Are We Headed Higher? (RWR, UCO, SPY, DIA, IWM, QQQ)

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December 12, 2011 11:11am NYSE:RWR NYSE:UCO

Stocks reclaimed most of Thursday’s losses on Friday, but on lackluster trade. The major indices all closed well in the black as the higher beta indices led the advance. The small-cap Russell 2000 (NYSEARCA:IWM), S&P MidCap 400 and the Nasdaq (NASDAQ:QQQ) tacked on solid gains of 3.1%, 2.3%


and 1.9% respectively. The S&P 500 (NYSEARCA:SPY) rose 1.7%, while the Dow Jones Industrial Average (NYSEARCA:DIA) managed a 1.6% advance.

Market internals ended the session mixed. Volume dropped across the board. Trade on the Nasdaq slid by 9.8%. On the NYSE, Volume fell by just over 13.0%. However, both exchanges advancing volume top declining volume by a wide margin. By the closing bell, the spread ratio stood at a positive 10.9 to 1 on the NYSE and a plus 7.6 to 1 on the Nasdaq. Despite the positive price action, Friday’s light volume suggests institutions were on the sidelines.

After undercutting and closing below support of the 20-day EMA on Thursday, the ProShares Ultra Dow Jones-AIG Crude Oil ETF (NYSEARCA:UCO) reversed and closed higher on Friday, on an increase in volume. UCO is now poised for a potential move higher. A move above the December 8th high of $42.40 could provide a long entry trigger for this ETF. We are placing UCO on the watchlist. Trade details are available to our subscribers in the watchlist section of the newsletter.

Yesterday, on a massive spike in volume, the SPDR DJ Wilshire REIT ETF (NYSEARCA:RWR) gapped up and rallied for most of the day, to close near session highs. A move above yesterday’s high of $62.89 could provide a long opportunity in RWR. We are also placing RWR on the watchlist. Trade details can be found in the watchlist segment of the newsletter.

Yesterday brought solid price action but trade was light. However, many potential new leadership candidates broke out on Friday, which is encouraging. If we are to head higher however, then we need to see a spike in volume to confirm the positive price action. A bullish confirmation day on Monday would be ideal.


The commentary above is an abbreviated version of our daily ETF trading newsletter, The Wagner Daily. Subscribers to the full version receive specific ETF trade setups with detailed trigger, stop, and target prices, as well as daily updates on all open positions. Intraday Trade Alerts are also sent via e-mail and/or text message, on as-needed basis. For your free 1-month trial to the full version of The Wagner Daily, or to learn about our other services, please visit morpheustrading.com.

Deron Wagner is the Founder and Head Portfolio Manager of Morpheus Trading Group, a capital management and trader education firm launched in 2001. Wagner is the author of the best-selling book, Trading ETFs: Gaining An Edge With Technical Analysis (Bloomberg Press, August 2008), and also appears in the popular DVD video, Sector Trading Strategies (Marketplace Books, June 2002). He is also co-author of both The Long-Term Day Trader (Career Press, April 2000) and The After-Hours Trader (McGraw Hill, August 2000). Past television appearances include CNBC, ABC, and Yahoo! FinanceVision. Wagner is a frequent guest speaker at various trading and financial conferences around the world, and can be reached by sending e-mail to: [email protected]


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