Watching The Frontier ETF (FM) For A Potential Buy Entry

sellbuyMorpheus Trading: The Nasdaq Composite rallied 1.0% higher on a pick up in volume, producing a follow-through like day and generating a buy signal in our timing model. The follow through day comes on day 5 of the rally off the lows, which is also a good sign (within 4 to 10 days of a swing low is ideal).

Although our timing model now shifts from neutral to buy, our thought process does not change much, as we were already prepared to buy stocks this week and posted 8 buy setups in last night’s report.

From here on out, we’ll be looking for new setups to emerge to confirm the recent buy signal, and for the to avoid distribution within the next few days.

We have one new buy setup on the ETF watchlist tonight in iShares MSCI Frontier 100 ETF (NYSEARCA:FM), which has 55% of its exposure to top equities from Kuwait, Nigeria, Qatar, and UAE.

After an ugly undercut of a prior swing low in late June, $FM has recovered nicely and formed a tight trading range above the 50-day MA, with momentum starting to build (the 20-day EMA crossed above the 50ma).

Note the dry up in volume, especially over the past few weeks which is bullish.

$FM downtrend line break

First Trust DJ Internet Index ($FDN) is also on the list, but has been changed from a buy limit order to a buy stop due to Wednesday’s downtrend line breakout on a pick up in volume.

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