Look For A Buy Entry In The Market Vectors Retail ETF (RTH)
Stocks began the session weak but ended strong, on heavier trade. All five major indices formed bullish reversal candles and closed near session highs. The S&P 500 showed relative strength, as it closed up 0.7%. The S&P MidCap 400 and the Dow Jones Industrial Average added 0.6%. The Nasdaq and the small-cap Russell 2000 tacked on 0.5% and 0.4% respectively.
Market internals were, for the most part, bullish yesterday. Volume spiked on the Nasdaq by almost 23.0% and on the NYSE by 17.5%. The ratio of advancing volume to declining volume (spread ratio) on the Nasdaq and the NYSE ened at just over 1 to 1 and 2.5 to 1 respectively. Yesterday’s strong reversal on higher volume resulted in an accumulation day on both exchanges.
On two occasions in the past three days, the Market Vectors Retail ETF (NYSEARCA:RTH) has tested and held support of its 20-day EMA. Yesterday, on an uptick in volume, RTH formed a bullish reversal candle, as it recovered from an undercut of its 20-day EMA. A volume assisted move above the three day high of $42.52 could provide a buy entry trigger for RTH.
Yesterday’s see-saw action in the broad market has become the norm lately. The type of intraday volatility that we are seeing does not bode well for swing trading. As trend traders, it is difficult to extract gains from the market in the absence of consistent price action.