Markets: Dow Jones Industrial Average Stars Abound (XLP, DVY, DUST, IWM, DIA, SPY, QQQ)

Stocks ended mostly down on Monday, but barely.  The S&P 500 (NYSEArca:SPY) was the day’s only winner, as it closed higher by a meager 0.1%.  For the second time in as many days, the S&P MidCap 400 closed flat.  Both the Nasdaq (NASDAQ:QQQ) and the Dow Jones Industrial Average (NYSEArca:DIA) slid 0.1%, while the small-cap Russell 2000 (NYSEArca:IWM) was the weakest performer on Monday, as it shed 0.2%.  The market was listless yesterday.

Internals were mixed yesterday.  Volume slid on the Nasdaq by 14% and on the NYSE by 19.8%.  On the NYSE plus volume outpaced minus volume by a ratio of 1.3 to 1, while on the Nasdaq declining volume topped advancing volume by 1.2 to 1.  For a second straight day, market internals have provided no guidance with respect to the day’s price action.  The light volume suggests that institutions “took a breather” from the market.

The S&P Select Consumer Staples ETF (NYSEArca:XLP) has been consolidating along its 20-day EMA since pulling back on January 13th.  Over the past four sessions this ETF has formed four reversal candles, as it has consistently held support at the 20-day EMA.  A move above the January 19th high of $32.46 could present a buying opportunity in XLP.  We are placing XLP on the watchlist.  Trade details are available in the watchlist segment of the newsletter.

Since its breakout move last December, the iShares Dow Jones Dividend Index (NYSEArca:DVY) has pulled back and has been setting a sequence of higher lows along its 20-day EMA.  This is quite bullish price action.  A volume fueled move above the January 17th high of $54.54 should provide the impetus for a move higher in DVY.  DVY is also being added to the watchlist.  Trade details are available to our subscribers in the watchlist portion of the newsletter.

Yesterday we exited our long position in (NYSEArca:DUST), well ahead of its stop, for a small loss.  Please note that we have raised the stops in the remainder of our open positions.  See the open positions section of the newsletter for specifics.  The Nasdaq, S&P 500, S&P MidCap 400 and small-cap Russell 2000 all formed long legged doji candlesticks.  Doji stars are clear hesitation patterns, suggesting the market may be looking to pull back.  However, if we break the highs of these candlesticks, the market will likely catch a strong bid.

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

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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