Bullish reversal candle in energy ETF (XES) – The Wagner Daily
The Wagner Daily – April 28, 2011
Concise technical analysis and picks of the leading global ETFs
Commentary:
For the fifth time in six days stocks forged higher. The major indices all closed in positive territory with biotechs and precious metals leading the move. Both the Dow Jones Industrial Average and the Nasdaq tacked on solid gains of 0.8%. The small-cap Russell 2000 added 0.7% while both the S&P MidCap 400 and S&P 500 improved by 0.6%.
Market internals continue to remain sound. Volume moved higher across the board. Turnover was fractionally higher on the Nasdaq, but improved by almost 5% on the NYSE. For a second consecutive day advancing volume outpaced declining volume. By the closing bell the advancing volume to declining volume ratio was 2.2 to 1 on the Big Board and 1.7 to 1 on the Nasdaq. Although internals were not spectacular they were solid and continue to corroborate the presence of institutional buying.
The SPDR S&P Oil & Gas Equipment ETF (XES) formed a bullish reversal candle yesterday as it sold off sharply in the first hour of the session, undercut the four day low but rebounded to close in the top quarter of the trading range. The importance of this price action is that it serves to sweep most stops, shake out the weak hands and encourage shorting activity. A volume fueled move above yesterday’s high of $43.86 could provide a buy trigger for XES. We are placing XES on the watchlist. Trade details can be found in the watchlist segment of the newsletter.
The US Commodity Index ETF (USCI) also formed a bullish reversal candle by undercutting the four day low and filling the gap formed from the April 20th gap up. A move above yesterday’s high of $72.06 should present a long entry for this ETF. We are placing USCI on the watchlist. As always, trade details are available for our clients in the watchlist section of the newsletter.
With yesterday’s performance all indices but the Russell 2000, have clearly established new 52 week highs. Now that the Nasdaq, DJIA and S&P 500 have all found higher ground the odds favor the market moving solidly higher from current levels.
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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