Wagner Daily: A Closer Look At These ETFs (SLV, EPU, SPY, DIA, IWM, QQQ)
Stocks moved higher on Wednesday as trade expanded. For the third consecutive day all five major indices closed higher. The S&P 500 (NYSE:SPY) and the S&P MidCap 400 both tacked on solid gains of 0.8%. The Dow Jones Industrial Average (NYSE:DIA) improved by 0.6% while the small-cap Russell 2000 (NYSE:IWM) and the Nasdaq (NASDAQ:QQQ) added 0.5% and 0.4% respectively.
Market internals were bullish yesterday. For the first time in three days volume increased across the board. The Big Board saw volume improve by 15.2% as turnover on the Nasdaq rose by 7.1%. Advancing volume outpaced declining volume by a ratio of 4.0 to 1 on the NYSE and 1.8 to 1 on the Nasdaq. Even though volume on both exchanges remained below the 50-day volume moving average, we would still categorize yesterday as an accumulation day for the market.
Yesterday, via an intraday alert, we entered a long position in the iShares Silver Trust ETF (NYSE:SLV) as it gapped above a two day resistance level at $33.20. We view this trade as a quick reversal trade since SLV has recently reversed trend. We anticipate SLV to find resistance near its 20-day EMA. Details of this trade are available to our subscribing members in the open positions segment of the newsletter.
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The iShares MSCI All Peru Capped Index (NYSE:EPU) has been demonstrating significant relative weakness over the past three sessions. As the broad market has been rallying EPU has been unable to bounce off the current lows. A volume fueled move back below the two day low of $36.92 could provide a shorting opportunity in this ETF.
In yesterday’s edition of The Wagner Daily we stated, “If the S&P 500 find its way abov…1300…then it will likely continue its advance to the 50-day moving average“. The S&P 500 did in fact break through this resistance level and closed near session highs at 1307.41. We now anticipate the S&P will follow through and rally into its 50-day MA. The market should find resistance at this level. For the moment we are not interested in taking on any more long positions as many of the short term technical indicators we follow are providing overbought readings. We are more apt to remain patient and look to short ETFs that are rallying into resistance. We consider it unwise to take on new positions in an over-extended environment.
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: deron@morpheustrading.com.
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