting an abbreviated version of this seminar (free) at the LA Traders Expo on June 21, but this is your chance to dive in deeper, put all the details together, and pick his brain! If you're already attending the LA Traders Expo from June 18 - 21, Wagner's dynamic ETF workshop is a great way to wrap up your trip. Most importantly, we're quite confident the investment in yourself will pay for itself many times over, within a very short time. Nevertheless, you need to act fast because seating is limited and advance registration is required. Attendance available on a first-come, first-served basis. |
In this column, MTG presents you with a FREE, actual trade setup that we are stalking for entry at some point during the week. Note that, unlike the daily guidance that regular Stalk Sheet subscribers receive, this free Stalk of the Week does not take into account overall broad market conditions that can easily affect the trade over the next several days. This week's Stalk of the Week is:
Click to receive your free 1-month trial to The MTG Stalk Sheet so that you can receive an average of one to three trade ideas such as this one on a daily basis (limit one free trial per household). Subscribers are always provided with detailed entry, stop, and target prices for each trade, and intraday e-mail alerts are sent as needed.
Below is the weekly commentary that accompanied the most recent ETF Trend Tracker, e-mailed to subscribers last weekend. The Morpheus ETF Trend Tracker, a perfect supplement to the ETF Roundup guide, is a comprehensive table of Exchange Traded Funds (ETFs) designed for informed investors and longer-term traders who prefer to hold their ETF positions for a few weeks to several months at a time. Based exclusively on a weekly analysis of trendlines on the daily and weekly charts, the ETF Trend Tracker provides subscribers with a thorough snapshot of the primary trend direction of ETFs in every category from broad-based to industry sector to international. This information is e-mailed to subscribers weekly, in a user-friendly format that groups ETFs based on the direction of their primary trends.
Commentary:The Market Segments took a beating last week, as the major indices broke below key support levels. The S&P Midcap 400 Index (MDY) showed some relative strength as it consolidated and traded near its recent highs. The Dow 30 (DIA) is back to its "ascending trend" trigger level and will be testing the MTG Stop (S1) if weakness continues. The Market Segments are approaching prior support levels, so we might experience some firming of price action next week. Nevertheless, downside momentum could continue if the 20-day exponential moving averages of the major indices fail to hold as support.
The Industry sectors gave back their gains, as widespread weakness took down recent industries that triggered to the ascending trend in May. Possible inflationary worries from sharply rising energy, commodities, and basic materials may be the blame. Take a look at the charts in this week's ETF Trend Tracker for updated information. Oil (USO) accelerated higher, after dipping a bit in the preceding week. USO closed at the highs and has gained 39% since mid-February. Several other industries are stuck in a trading range, including Pharmaceuticals (PPH), Consumer Staples (XLP), and Aerospace (PPA). The IPOs (FPX) has moved well and stealthily touched new highs last week.
The fixed-income (bond) ETFs were slightly higher, but the bias for the bond ETFs is neutral. Based on year-to-date figures, there have been very small percentage changes on either side.
The first two International ETFs that triggered to the descending trend were Asian ETFs. Check out which ones in the ETF Trend Tracker report. Rows shaded in pink color indicate new additions to the current trend list. Canada (EWC) broke near-term resistance and closed near the highs. Germany (EWG) continues to grind higher, week after week. Brazil (EWZ) took a breather last week, but is still holding its gains from the week prior. We are holding the stops for EWZ to allow for volatile price action.
Our free one-on-one phone consultation was a big hit for many traders and investors alike. Numerous subscribers took advantage of the service, and we are sure a great deal of knowledge was transferred. It was a pleasure receiving and answering questions in person and getting immediate feedback. We truly want our subscribers to become successful traders and investors, and using the ETF Trend Tracker is the dynamic way to keep interest in the market for the long run. If you would like to schedule a consultation session, MTG is offering a special discounted rate of $150 per half hour for a limited time. Just call or email us and setup an appointment. Learn ways how to approach trades in this difficult market and gain insights to use the ETF Trend Tracker report for long term growth. Learn mid-trend entry strategies, controlling risk, portfolio management, trade execution, and much more.
Alert of imminent reversal to the upside:Click to receive your free 1-month trial to the ETF Trend Tracker (limit one free trial per household), which will be e-mailed to you every week, along with intra-week updates on an as-needed basis.
