Making Some Buy & Sell Adjustments In Our Portfolio With These ETFs (TNA, IXN, DUST, EUO, SPY, DIA, IWM)

Stocks closed modestly higher on Thursday on mixed trade.  All five major indices ended up on the day.  The S&P MidCap 400 led the way, as it rose by 0.8%.  The Nasdaq (NASDAQ:QQQ) tacked on 0.7%, while the S&P 500 (NYSEARCA:SPY) finished up by 0.5%.  Both the DJIA (NYSEARCA:DIA) and the small-cap Russell 2000 (NYSEARCA:IWM) tacked on 0.4%.  Yesterday marked the ninth time in ten sessions that the Nasdaq has closed higher.  Sectors showing relative strength were retail, semiconductors, financials, emerging markets and networking.  Precious metals, oil, natural gas and utilities lagged on the day.

Internals were mixed.  Volume dipped on the Nasdaq by 1.0%, while on the NYSE it finished higher by 1.2%.  Advancing volume topped declining volume across the board.  The ration of up volume to down volume ended the day at 1.9 to 1 on the NYSE and at 1.7 to 1 on the Nasdaq.

Yesterday, via an intraday alert we entered a long position in the Direxion Daily Gold Miners Fund (NYSEARCA:DUST) as it rallied above the two day high ($38.50) on the highest volume it has seen in 13 sessions.  On January 17th, DUST formed a long reversal candle, as it undercut the 50-day MA and then rallied to close near session highs just below resistance of the 20-day EMA and the 200-day MA.  Then on January 18th, DUST formed an inside candle as it trade near the January 17th highs in a tight range.  Trade details are available to our members in the open positions segment of the newsletter.

The ProShares UltraShort EURO Fund (NYSEARCA:EUO) has been in an uptrend since early November and has exhibited relative strength to the broad market during this time.  Over the past three days, EUO has gapped down three consecutive times and is now just below support of its uptrend line and the 20-day EMA.  If EUO can stabilize and form a reversal candle at its current level, it could provide a long opportunity.  Ideally, we would like to see a reversal candle formed, followed by several days of sideways action.  We are monitoring EUO closely for a possible long entry.

We exited two trades yesterday to lock in profits.  We sold both (NYSEARCA:TNA) and (NYSEARCA:IXN) into strength.  Since the market has been up for quite a few days, we felt it was wise to lock in some solid gains. As mentioned, we purchased DUST and are currently up over 3.0% in this trade.   Although most of the major indices closed near session highs, there seemed to be some selling pressure that entered the market late in the day.  After hours, Google reported a miss of both revenues and earnings, sending the stock into a tailspin.  Google (NYSE:GOOG) was down almost $60.00 after the close.  We wouldn’t be surprised to see the Nasdaq fall under further pressure at the open.  A day or two of modest selling would actually be good for the market, as several of our momentum indicators are beginning to suggest the market may be overbought in the near term.


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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