Markets: Just A Few More Days (EUM, QQQ, IWM, SPY, DIA)

Stocks ended the session mixed Tuesday after surrendering early gains. The tech-rich Nasdaq (NASDAQ:QQQ) slid 0.5% after trading in positive territory early in the session. The small-cap Russell 2000 (NYSEARCA:IWM) also had issues finding a bid, as it fell 0.3% on the day. The Dow Jones Industrial Average (NYSEARCA:DIA), S&P 500 (NYSEARCA:SPY) and S&P MidCap 400 tacked on small gains of 0.3% 0.2% and 0.1% respectively.

Market internals also ended the session mixed. Volume was fractionally higher on the Nasdaq but fell just over 4.0% on the NYSE. Declining volume edged out advancing volume on both exchanges. By the closing bell the ratio of declining volume to advancing volume stood at 1.1 to 1 on the NYSE and 1.3 to 1 on the Nasdaq. Market internals were unimpressive and point to a lack of institutional participation in the day’s action.

Yesterday, via intraday alert, we provided an alternative short entry trigger for QQQ. The initial trade details for QQQ provided in yesterday’s newsletter remain valid. However, we have added an alternative short entry setup for QQQ in the event the market is unable to rally above current levels. Whichever setup triggers first is the valid setup. Both sets of trade details are available to our clients in the watchlist segment of the newsletter.

Since breaking above its 50-day MA on November 21st, the ProShares Short MSCI Emerging Markets ETF (NYSEARCA:EUM) has pulled back into support of this key moving average. Yesterday, EUM formed a distinct reversal candle as it undercut its 50-day MA but reversed to close above this key mark near session highs. A move above the two day high of $34.60 could present a buying opportunity in this inverse ETF. We are placing EUM on the watchlist. Trade details are available to our subscribers in the watchlist segment of the newsletter.

New trade setups are slowly beginning to emerge as the market has bounced and stabilized over the past two sessions. If the market is able to hold up and rally for another day or two, then many new trading opportunities should begin to emerge.

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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