Thursday's action brought stocks modestly lower on mixed trade. At the closing bell both the S&P MidCap 400 and the small-cap Russell 2000 were down by 0.6%. The Down Jones Industrial Average, S&P 500 and the Nasdaq all shed 0.1% for the session. Stocks began the session on firm ground but a 7.1 magnitude aftershock in Tokyo appeared to spur a wave of selling and stocks spent the remainder of the day in recovery mode.

Market internals ended the day mixed. Volume on the Nasdaq fell by 10.60% but increased by 2.5% on the NYSE. Declining volume slightly outpaced advancing volume by 1.3 to 1 on the NYSE and 1.7 to 1 on the Nasdaq. The lack of volume on the Nasdaq suggests that institutions were not significantly involved in yesterday's selling. The divergence in volume between the two indices further suggests the absence to broad-based participation in the selloff.

Since hitting resistance following its last breakout move on March 18, the Sprott Physical Silver Trust (PSLV) has been consolidation in an up-trending wedge like pattern. A move above $18.00 could provide a buy entry for this ETF.



The PowerShares Water Resources Portfolio ETF (PHO) has been demonstrating market leadership for several months and is now pulling back toward support of the 20-day EMA. An undercut of the 20-day EMA followed by several days to weeks of consolidation may provide the ideal setup for a long entry in PHO. We will be tracking the price action in PHO for a possible buy entry.



The market has remained resilient over the past several weeks. Thursday appeared to bring another day of consolidation to the market. As we explained in yesterday's newsletter, the longer the major indices consolidate near the highs, the more likely it becomes that stocks will move higher.

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.