Potential breakout entry in Physical Silver Trust (PSLV) – The Wagner Daily
The Wagner Daily – April 8, 2011
Concise technical analysis and picks of the leading global ETFs
Commentary:
Thursday’s action brought stocks modestly lower on mixed trade. At the closing bell both the S&P MidCap 400 and the small-cap Russell 2000 were down by 0.6%. The Down Jones Industrial Average, S&P 500 and the Nasdaq all shed 0.1% for the session. Stocks began the session on firm ground but a 7.1 magnitude aftershock in Tokyo appeared to spur a wave of selling and stocks spent the remainder of the day in recovery mode.
Market internals ended the day mixed. Volume on the Nasdaq fell by 10.60% but increased by 2.5% on the NYSE. Declining volume slightly outpaced advancing volume by 1.3 to 1 on the NYSE and 1.7 to 1 on the Nasdaq. The lack of volume on the Nasdaq suggests that institutions were not significantly involved in yesterday’s selling. The divergence in volume between the two indices further suggests the absence to broad based participation in the sell-off.
Since hitting resistance following its last breakout move on March 18th, the Sprott Physical Silver Trust (PSLV) has been consolidation in an up-trending wedge like pattern. A move above $18.00 could provide a buy entry for this ETF.
The PowerShares Water Resources Portfolio ETF (PHO) has been demonstrating market leadership for several months and is now pulling back toward support of the 20-day EMA. An undercut of the 20-day EMA followed by several days to weeks of consolidation may provide the ideal setup for a long entry in PHO. We will be tracking the price action in PHO for a possible buy entry.
The market has remained resilient over the past several weeks. Thursday appeared to bring another day of consolidation to the market. As we explained in yesterday’s newsletter, the longer the major indices consolidate near the highs, the more likely it becomes that stocks will move higher.
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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