Look For A Low Risk Buying Opportunity In This ETF (XBI, XHB)

After two days of strong buying, stocks took a break on Monday, as they closed modestly lower on light trade. All of the major indices ended the session approximately in the bottom third of their respective ranges. However, the intraday ranges were fairly tight, which is a good sign for market bulls. The small-cap Russell 2000 led the move lower, as it posted a 0.6% loss on the day. The Nasdaq dropped 0.4% while the S&P MidCap 400 ended the day down by 0.3%. Blue chip stocks performed slightly better on the day. By the closing bell the S&P 500 posted a small 0.1% decline while the Dow Jones Industrial Average ended the session fractionally lower.

Internals ended the session mixed. Volume fell significantly across the board. On the Nasdaq, turnover slid 29.0% and on the NYSE it fell 26.5%. On the NYSE advancing volume ended at par with declining volume. However, on the Nasdaq, declining volume held the upper hand by a factor of 2.1 to 1. Monday was a neutral day with respect to market internals. The light volume move lower suggests that institutions were on the sidelines yesterday.

The SPDR S&P Biotech (NYSEARCA:XBI) has been consolidating in a tight range at the highs the past few weeks. XBI could pull back in to support this week and present us with a low risk entry point if it holds support of the 20-day EMA.

open position summary

On the weekly chart below, the SPDR S&P Homebuilders (NYSEARCA:XHB) has formed a 14-week consolidation just below the 52-week high. There are two potential entry points. One is on a breakout above $22.00 and the other is on a pullback to the 21.20 – 21.30 area (the 20-day EMA on the daily chart).

open position summary

The commentary above is an excerpt from The Wagner Daily swing trader newsletter. Subscribers to the full version receive our exact entry and exit prices for short-term trades of our best ETF and stock ETF picks, access to our market timing system, and more. To get started today, sign up for your 30-day risk-free subscription to The Wagner Daily newsletter at Morpheus Trading Group. To learn more about our proven trading strategy, please visit and bookmark our stock trading blog.

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