Russell 2000 Index Close To A Breakout (IWM, SPY, UWM, DIA, INDEXRUSSELL:RUT)

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March 16, 2012 10:09am NYSE:IWM NYSE:UWM

Stocks set new highs on Thursday but trade was mixed. As of yesterday, the small-cap Russell 2000 (NYSE:IWM) was still the only major index that had not set a fresh 52-week high. Still, the Russell (INDEXRUSSELL:RUT) led yesterday’s advance as it posted a 1.0% gain. The S&P MidCap 400 tacked on


0.9%, while the S&P 500 (NYSE:SPY), Nasdaq and DJIA (NYSE:DIA) saw improvements of 0.6%, 0.5% and 0.4% respectively. Transportation, coal, financials and homebuilders were the big winners yesterday, while gold miners and computer hardware exhibited the most relative weakness.

For a second consecutive day, market internals were mixed. Volume was higher on the Nasdaq by a modest 1.0% but fell on the NYSE by 3.2%. Advancing volume topped declining volume by a factor of 3.5 to 1 on the NYSE and a by 1.9 to 1 on the Nasdaq. Based on the higher volume and the higher advancing volume, the Nasdaq earned an accumulation day yesterday.

The only major index that has not seen a new 52-week high in this recent rally is the small-cap Russell 2000. However the Russell has been consolidating for the past three sessions just below key resistance. Further, the Russell has begun to show signs of relative strength. Consequently, we are looking at a potential buy entry in the ProShares Ultra Russell 2000 ETF (NYSE:UWM). A volume fueled move above $44.00 in UWM could present a buying opportunity. We are placing UWM on the watchlist. Trade details are available to our members in the watchlist segment of the newsletter.

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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