Morpheus Trading: As recently discussed in my March 26 blog post, banks, mutual funds, hedge funds, and other institutional funds have been rotating out of the NASDAQ and into the S&P 500 and Dow Jones in recent weeks.
Although this has been leading to moderately bullish price action in select blue-chip stocks such as $IBM, more explosive, high-momentum moves have been coming from various commodity-based ETFs (which have a low correlation to the direction of the overall stock market).
Today, I share with you the technical setup of one of the best looking ETF trade setups out there right now, so read on for all the details…
Corn Is Popping!
Designed to follow the price of continuous corn futures contracts, the Corn ETF ($CORN) broke out from a short-term consolidation on heavy volume yesterday (March 31), after a three-week consolidation.
Note the drop off in volume during the base of consolidation, which was bullish:
The “undercut” of the 20-day exponential moving average that occurred on the morning of March 31 was followed by a breakout above the high of the recent range (from shakeout to breakout in a few hours).
Confirming the massive intraday reversal and breakout was a huge volume spike (nearly 400% it average daily volume).
Whenever volume suddenly surges so massively as a stock/ETF breaks out above a tight range, it is the undeniable footprint of institutional buying activity, which acts as a gas pedal to propel the stock/ETF higher in the near to intermediate-term.