Friday marked the eighth consecutive session of whipsaw trading, with the Dow and the S&P 500 continuing to lag the other major indices. Still, all five indices lost ground on the day. The Dow Jones Industrial Average led the selling as it fell 0.9%, while the S&P 500 shed 0.8% in yesterday's action. Both the S&P MidCap 400 and the small-cap Russell 2000 lost 0.5%, while the Nasdaq dropped 0.3% on the session. For the week the Nasdaq rose by 0.7%, while the Dow and the S&P 500 shed 1% and 0.9% respectively.

As would be expected for a holiday shortened session, turnover was down substantially. On the NYSE volume was off by 44%, while Nasdaq volume was down by 43% day over day. Given the light trading volume, little can be gleaned from the advancing volume to declining volume ratio. On the day, declining volume outpaced advancing volume on the NYSE by a factor of 5 to 1. The ratio on the Nasdaq was 1.7 to 1 in favor of declining turnover.

After a huge volume gap-up on November 4, the PowerShares Water Resources Portfolio ETF (PHO), has been consolidating just below the 52-week highs for the past four weeks. Further, PHO formed another support base from October 13 until the November breakout. A volume assisted rally above the November 9 high of $18.15 will likely propel this ETF to a new one year high. As such, we are placing PHO on our watchlist. For our subscribing members, the trade details are posted in the watchlist segment of the newsletter.




The ProShares Ultrashort MSCI Brazil ETF (BZQ), is exhibiting signs of trend reversal. On a big spike in volume on November 4, BZQ gapped down and set a new low. However, the new low just undercut the previous low set on October 13. Within three days, BZQ rallied sharply. On November 16 this ETF saw a major increase in volume and gapped above the 50-day MA. It has traded above this mark ever since. Further, BZQ has been consolidating above the downtrend line that began forming on May 25. A rally back above the November 23 high of $18.04 would present a potential buying opportunity for BZQ. We are placing BZQ on the watchlist. Trade details are posted below.




We are still wary of becoming overly aggressive given the current choppiness in the market. As we stated on Friday, "the Dow and the S&P 500 most likely hold the key to the next significant move in the market". We will be monitoring both indices closely.

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.