ETF Trade Setups On The Long Side Have Been Drying Up

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November 20, 2013 11:53am NYSE:KRE NYSE:TAN

money and investingMorpheus Trading: As mentioned in yesterday’s report, actionable swing trade setups on the long side have been drying up over the past few days. From our nightly scans, many charts look as though they could use a few weeks or so of base building 

before moving higher.

We discussed in yesterday’s report that S&P Regional Banking ETF (NYSEARCA:KRE) failed to extend much beyond the original breakout level and may need more time to chop around. Another example of this situation can be found in the weekly chart of iShares Core MSCI EAFE ($IEFA), which is in its fourth week of consolidation after stalling out around $60:

$Tight price action

With $IEFA above, just one or two more weeks of sideways price action, along with a test of the rising 10-week moving average, would be ideal price action.

One ETF that definitely needs several more weeks of base building is the Guggenheim Solar ETF (NYSEARCA:TAN), which has seen a pick up in volatility the past few weeks after a 50% run up from its last base breakout:

$Tight price action

There is a bit too much interest in solar stocks right now since the strong run up. A 20% correction off the highs would not be unusual, and would put $TAN somewhere around the $33 to $34 level (as a potential base low). All stocks and ETFs eventually base out after a strong advance and $TAN is no different.

We continue to monitor the action in ProShares UltraShort 20+ Year T-bond (details of original $TBT trade setup here), as we look for a higher swing low to print, or some sort of bullish reversal candle, to signal a low-risk buy entry is in place after its recent pullback to the 50-day MA.

By the way, I highly suggest reading the excellent trading strategy article just posted on our blog that explains precisely why profitable trading is easier than you think.

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

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