Trading ETFs: Buying Leveraged Small Cap & Opportunities In Tech? (TNA, IXN, XRT, SPY, DIA, IWM, QQQ)
Stocks climbed their way back from early losses to end higher on the day, but on mixed trade. All five major indices closed in positive territory with the Nasdaq (NASDAQ:QQQ) claiming its sixth consecutive winning session. The technology rich index posted a 0.5% gain on the day. The small-cap Russell 2000 (NYSEARCA:IWM) forged higher by 0.4%, while the Dow Jones Industrial Average (NYSEARCA:DIA), S&P 500 (NYSEARCA:SPY) and S&P MidCap 400 all posted modest 0.2% gain.
For a second straight day market internals were mixed. Volume dropped on the Nasdaq by 3.0% but climbed on the NYSE by 1.9%. Also for a second consecutive day, advancing volume outpaced declining volume across the board. On the Nasdaq, up volume outpaced down volume by 2.0 to 1 and on the NYSE by 1.5 to 1. Although we would not officially label Thursday as an accumulation day, the price action was reasonably bullish.
Yesterday, via an intraday alert we entered a long position in the Direxion Small Cap Bull 3x (NYSEARCA:TNA). We liked the trade because TNA sold off, tested the three day low, and reversed on a big spike in volume to close at session highs. Further, it closed above resistance at the two day high. The trade also closed in the money. Trade details are posted for our subscribers in the open positions segment of the newsletter.
The iShares S&P Global Tech Sector I ETF (NYSEARCA:IXN) has been consolidating above its 200-day MA for the past eight sessions. A volume assisted move above the three day high of $60.41 could present a buying opportunity in this ETF. We often look for false breakouts and retests of support to provide the pivot points for potential trade entries. We are placing IXN on the watchlist. Trade details are available to our members in the watchlist section of the newsletter.
Wednesday brought another round of traders buying on pullbacks. We often discuss that we do not trade news. Today was an excellent example of why we avoid the media. Today’s news was primarily negative as weekly jobless claims increased and December retail sales were worse than expected. Nonetheless, the market rallied in the face of this negative news, and the SPDR S&P Retail ETF (NYSEARCA:XRT) closed higher on the day. The market continues to flash bullish signals and appears headed higher.
The commentary above is an abbreviated version of our daily ETF trading newsletter, The Wagner Daily. Subscribers to the full version receive specific ETF trade setups with detailed trigger, stop, and target prices, as well as daily updates on all open positions. Intraday Trade Alerts are also sent via e-mail and/or text message, on as-needed basis. For your free 1-month trial to the full version of The Wagner Daily, or to learn about our other services, please visit morpheustrading.com.
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.