Stocks followed up the previous day's breakout with a session of extremely tight, sideways trading that ended with mixed results. The Nasdaq Composite ticked 0.3% higher, but the Dow Jones Industrial Average slipped 0.1%. Contained within a rather narrow trading range of less than five points, the S&P 500 was unchanged. The small-cap Russell 2000 and S&P Midcap 400 indices registered matching gains of 0.2%. Most of the major indices closed near the middle of their intraday trading ranges, which was rather irrelevant considering stocks barely moved all day.

Adding to yesterday's uneventful session was lower turnover in both exchanges. Total volume in the NYSE receded 14%, while volume in the Nasdaq was 7% lighter than the previous day's level. Trading in both the NYSE and Nasdaq was below 50-day average levels. Although the Nasdaq managed a small gain, advancing volume in the exchange exceeded declining volume by a margin of only 3 to 2. Nevertheless, the adv/dec volume ratio in the NYSE was fractionally positive, despite the flat close in the S&P.

As we've been seeing a bit of sector rotation back into commodities lately, the pattern in Market Vectors Gold Miners (GDX) may be setting up for a nice swing trade entry. Last week, GDX broke out above a three-month downtrend line, as well as its 50-day MA. Now, it is consolidating in a narrow, four-day range. We like GDX for buy entry above that four-day high, with a short to intermediate-term time horizon. This is annotated on the daily chart of GDX below:



Although it appears to be stabilizing above its 50-day MA, SPDR Gold Trust (GLD), which tracks the price of the actual spot gold commodity, has been choppy. Instead, we prefer the setup in GDX, whose portfolio is comprised of a basket of individual gold mining stocks. Spot gold and individual gold stocks sometimes trade with a close correlation to each other, but this is not always the case. Regular subscribers should note our detailed trigger, stop, and target prices for the GDX setup on Today's Watchlist below.

Two weeks ago, we said it appeared the intermediate-term correction in the various emerging markets ETFs was nearing completion, as many of them were forming bottoming patterns. Anticipating institutional sector rotation back into the emerging markets, we subsequently bought iShares China Xinhua 25 (FXI) on February 26, as it broke out above its 20-day exponential moving average and a six-week downtrend line. Since then, FXI has been trending higher, and is presently showing a substantial unrealized gain. But let's take an updated look at the recent performances of two additional emerging markets ETFs, each of which could be considered for investors and traders looking for additional exposure in the emerging markets arena.

One of the smoothest-trending emerging markets ETFs over the past two weeks has been iPath India Index (INP; technically an exchange traded note [ETN], but trades like an ETF). While many emerging markets ETFs are just now moving back above their 50-day moving averages, INP surged right through its 50-day MA last week, and is now only 4% below its 52-week high from January of 2010. INP is probably too extended over the past few days to buy at its current price, but one can look for the formation of a "bull flag" pattern, or even a pullback to new support of its 50-day MA. Either could present a secondary buy entry over the next week or so. The setup is shown on the daily chart of INP below:



Consolidating in a tight range, just above its 50-day MA, iShares Brazil Index (EWZ) may soon break out above resistance of a three-month downtrend line. If it does, bullish momentum could send it sharply higher in the near-term. Below is the daily chart of EWZ:



Unlike INP, in which we're waiting for a pullback or some sort of short-term price consolidation, EWZ could be bought about 50 cents above yesterday's high of $72.56. However, because resistance of the three-month downtrend line is in the same vicinity, consider a very tight stop on the initial day of entry, perhaps around 50 - 75 cents below the entry. This will prevent getting stuck in a quick "stop run" that leads to a failed breakout. However, if EWZ triggers and closes strong, it makes sense to use a wider stop the following day, below the 50-day MA. AS with all technical setups, be sure not to "jump the gun" with a premature buy entry ahead of the actual breakout trigger price.

Open ETF positions:

Long - FXI, KCE, IYW
Short (including inversely correlated "short ETFs") - (none)

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.