Short setup in (OIL) – The Wagner Daily
The Wagner Daily – July 11, 2011
Concise technical analysis and picks of the leading global ETFs
Commentary:
Stocks slid on Friday as volume contracted. For the first day in almost two weeks of trading all five major averages lost ground. However, the market did close well off session lows. After being down nearly 1.5% intraday, the Nasdaq recovered and ended the session lower by only 0.5%. The small-cap Russell 2000 and the Dow Jones Industrial Average also fell 0.5% while both the S&P MidCap 500 and the S&P 500 shed 0.7%.
Friday’s market internals portrayed a mixed bias. Volume declined across the board, as turnover eased 14% on the Nasdaq and 10% on the NYSE. This is positive because it indicates institutions such as mutual funds and hedge funds were not heavily selling into the decline. Nevertheless, the adv/dec volume ratios were firmly negative, indicating the bears still had control. In the NYSE, declining volume exceeded advancing volume by a ratio of nearly 5 to 1. The Nasdaq adv/dec volume ratio was negative by approximately 2 to 1.
Since losing support of its 200-day MA on June 15th, the iPath Goldman Sachs Crude Oil ETN (OIL) has found resistance at this former support level. A drop below yesterday’s low of $24.67 could provide a shorting opportunity in OIL.
The CurrencyShares Australian Dollar ETF (FXA) has been consolidating for the past six days just below the key resistance level of $107.91. Since mid May, FXA has tested this mark on three occasions. The next test of this level could very likely result in a breakout for this ETF. We are placing FXa on the watchlist. Trade details are available to our subscribers in the watchlist segment of the newsletter.
After spending eight consecutive days of rallying back near fifty two weeks highs, it was not surprising that the market was met with selling pressure on Friday. After such an impressive advance into resistance, we would expect the market to take a “rest” and anticipate further selling early this week.
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.
DISCLAIMER: There is a risk for substantial losses trading securities and commodities. This material is for information purposes only and should not be construed as an offer or solicitation of an offer to buy or sell any securities. Morpheus Trading, LLC (hereinafter “The Company”) is not a licensed broker, broker-dealer, market maker, investment banker, investment advisor, analyst or underwriter. This discussion contains forward-looking statements that involve risks and uncertainties. A stock’s actual results could differ materially from descriptions given. The companies discussed in this report have not approved any statements made by The Company. Please consult a broker or financial planner before purchasing or selling any securities discussed in The Wagner Daily (hereinafter “The Newsletter”). The Company has not been compensated by any of the companies listed herein, or by their affiliates, agents, officers or employees for the preparation and distribution of any materials in The Newsletter. The Company and/or its affiliates, officers, directors and employees may or may not buy, sell or have positions in the securities discussed in The Newsletter and may profit in the event the shares of the companies discussed in The Newsletter rise or fall in value. Past performance never guarantees future results.
Charts created by TradeStation (tradestation.com).
© 2002-2010 Morpheus Trading, LLC
Reproduction without permission is strictly prohibited.
