Big Accumulation Day For The Market (TBT, SPY, DIA, IWM, DIG)

Stocks surged higher on Tuesday on fast trade. The small-cap Russell 2000 (NYSEArca:IWM) was the day’s big winner, as it tacked on 2.1%. However, the small-cap index is the only index that has yet to set a new 52 week high in the past five sessions. The S&P MidCap 400 followed the lead of the Nasdaq, DJIA (NYSEArca:DIA) and S&P 500 (NYSEArca:SPY) as it set a new 52 week high yesterday and posted an impressive 2.0% gain. The Nasdaq added 1.9% while the DJIA and S&P 500 rose 18.% and 1.7% respectively. Of the 104 sectors that we monitor, gold miners and drug retailers were the only two that closed lower on the day. The impressive broad based rally was led by banks and real estate. Seventy eight sectors closed higher by one percent or more.

Tuesday’s rally was quite bullish as it occurred on a massive spike in volume. Trade on the Nasdaq increased by 26.4% and on the NYSE by 39.7%. Advancing volume overpowered declining volume by a factor of 9.6 to 1 on the NYSE and 5.1 to 1 on the Nasdaq. Yesterday was a definitive accumulation day for the broad market and a good day on Wall Street.

Since September of 2011, the ProShares UltraShort 20+ Year Treasury (NYSEArca:TBT) has found support at, and has been consolidating in a tight trading range between $17.80 and $19.90. Yesterday, on a burst of volume, TBT closed above the $19.90 mark for the first time since December of last year. If TBT can clear the December 1, 2011 high of $20.15, it could present a buying opportunity. We are monitoring this setup closely for a potential long entry.

The ProShares Ultra Oil and Gas ETF (NYSEArca:DIG) formed a reversal candle on an increase in volume yesterday. At the open, DIG sold off and tested Monday’s low before reversing to close near the session high. A rally above yesterday’s high of $51.24 could provide a buying opportunity in DIG. We are placing DIG on the watchlist. Trade details are posted in the newsletter.

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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