All five major indices moved higher on Wednesday, as trade increased. The small-cap Russell 2000 led the charge by posting an impressive 1.0% gain on the session. The Nasdaq and the S&P MidCap 400 both advanced by 0.7%, while the S&P 500 posted a 0.6% improvement day over day. The Dow Jones Industrial Average lagged the other averages as it ended the day only 0.5% higher.

Wednesday brought with it a vast improvement to market internals. Turnover improved across the board yesterday. Volume was higher on the Nasdaq by 12.3% and on the NYSE by just under 1%. The ratio of advancing to declining volume was 2.7 to 1 on the Big Board, and 2.5 to 1 on the Nasdaq.

The SPDR Series KBW Bank ETF (KBE) has been consolidating for the past three days on declining volume. Further, this price action follows a big breakout on February 11. A move above the February 15 high of $27.77 should present a buy trigger for this ETF. We are placing KBE on the watchlist. Our subscribers can find position details in the watchlist segment of the newsletter.



Our position in the ETFS Physical Palladium Shares ETF (PALL) continues to consolidate near its all-time high. We may look to add to the position above yesterday's high (we will send an intraday alert if any action is taken).



The broad market continues to demonstrate bullish resiliency. However, the majority of ETFs breaking to new highs have not met our strict technical criteria or risk/reward parameters. On a separate note, we are keeping a close eye on Emerging Market, Gold and Gold Related ETFs for potential short entries. All of these ETF classes are approaching resistance (support for inversely correlated ETFs) and may soon provide short opportunities.

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.