Possible Buy Entry Trigger For This ETF (IYR, XOP, XLU, SOXL, DVY)
Stocks ended the session mixed on Friday as volume quickened. Bigger cap issues showed strength as high beta issues struggled. By the closing bell the Dow Jones Industrial Average (NYSEArca:DIA) and the S&P 500 (NYSEArca:SPY) posted gains of 0.4% and 0.2% respectively. The S&P MidCap 400 and the small-cap Russell 2000 (NYSEArca:IWM) both slid 01.%, while the Nasdaq (NASDAQ:QQQ) demonstrated the most weakness as it fell 0.3% on the day. Sectors showing strength included, retail, banking defense. The biotech sector got blistered on Friday, as it sank almost 4.0%. Other losers included non ferrous metals, gold miners, coal miners, airlines and steel.
Market internals ended the day mixed. Volume increased on the Nasdaq by 1.5% and on the NYSE by 11.3%. Declining volume outpaced advancing volume on the Nasdaq by a factor of 1.2 to 1, but on the NYSE advancing volume held the upper hand as it upped declining volume by 1.2 to 1. The Nasdaq experienced its first distribution day in quite some time, as both total volume and declining volume were higher on the technology rich index. However, the NYSE escaped a distribution day due to its mixed internals.
The iShares Dow Jones US Real Estate Index ETF (NYSEArca:IYR) has been in pullback mode since setting a swing high on February 3, 2011. A move above Friday’s high of $61.43 could provide a possible buy entry trigger for this ETF.
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The SPDR S&P Oil & Gas Exploration ETF (NYSEArca:XOP) has recently broken out from an 8 month base above its 200-day MA. Currently, XOP does not offer a reasonable entry due to how far it is extended above its 10-day and 20-day moving averages. However, on a pullback XOP could offer a possible buy entry. An undercut of the 10-day and/or 20-day moving average(s), followed by a reversal candle would present an ideal long setup for this ETF.
Our open positions put in a mixed performance on Friday. (NYSEArca:DVY) held relative strength while both (NYSEArca:XLU) and (NYSEArca:SOXL) closed near session lows. For the moment however, none of the positions are in danger of stopping out and as long as we avoid a series of distribution days, all of these positions appear ready to move higher. Friday marked the first distribution day in the Nasdaq in nearly a month.
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: deron@morpheustrading.com.
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