The Best Looking ETF Trade Setup Right Now [Teucrium Corn Fund(NYSEARCA:CORN)]

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April 1, 2014 12:29pm NYSE:CORN

cornMorpheus Trading: As recently discussed in my March 26 blog post, banks, mutual funds, hedge funds, and other institutional funds have been rotating out of the NASDAQ and into the S&P 500 and Dow Jones in recent weeks.

Although this has been leading to moderately bullish price action in select blue-chip stocks such as $IBM, more explosive, high-momentum moves have been coming from various commodity-based ETFs (which have a low correlation to the direction of the overall stock market).

Today, I share with you the technical setup of one of the best looking ETF trade setups out there right now, so read on for all the details…

Corn Is Popping!

Designed to follow the price of continuous corn futures contracts, the Corn ETF ($CORN) broke out from a short-term consolidation on heavy volume yesterday (March 31), after a three-week consolidation.

Note the drop off in volume during the base of consolidation, which was bullish:


The “undercut” of the 20-day exponential moving average that occurred on the morning of March 31 was followed by a breakout above the high of the recent range (from shakeout to breakout in a few hours).

Confirming the massive intraday reversal and breakout was a huge volume spike (nearly 400% it average daily volume).

Whenever volume suddenly surges so massively as a stock/ETF breaks out above a tight range, it is the undeniable footprint of institutional buying activity, which acts as a gas pedal to propel the stock/ETF higher in the near to intermediate-term.

Corn Confirmation On Weekly

Since a key part of our technical  analysis is always looking for confirmation on multiple time frames, let’s zoom out to look at the longer-term weekly chart of $CORN:


On the weekly chart above, notice the tight price action near resistance of the 40-week moving average (similar to 200-day moving average) over the preceding four weeks.

When the price of $CORN broke out yesterday, it pushed above the highs of that 4-week range. It’s also quite bullish that yesterday’s volume alone nearly equaled turnover the entire previous week.

With such strong volume confirming a clean weekly breakout and trend reversal, bullish momentum is likely to carry $CORN substantially higher over the next several weeks.

As such, we have added $CORN as a potential buy entry in our ETF portfolio.

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

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