Watching Our Weekly ETF Trades

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September 30, 2013 10:30am NYSE:FXO NYSE:TAN

sellbuyMorpheus Trading: In last Friday’s commentary, we pointed out a potential buy setup in S&P Technology SPDR (NYSEARCA:XLK). Since $XLK did not trigger for swing trade entry last Friday, we are canceling that setup in favor of a bullish setup


in First Trust Financials AlphaDEX Fund (NYSEARCA:FXO).

$FXO has recently pulled back to support of its rising 50-day moving average, after stalling at the prior high. The 20-day exponential moving average has just crossed above the 50-day moving average, which is a positive sign signaling that the current consolidation may soon lead to a breakout:

$FXO BREAKOUT

Although a moving average crossover is never a guarantee of anything, the moving averages point to a positive shift in momentum over the past few weeks. Furthermore, notice that long-term support of the 200-day MA still remains in a clear uptrend.

We look for $FXO to chop around for a few more days or weeks above the 50-day moving average (minus a few shakeout bars). As long as the price action holds above the 50-day moving average, the ETF should eventually break the downtrend line and move out to new highs.

In case that bullish move happens sooner, rather than later, we have listed $FXO as a new trade setup today. 

As for existing positions, our best performing ETF continues to be Guggenheim Solar ETF (NYSEARCA:TAN). The weekly chart below shows our first buy entry on a pullback to the rising 10-week moving average, followed by an add of additional shares on a breakout above the highs of a six-week long consolidation:

$TAN ENTRIES

As shown in the chart, our initial position of $TAN is up 38% since our July buy entry. The additional shares are presently showing a 10% unrealized gain. For both positions, our target remains the $36.50 area.

If $TAN hits the target, it would give us a locked-in gain of approximately 50% on the initial buy entry. If the trade suddenly starts to falter before reaching our target, we will tighten our protective stop and notify readers of such. However, until the price action gives us a reason to be cautious, we continue to let the profit ride.

This article is brought to you courtesy of Morpheus Trading, LLC.


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