Tuesday marked the fourth consecutive session of predominantly range-bound trading. Still, stocks ended the day slightly higher after recovering from early session selling. The rebound occurred late in the day and carried all but the Dow to higher ground. The small-cap Russell 2000 and the S&P MidCap 400 led the recovery, as both tacked on 0.2% gains on the day. The Nasdaq closed higher by 0.1%, while the S&P 500 closed a fraction above breakeven. The Dow Jones Industrial Average slid only fractionally.

Volume was higher across the board yesterday. Turnover on the Nasdaq rose by 2.1%, while on the Big Board volume jumped an impressive 11.7%. Declining volume outpaced advancing volume on both indices. The ratio of declining volume over advancing volume was 1.7 to 1 on both the Nasdaq and the NYSE.

Yesterday we entered a short position in The Guggenheim Frontier Markets ETF (FRN) as it fell below its three-day trading range. FRN was not on the watchlist, but was discussed in a recent newsletter. The decision to enter the position was made intraday, and an email alert was sent to our subscribing members. Trade details can be found in the watchlist segment of today's newsletter.

The iShares MSCI Sweden Index ETF (EWD) has been consolidating at its 52-week high for the past three weeks. A heavy volume rally above yesterday's high of $32.02 may provide a buying opportunity for this ETF.



The SPDR S&P Emerging Markets Small Cap ETF (EWX) has tested support near $55.00 three times since October. A move below yesterday's low of $54.70 may provide a shorting opportunity for this ETF. We are closely monitoring this setup for a possible entry.



Market leadership has shown some signs of stabilizing, but our nightly scans continue to provide an equal distribution of both long and short setups.

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.