For the most part stocks finished higher on Monday, but trade was light. The S&P MidCap 400 and the small-cap Russell 2000 led all the major averages, as both advanced 0.5% for the session. The Nasdaq and The S&P 500 improved by 0.3% and 0.25% respectively. The Dow Jones Industrial average ended the day fractionally lower.

Market internals ended Monday's session mixed. For the second consecutive day volume was markedly lower on both indices. On the Big Board turnover fell by 14.3% while on the Nasdaq it was lower by just over 5.0%. Advancing volume outpaced declining volume on the NYSE by a ratio of 1.5 to 1 and on the Nasdaq by a factor of 1.4 to 1.

Yesterday, URA hit its trigger and we entered the position. URA closed near the high of the session and appears to be on its way to setting a new high. We were stopped out of our remaining shares of ECH and sold IJT to lock in a healthy gain. We also closed the position in FDN netting a gain of approximately 1.2 points.

The PowerShares Financial Preferred ETF (PGF) has spent five consecutive days consolidating in a tight range. A move above resistance at $18.00 may present a buying opportunity in PGF. We are monitoring this setup for a possible long entry.


Yesterday, the Market Vectors Coal ETF (KOL) rallied back above the 50-day MA on increasing volume. A volume assisted move back above $47.20 could represent a buy trigger for this ETF.



The broad market continues to plod higher in what we've been referring to as the "range bound rally". This may be largely explained by a lack of volatility in the market and the rotation of money among ETF classes. It is noteworthy that our overnight research revealed very few quality long or short setups. This suggests a pullback or several days of consolidation would be in order.

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.