Wagner Daily: A Closer Look At These ETFs (FRN, EWD, EWX)

Tuesday marked the fourth consecutive session of predominantly range bound trading. Still, stocks ended the day slightly higher after recovering from early session selling. The rebound occurred late in the day and carried all but the Dow to higher ground. The small-cap Russell 2000 and the S&P MidCap 400 led the recovery, as both tacked on 0.2% gains on the day. The Nasdaq closed higher by 0.1%, while the S&P 500 closed a fraction above breakeven. The Dow Jones Industrial Average slid only fractionally.

Volume was higher across the board yesterday. Turnover on the Nasdaq rose by 2.1%, while on the Big Board volume jumped an impressive 11.7%. Declining volume outpaced advancing volume on both indices. The ratio of declining volume over advancing volume was 1.7 to 1 on both the Nasdaq and the NYSE.

Yesterday we entered a short position in The Guggenheim Frontier Markets ETF (NYSE:FRN) as it fell below its three day trading range. FRN was not on the watchlist, but was discussed in a recent newsletter. The decision to enter the position was made intraday, and an email alert was sent to our subscribing members. Trade details can be found in the watchlist segment of today’s newsletter.

The iShares MSCI Sweden Index ETF (NYSE:EWD) has been consolidating at its 52-week high for the past three weeks. A heavy volume rally above yesterday’s high of $32.02 may provide a buying opportunity for this ETF.

The SPDR S&P Emerging Markets Small Cap ETF (NYSE:EWX) has tested support near $55.00 three times since October. A move below yesterday’s low of $54.70 may provide a shorting opportunity for this ETF. We are closely monitoring this setup for a possible entry.

Market leadership has shown some signs of stabilizing, but our nightly scans continue to provide an equal distribution of both long and short setups.

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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