After a poor start, stocks closed well off session lows but trade was light. Four of the five major indices ended the day modestly lower but the S&P MidCap 400 managed to eke out a 0.1% gain. The small-cap Russell 2000 closed down by 0.7% while the S&P 500 dropped 0.6%. The Dow Jones Industrial Average and the Nasdaq fell 0.5% and 0.4% respectively. The market closed slightly down for the week.

Internals were mixed on Friday. Volume finished lower on the Nasdaq by 8.3% and on the NYSE by 18.7%. However, declining volume outpaced advancing volume by 1.8 to 1 on the NYSE and 1.2 to 1 on the Nasdaq. The light volume suggests that institutions were not actively participating in the day's action.

For the past four sessions the Vanguard REIT ETF (VNQ) has been consolidating in a two-point trading range just below its 200-day MA. A volume-fueled rally above the two-day high of $58.29 could offer a buying opportunity in VNQ.



Since a failed breakout attempt above the 200-day MA on October 27, the iShares Russell 1000 Growth Index ETF (IWF) has been consolidating between its 20-day EMA and 200-day moving average. A thrust above the two day high of $58.94 could provide a buy entry trigger for IWF. We are monitoring this ETF closely for a possible buy entry.



The market closed slightly lower on the week but this type of price action could be expected given the big run up that has occurred since the August 4 reversal. More and more stocks seem to be emerging as potential breakout candidates. The more the market consolidates at the current levels, the more likely the next significant move will be 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.