Stocks closed higher on Tuesday, but on lighter volume. The small-cap Russell 2000 led the rally, as it advanced 1.6% yesterday. The S&P MidCap 400 and the Dow Jones Industrial Average both tacked on just over 1% for the session. The S&P 500 improved by 0.9%, while the Nasdaq rose by 0.7% day over day.

Internals were mixed on Tuesday. Volume declined on both major indices. Turnover on the NYSE slid a modest 2.7% yesterday. However, volume on the Nasdaq was down nearly 16%. Advancing volume was higher than declining volume by a ratio of 3.5 to 1 on the NYSE and 1.7 to 1 on the Nasdaq. Tuesday's market internals provided little evidence of institutional participation.

KBE hit its stop on during Tuesday's session and we exited the trade. The lack of follow through on either side of the market suggests that limited market exposure is warranted. There are no new setups for today, as our daily research has provided few quality setups.

The Market Vectors Coal ETF (KOL) has been holding support above its previous breakout as volume has declined. A retracement back to the 50-day MA could provide an opportunity to take on a partial long position in this ETF (half size). Alternatively, a move above yesterday's high near $48.45 may also provide a buy trigger for KOL. Since most breakouts have been short lived lately, an entry above yesterday's high should likely be considered a more risky entry.

 
The iShares MSCI Turkey Investable Market Index ETF (TUR) has been in a "stair step" downtrend since November of 2010. A rally back into the downtrend line or the 50-day MA could provide a short entry for this ETF. We are actively monitoring all emerging market ETFs for similar setups.

 
The battle continues between bears and bulls for control of the 50-day moving average. This mark appears to hold the key to the next significant move in the market. For the moment we are inclined to stay in cash.

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.