Continuing to pull back from their recent highs, the major indices sustained a significant round of losses yesterday, but turnover continued to decline. Stocks gapped lower on the open, then drifted sideways to lower throughout the remainder of the day. The Nasdaq Composite shed 2.8%, the S&P 500 2.4%, and the Dow Jones Industrial Average 2.3%. The small-cap Russell 2000 and S&P Midcap 400 indices lost 3.5% and 3.3% respectively. Opposite of Monday's losing session, this time the main stock market indexes closed near their intraday lows.

One encouraging aspect of yesterday's action was that volume continued to recede. Total volume in the NYSE was 3% lighter than the previous day's level, while volume in the Nasdaq ticked 7% lower. Yesterday was the third straight day of declining volume, two of which were "down" days. This tells us the bulls have been taking a rest, but the bears have not shown an interest in reclaiming control. Nevertheless, market internals worsened. In both the NYSE and Nasdaq, declining volume exceeded advancing volume by a margin of just over 5 to 1.

Yesterday, we illustrated that SPDR Gold Trust (GLD) had sold off to fall below a key level of horizontal price support, but closed at even more important support of its 200-day moving average. Following a similar pattern as gold, iShares Silver Trust (SLV) has also sold off over the past several weeks. But even as gold and silver have been dropping, E-Tracs Platinum (PTM) is one precious metal ETF bucking the trend. Take a look:



The pink rectangle on the chart above marks the short-term base of consolidation PTM has been forming in recent weeks. As it has been trading sideways, the 20-day exponential moving average (the beige line) has been rising up to meet the price of PTM. The 50-day MA (the teal line) has cleanly been trending higher, well below the 20-day EMA. As a potential buy setup, PTM can be bought on a breakout above the March 19 high of $14.38. However, note that the 200-day MA (presently at $14.71) may provide resistance. Still, even if the breakout above consolidation has trouble following through because of the 200-day MA, one can simply scratch or close the trade for a small gain.

So far, there's been no indication the broad market's rally off the March lows, a substantial, counter-trend bounce within a long-term bear market, is finished. Despite the losses of the past two days, the major indices remain in short and intermediate-term uptrends. All the main stock market indexes are still above their 20-day exponential moving averages, which have crossed up through the 50-day moving averages (a bullish intermediate-term signal). Nevertheless, now is probably not the most ideal time to enter new positions. In case you missed yesterday's closing commentary, it bears repeating. . .

"There are two reasons it may be a good idea to lay low throughout the rest of the week, focusing on managing existing positions, rather than entering new ones. First, quarterly corporate earnings season officially kicks off today...There's been a lot of speculation over the past several months as to how the next corporate earnings period would fare, but pure speculation is all it's been. As such, it's likely the stock market will be rather jittery and indecisive as investors and traders await and subsequently digest earnings reports from key, market-moving companies. Second, the market is closed for Good Friday holiday on April 10. As is the case with all three-day weekends, volume will probably be lighter than average ahead of the holiday. Light volume mixed with possible earnings jitters is a perfect recipe for whippy market action, the kind that will churn your trading account if you're not careful. To compensate, you might consider keeping your stops wide enough to provide your positions with substantial "wiggle room" for the rest of the week."

Open ETF positions:

Long - HHH, TAN, ERX, USO, UGA, UDN, SLV
Short - (none)

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and Morpheus Trading Group, a trader education firm launched in 2001 that provides daily technical analysis of the leading ETFs and stocks. For a free trial to the full version of The Wagner Daily or to learn about Wagner's other services, visit MorpheusTrading.com or send an e-mail to deron@morpheustrading.com.