Two ETFs On Our Watch List (PBJ, GWL)

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January 15, 2014 4:05pm NYSE:GWL NYSE:PBJ

new etfsMorpheus Trading: Stocks put in an impressive reversal yesterday, especially tech stocks, as the NASDAQ Composite and NASDAQ 100 closed above Monday’s high and gained 1.7% and 1.9% respectively. The S&P 500 did not clear Monday’s high,

but still managed a solid 1.1% gain. Although the price action was strong, turnover did not confirm the move as volume was off Monday’s pace on the NYSE and NASDAQ.

Traders in the bear camp may see Tuesday’s light volume rally to Monday’s heavy distribution as a big negative. While we would have liked for volume to tick higher and confirm the advance, leadership stocks responded well, led by a monster reversal day in $TSLA (one of our current Wagner Daily stock trades), which closed up 15% on more than double its average volume.

Tuesday’s bullish reversal should serve as a strong reminder for all traders to “plan the trade and trade the plan.” Having the courage to buy at the right time solves many issues, as those who buy late are usually headed for the exit at the first sign of trouble. Traders who buy at the right time and follow a plan are usually in a much better position to deal with an ugly market shakeout of a day or two.

We added one new buy setup to today’s ETF watchlist in SPDR S&P World ex-US ETF (NYSEARCA:GWL). $GWL has been in consolidation mode since mid-October, but has recently set a higher low within the base with the past two weeks of tight action above the 50-day MA.

The tight price action in January, which is just below the highs of the base, is very bullish and should lead to a breakout within the next week or two. Note that the 20-day EMA has crossed above the 50-day MA, which is also a sign that the consolidation is close to ending:


The price action in PowerShares Dynamic Food & Beverage ETF (NYSEARCA:PBJ), which has been on our official watch-list the past few days, continues to tighten up. The weekly chart below shows the tight action over the past three and a half weeks, with the closing action above the 10-week MA:


Notice how the weekly volume has died down since the summer when $PBJ was in trend mode. The dry up in volume indicates that traders have forgotten about $PBJ because it hasn’t gone anywhere in quite some time. The light volume and tight price action should eventually give way to a breakout with increased volatility and higher volume.

On the individual stock side, we sold the remaining half position of $MONT for a 25% gain yesterday, and sold half of $WDAY for a 7% gain. $IRBT was also closed on the open with an 11% gain.

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

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