Setup Trade: Look For A Potential Swing Trade Entry In This UltraShort Silver ETF (ZSL)
Stocks closed mixed yesterday and well off session highs. Trade was also mixed. The S&P MidCap 400 showed the most resiliency, as it posted a 0.2% gain. The S&P 500 ended fractionally higher, while the Dow Jones Industrial Average closed fractionally lower. The tech-rich Nasdaq slid 0.3% and the small-cap Russell 2000 was the session’s worst performer, falling 0.7%.
For the second day in a row, market internals were mixed. Turnover on the Nasdaq fell 0.4% but increased on the NYSE by 8.8%. However, declining volume edged out advancing volume on the Nasdaq and the NYSE by ratios of 1.4 to 1 and 1.1 to 1 respectively. This was not very conclusive with regard to institutional trading activity.
Yesterday, on a burst of volume, the ProShares UltraShort Silver ETF (NYSEARCA:ZSL) tested its 3-day low and undercut very near-term support of its 10-day EMA before reversing to close near session highs. Now, a volume-fueled move above yesterday’s high of $68.21 could provide a buying opportunity in this ETF. As such, we are now monitoring ZSL for potential swing trade entry today. Regular subscribers to The Wagner Daily should note our exact entry, stop, and target prices in the “watchlist” section of the newsletter below. The following chart illustrates the setup in ZSL:
Overall, what started as a good day for the broad market ended on a bearish note yesterday, as both volume and selling activity quickened in the last two hours of the session. Selling into strength on higher volume is a noteworthy characteristic of a bear market, and provides further evidence that the market is struggling to find traction. Nevertheless, as trend following swing traders, we’re ready to take advantage of market conditions in either direction. With our market timing model remaining on “sell” mode, selling short select stocks and ETFs (or buying inverse ETFs) as they rally into near-term resistance levels remains our plan.