The Guggenheim Shipping ETF (SEA) Ready To Move Significantly Higher

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December 30, 2013 1:52pm NYSE:SEA

sellbuyMorpheus Trading: On December 20, we purchased Guggenheim Shipping ETF (NYSEARCA:SEA) at $20.39 on a base breakout. On the chart below, note the big volume over the past two weeks:


$SEA big volume breakout

The strong volume confirms the recent breakout and signals that $SEA may be ready to move significantly higher through the first six months of the new year.

Along with $SEA, Nikkei 225 Index ETF ($NKY), PowerShares Golden Dragon China ($PGJ), and Global X FTSE Greece 20 ETF ($GREK) have formed bullish chart patterns. We recently bought $PGJ in the ETF portfolio on a downtrend line breakout above the 50-day moving average.

After a four-month rally off the lows, Market Vectors Coal ETF ($KOL) stalled at resistance of its declining 40-week moving average. After a few weeks of chop, $KOL also broke the uptrend line of the rally and closed below the 10 and 40-week moving averages.

The 10-week moving average of $KOL has also lost momentum, as it is beginning to turn down after going sideways for a few weeks:

$KOL BREAKDOWN

$KOL has been in an ugly downtrend since August of 2011, and has been unable to climb back above the 10-month moving average, which is much like the 200-day moving average on a daily chart. A breakdown below low of the current base could lead to a test of the 2009 low around $12:

$KOL monthly breakdown

A bounce into the declining 10 and 40-week moving averages on the weekly chart could make for a low-risk entry point on the short side (for those interested). However, with our market timing model on a clear buy signal, we are not looking to initiate short positions at this time.

This article is brought to you courtesy of Morpheus Trading, LLC.


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