Prepped For a Pullback? – (GDXJ) (TLT) – The Wagner Daily
The Wagner Daily – December 6, 2011
Concise technical analysis and picks of the leading global ETFs
Commentary:Commentary:
Equities closed higher on Monday on modestly higher trade. The market gapped up at the open and consolidated near session highs for most of the day. However, around 1:30 pm the market sold off sharply, before recovering into the close. Stocks did however finish well off the highs. All five major indices ended higher with the small-cap Russell 2000 leading the way. The high beta index ended the day up 1.6%. The S&P MidCap 400 tacked on 1.3%, while the Nadaq added a solid 1.1%. The S&P 500 closed 1.0% higher, while the Dow was the day’s laggard, as it posted a more modest 0.65% gain.
Market internals were moderately bullish on Monday. Volume closed up on the Nasdaq by 2.2% and on the NYSE by 2.4%. Advancing volume outpaced declining volume on both exchanges. By the closing bell the spread ratio stood at 6.1 to 1 on the NYSE and 3.0 to 1 on the Nasdaq in favor of advancing volume.
Yesterday, on a massive spike in volume, the Market Vectors Junior Gold Miner ETF (GDXJ) formed a reversal candle, as it overcut its 20 and 50 day moving averages and closed near the lows of the the day. Also notice the divergence between the Accumulation-Distribution Histogram and the price action in this ETF. A move below yesterday’s low of $29.40 may present a shorting opportunity in this ETF. We are placing GDXJ on the watchlist. Trade details are available to our subscribers in the watchlist section of the newsletter.
For the second time in as many days, the iShares 20yr+ Lehman Treasury Bond ETF (TLT) gapped down, but rallied to close near session highs. Further, this ETF is now poised to break above resistance of its 20-day EMA. A volume assisted move above yesterday’s high of $118.83 could provide a buying opportunity in this ETF. We are watching this setup closely for a potential entry.
EUO posted another accumulation day yesterday, as it recovered from an early morning gap down, to close in the black and near session highs. Despite the positive price action and positive internals yesterday, we are not inclined to classify the session as an accumulation day. Over the past several days the market appears to be churning. Each time it has attempted to move higher, the bid has dried up. It is also concerning that the dollar has been moving higher with the broad market.
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: deron@morpheustrading.com.
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