In another whipsaw session stocks ended the day mixed on heavier volume. Stocks gapped up sharply at the open but sold off for most of the day before staging a late session rally into the close. The divergence between the Nasdaq and the rest of the market continued on Thursday as the tech-rich index closed lower by 0.4%. The small-cap Russell 2000 showed the most strength on the day as it tacked on 1.6%. The Dow Jones Industrial Average gained 1.3% while both the S&P 500 and the S&P MidCap 400 gained 0.8%.

Market internals also ended the session mixed as might be expected with the divergence in the market. Volume spiked on the Nasdaq by 18.7% but increased by a more modest 8.0% on the NYSE. The ratio of advancing to declining volume ended the day at a plus 3.0 to 1 on the NYSE and a minus 1.6 to 1 on the Nasdaq. Big name leadership stocks were on pressure virtually the entire day on the Nasdaq which suggests institutional distribution.

The ProShares Short MSCI Emerging Markets ETF (EUM) has shown significant relative strength as it has held its 20-day EMA on this pullback. A move back above the two-day high should result in a breakout to higher ground for this ETF. An alternative entry would be a pullback-undercut of the 20-day EMA.



Since its big breakout move last week, the ProShares UltraShort Silver ETF (ZSL) has been consolidating just above its 20-day EMA and now appears poised for another move higher. A rally above the two-day high of $17.32 could provide a long entry trigger for ZSL. We are monitoring ZSL closely for a potential long entry.

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When leadership stocks are under pressure the health of the broad market should be questioned. Yesterday's price action among market leaders was not encouraging. Also of concern yesterday is that weak industry groups held the market up. Bottom fishing is generally not a good sign for market bulls. It is not likely for the market to recover or sustain a meaningful rally on the back of market laggards.

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.