Following through on the previous day's breakout, stocks bagged another round of solid gains yesterday. The main stock market indexes edged higher in the morning, then saw more significant buying interest into the close. The Nasdaq Composite rose 1.1%, the S&P 500 0.9%, and the Dow Jones Industrial Average 0.5%. The small-cap Russell 2000 and S&P Midcap 400 indices advanced 1.2% and 1.3% respectively. For the second day in a row, the major indices finished at their intraday highs.

Unfortunately for the bulls, yesterday's gains lacked the punch of institutional accumulation. Total volume in the NYSE receded 18%, while volume in the Nasdaq limped in 20% lighter than the previous day's level. In both exchanges, turnover also slipped back below 50-day average levels. With the markets closed for the Labor Day holiday on Monday, today's session could be even quieter.

Yesterday, PowerShares Agriculture Fund (DBA) gapped up to break out above its short-term downtrend line. As such, a resumption its solid, intermediate-term uptrend is now under way. As one of the few ETFs to show relative strength by consolidating near its highs in August, we anticipate further upside in the near-term. The daily chart of DBA is shown below:



For the contrarians out there, or those who may be looking to hedge the exposure of any long positions, one ETF to consider buying is iPath S&P 500 VIX Mid-Term (VXZ). Yesterday, VXZ "undercut" support of its 50-day moving average, which had also converged with the 20-day exponential moving average. As such, a rally back above yesterday's high would be a valid buy entry, although the ETF is unlikely to move very far if the market remains in rally mode. Still, it's a decent hedge against long exposure, without directly placing new bets on the short side of the market. The setup is shown on the daily chart of VXZ below:



With today's session preceding a three-day, holiday weekend, we don't expect a lot of action in the market today. Your best bet may be to simply set your stops and walk away, rather than aggressively looking for new plays on what is likely to be a light volume, minimal momentum session. Next week, we'll see if this week's rally has any legs, and will be on top of new ETFs to consider buying if it does.

NOTE: On Monday, September 6, the U.S. markets are closed for the Labor Day holiday. As such, The Wagner Daily will not be published that day. Regular publication will resume on Tuesday, September 7. Enjoy the long weekend.

Open ETF positions:

Long - TUR, DBA, UUP
Short (including inversely correlated "short ETFs") - SSG, EPV

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.