Stocks surged higher on Wednesday on a massive spike in trade. All five major indices closed up more than 4.0% and ended the day near session highs. High beta issues led the advance, as the small-cap Russell 2000 and the S&P MidCap 400 spiked 5.9% and 5.0% respectively. The S&P 500 jumped 4.3%, while the Dow Jones Industrial Average and Nasdaq both advanced 4.2%.

As might be expected, yesterday's market internals were decidedly bullish. Turnover skyrocketed on the Nasdaq by 50.6% and on the NYSE by 36.3%. Advancing volume overwhelmed declining volume by a whopping margin of 33.6 to 1 on the NYSE and by over 10.0 to 1 on the Nasdaq. Given the strength of Wednesday's internals, it is apparent that institutional players were actively acquiring stocks. Wednesday was clearly an accumulation day on Wall Street.

Since March of this year, the DB Agricultural Double Short ETF (AGA) has been forming a basing pattern as it has attempted to break above resistance near $20.00 on five separate occasions. A volume fueled move above the November 25th high of $20.39 could provide a buying opportunity in this ETF. Alternatively, an undercut of the 20-day EMA may also provide a buy entry for AGA. We are monitoring this AGA closely for a possible long entry.



The S&P Select Consumer Staples SPDR ETF (XLP) broke out of a multi-week consolidation base yesterday and is now poised to challenge its 52-week high at $32.46. It is not advisable to chase this trade now that it has broken out. Rather, a pullback into support near $31.60 offers a more favorable entry point for this potential long candidate.



Due to yesterday's massive move higher, we decided to remove both the QQQ and EUM short setups from the watchlist. When violent moves against the predominant trend occur, we find it prudent to step back from the market and re-evaluate market conditions. This holds particularly true when the shift in market sentiment is driven by policy changes of the central banking system. There's a saying on Wall Street -- Don't fight the Fed. In this case we are choosing to not fight the decisions made by the world's central banks. Although we don't have an official buy signal from the market we are inclined to focus our attention on identifying potential long candidates. All we need now is a confirmation day for a buy signal to be confirmed.

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.