Stocks climbed for a second consecutive day as volume faded. All five major indices posted gains. Both the S&P MidCap 400 and the small-cap Russell 2000 advanced 1.4%. The S&P 500 and the Dow Jones Industrial Average added 1.3% while the Nasdaq improved by a more modest 0.9%.

Market internals ended the session mixed. Volume faded by 12.7% on the Nasdaq and 8.5% on the Big Board. However, for a second consecutive day, advancing volume was higher than declining volume across the board. On the NYSE the ratio of advancing volume to declining volume ended at 3.3 to 1 and on the Nasdaq it finished at 2.4 to 1. Due to the higher close we would classify yesterday as a follow-through day but the lack of volume suggests that institutions were not particularly active in yesterday's advance. Consequently, we would not classify Wednesday as an accumulation day for the broad market.

Yesterday, the iShares MSCI Mexico Investable Market ETF (EWW) saw a wide trading range as it gapped down, reversed and overcut the previous day's high but eventually sold off to close near session lows. Further, the overcut also occurred above the 20-day EMA and likely served to sweep weak hands and poorly placed stops. A move by EWW back below yesterday's low of $55.78 could present a shorting opportunity in this ETF. We are monitoring this position closely for a possible short entry.



As the broad market has moved higher over the past two days, the iShares MSCI Japan Index ETF (EWJ) has demonstrated relative weakness as it has remained trapped in a five-day trading range. A volume-fueled move below the five-day low of $9.42 could present a short entry trigger for EWJ.



Yesterday EWM triggered from the watchlist and we are now short this ETF. The market continued to show some signs of life yesterday but we maintain our bearish stance. For the moment we would not be surprised to see the market rally for several days on the heels of a massive selloff.

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.