Watching This ETF For A Potential Pullback Buy Entry

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January 10, 2014 12:13pm NYSE:FAN NYSE:PBJ

sellbuyMorpheus Trading: Clean energy ETFs have put in a strong advance over the past few weeks. $TAN, $QCLN, and $FAN have all run up with little rest, after breaking out above their daily downtrend lines and clearing the 50-day moving averages.


Global Wind Energy ETF (NYSEARCA:FAN) rallied 10% higher after breaking the daily downtrend line, with only one day of rest (Jan. 2). If the rally loses steam here, we could see the price action chop around for a few weeks, which would enable the 10-day moving average to catch up. This is where a low-risk buy point could emerge if the price action remains tight:

$FAN pullback to 10-day MA

All three clean energy ETFs mentioned above remain on the internal watchlist of our swing trading newsletter for potential pullback buy entry. Furthermore, we continue to hold SolarCity Corp (NASDAQ:SCTY), an individual stock in the solar sector, from our December 19 entry at $53.44. Presently, this momentum trade is showing an unrealized price gain of 26.3% since our buy entry, but we will continue to ride the gains as long as price action remains bullish.

Additionally, we continue to monitor PowerShares Dynamic Food & Beverage ETF (NYSEARCA:PBJ) for a potential breakout entry from a six-month long base at the highs.

After pulling back about 7% off the highs of August, the pullback from the false breakout in late November found support just 4.5% off the high, so the price action is now tightening up. The weekly chart below illustrates this:

$PBJ BULLISH BASING PATTERN

Note the past three weeks of price action, with two tight weeks of trading and a bullish reversal candle this week. As such, $PBJ could be setting up to breakout within the next week or two, and is a great candidate to add to your ETF watchlist.

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


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