No Silver Lining For The Silver ETF (SLV, THD, SPY, IWM)

Friday brought a modest recovery to the market but on light trade. All major indices ended the session higher with higher beta issues leading the way. Both the small-cap Russell 2000 (NYSE:IWM) and the S&P MidCap 400 rallied 1.3% while the Nasdaq (NASDAQ:QQQ) climbed by 1.1% The S&P 500 (NYSE:SPY) tacked on 0.6% and the Dow Jones Industrial Average (NYSE:DIA) Underperformed as it rose by only 0.3%.

Market internals ended the session mixed. Volume was down sharply across the board. Turnover plunged by 32.3% on the Nasdaq and by 28.2% on the NYSE. However, advancing volume topped declining volume by 2.0 to 1 on the NYSE and 3.7 to 1 on the Nasdaq. Because of the light volume, Friday’s price action appears to be little more than a bounce in the wake of Thursday’s viscous distribution.

Over the past two sessions the iShares Silver Trust ETF (NYSE:SLV) has gapped down dramatically and sliced through support of all of its moving averages and its one year uptrend line. SLV has now set a lower high and a lower low which officially makes it a trend reversal candidate. A rally back into the 200-day moving average could present shorting opportunity in this ETF.

The iShares MSCI Thailand Investable Market Index ETF (NYSE:THD) has recently broken its long term uptrend line as it lost support of all key moving averages. THD is now testing support of its February 10th swing low. A bounce off of this level back into resistance near the 20-day EMA could provide a shorting opportunity in THD. We are monitoring THD closely for a potential short entry.

The market consolidated near the two day low on Friday as all of the major indices moved sideways along their respective 20-day and 50-day moving averages. This type of price action following a big move often results in a continuation of the prevailing trend.

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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