Back Within Striking Distance (SLV, XBI, EPU, SPY, IWM, QQQ, DIA)
Equities performed well on Thursday pacing all five major indices well into positive territory. By the closing bell the S&P 500 (NYSE:SPY) tacked on 1.4% while the Dow Jones Industrial Average (NYSE:DIA) and small-cap Russell 2000 (NYSE:IWM) followed closely as both gained 1.2% yesterday. The S&P MidCap 400 closed 1.0% higher as the Nasdaq (NASDAQ:QQQ) improved by 0.7%.
Market internals were decidedly bullish yesterday. Turnover spiked on the Nasdaq by 26.5% and on the NYSE by 21.9%. Advancing volume outpaced declining volume by a ratio of 5.0 to 1 on the NYSE and 1.9 to 1 on the Nasdaq. The significant increase in volume points clearly to institutional buying on Thursday. Based on the strong price action and strong internals we would classify Thursday as an accumulation day across the board.
On a pullback we opened a long position in (NYSE:SLV) yesterday. For our subscribers, trade details are posted in the open positions segment of the newsletter.
Since a breakout move on June 28th the SPDR S&P Biotech ETF (NYSE:XBI) has been consolidating along its 20-day and 50-day moving averages for the past three weeks. Yesterday, on a twelve day high in volume, XBI gapped up and rallied to close near the high of the day. A move back above yesterday’s high of $75.05 could provide a buy entry trigger for this ETF.
Yesterday, on a spike in volume, the iShares MSCI All Peru Capped Index ETF (NYSE:EPU) gapped up, rallied sharply and eventually sold off sharply to form a bearish reversal candle. EPU may now offer a shorting opportunity below yesterday’s low of $42.88. We are monitoring EPU closely for a potential short entry.
The broad market is now again within striking distance of its two year high. A follow through day on Friday could serve to confirm that the market is prepared to surge to new highs.
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.
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