Stocks traded mixed on Thursday as trade waned. For the eleventh consecutive day, both the S&P 500 (NYSEArca:SPY) and the DJIA (NYSEArca:DIA) have consolidated in a tight range, as the Nasdaq (NASDAQ:QQQ), Russell 2000 (NYSEArca:IWM) and the S&P MidCap 400 have set fresh highs. The market has thus far, been reluctant to pull back. Both the small-cap Russell 2000 and the Nasdaq tacked on modest 0.4% gains. The S&P 500 and the S&P MidCap 400 added 0.1% while the DJIA finished lower by a slim 0.1%. The strongest sectors on the session were precious metals, real estate, biotechnology, software and emerging markets. The day’s laggards included defense, oil, transportation and pharmaceuticals.
The session ended with mixed internals. Volume fell by 10% across the board. Advancing volume was higher than declining volume on the Nasdaq by a ratio of 2 to 1 and on the NYSE by a ratio of 1.4 to 1. The market chopped for most of the day and in the absence of volume, we have to conclude that institutions were firmly on the sidelines today.
Although (NYSEArca:IYZ) has been lagging some of our other trades, recently it has begun to show signs of relative strength. If IYZ puts in an inside day on Friday, it could very well break above resistance next week. It would be ideal if IYZ could form a bullish, mini-cup and handle pattern, as the cup is already in place. It’s also not out of the realm of possibility that IYZ could gap up to complete its move.
Yesterday in the chat room we discussed the Market Vectors Pharmaceutical ETF (NYSEArca:PPH) as a possible long entry candidate. Besides being one of the leadership sectors in this rally, PPH has now been consolidating in a very tight range for the past five weeks. A move above Wednesday’s high of $73.94 could present a buy entry trigger for PPH. We are placing PPH on the watchlist. Trade details are available to our subscribing members in the watchlist segment of the newsletter.
All of our long positions stayed in consolidation mode yesterday and they all seem likely to find new higher ground. We like the way all four of the positions are behaving and may consider adding to the positions on a case by case basis. The broad market continues to show resiliency as every pullback continues to find a bid. The longer we consolidate at the current levels, the more likely we are to head higher.
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]