Look For An Entry Trigger In This Semiconductor and Crude Oil ETF (SOXL, UCO, SPY, DIA, IWM, QQQ)

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February 14, 2012 10:58am NYSE:SOXL NYSE:UCO

Stocks rebounded from Friday’s selloff but on below average trade. All five major indices posted gains. The small-cap Russell 2000 (NYSEArca:IWM) led the advance as it reclaimed the 1.4% loss it incurred on Friday. The S&P (NYSEArca:SPY) erased its 1.1% loss on Friday by posting a 1.1% gain

yesterday. The Nasdaq (NASDAQ:QQQ) added 1.0%, while the S&P 500 and the Dow Jones Industrial Average (NYSEArca:DIA) added 0.7% and 0.6% respectively.

Market internals ended the session mixed for a third consecutive day. Volume fell by 10.0% on the Nasdaq and 8.1% on the NYSE. However, advancing volume topped declining volume by a spread of 3.2 o 1 on the NYSE and 2.0 to 1 on the Nasdaq.

Yesterday, on a spike in volume, the ProShares Ultra Dow Jones-AIG Crude Oil ETF (NYSEArca:UCO) broke above its recent downtrend line and set a new four day high. A volume assisted move back above yesterday’s high of $42.14 could provide a buying opportunity in this ETF. We’re following UCO closely for a potential entry trigger.

Yesterday, the Direxion Daily Semiconductor 3x Bull ETF (NYSEArca:SOXL) formed a distinct reversal candle as it undercut its two day low and 10-day moving average. A rally above last Friday’s high of $40.65 could provide a long entry trigger for this ETF. We are placing SOXL on the watchlist. Trade details are available to our members in the watchlist segment of the newletter.

The market continues to show resiliency as buyers stepped in once again on Monday. Nonetheless, Monday’s light volume suggests that institutions were not particularly active during the session. This type of activity is common when markets are consolidating.

The commentary above is an abbreviated version of The Wagner Daily, a daily ETF and stock swing trading newsletter. Subscribers to the full version also receive detailed entry and exit prices for potential swing trade entries, and an additional section dedicated to individual stock trades. To learn more about our trading strategy, please visit our blog.

Deron Wagner is a professional hedge fund manager who founded Morpheus Trading Group, a swing trader education firm, in 2002. He is the author of the best-selling book, Trading ETFs: Gaining An Edge With Technical Analysis. His new book, Advanced Technical Analysis of ETFs, will be released in August 2012. Past television appearances include CNBC, ABC, and Yahoo! FinanceVision. Wagner is also a frequent guest speaker at various trading events around the world, and can be reached by sending e-mail to: deron@morpheustrading.com.

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