Which Way From Here – (VNQ)(IWF)- The Wagner Daily
The Wagner Daily – November 7, 2011
Concise technical analysis and picks of the leading global ETFs
Commentary:
After a poor start, stocks closed well off session lows but trade was light. Four of the five major indices ended the day modestly lower but the S&P MidCap 400 managed to eke out a 0.1% gain. The small-cap Russell 2000 closed down by 0.7% while the S&P 500 dropped 0.6%. The Dow Jones Industrial Average and the Nasdaq fell 0.5% and 0.4% respectively. The market closed slightly down for the week.
Internals were mixed on Friday. Volume finished lower on the Nasdaq by 8.3% and on the NYSE by 18.7%. However, declining volume outpaced advancing volume by 1.8 to 1 on the NYSE and 1.2 to 1 on the Nasdaq. The light volume suggests that institutions were not actively participating in the day’s action.
For the past four sessions the Vanguard REIT ETF (VNQ) has been consolidating in a two point trading range just below its 200-day MA. A volume fueled rally above the two day high of $58.29 could offer a buying opportunity in VNQ.
Since a failed breakout attempt above the 200-day MA on October 27th, the iShares Russell 1000 Growth Index ETF (IWF) has been consolidating between its 20-day EMA and 200-day moving average. A thrust above the two day high of $58.94 could provide a buy entry trigger for IWF. We are monitoring this ETF closely for a possible buy entry.
The market closed slightly lower on the week but this type of price action could be expected given the big run up that has occurred since the August 4th reversal. More and more stocks seem to be emerging as potential breakout candidates. The more the market consolidates at the current levels, the more likely the next significant move will be 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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