Stocks gapped up sharply on Tuesday and steadily rallied the entire day, to close at session highs. All five major indices ended the session up more that 2.75%. The small-cap Russell 2000 led the surge as it added a whopping 4.2%. The S&P MidCap 400 improved by 3.5%, while the Nasdaq tacked on 3.2%. The S&P and the Dow Jones Industrial Average advanced by 3.0% and 2.9% respectively.

Market internals were decidedly bullish yesterday. Volume improved by 14.5% on the Nasdaq and 7.5% on the NYSE. Advancing volume overpowered declining volume by 35.4 to 1 on the NYSE and 10.5 to 1 on the Nasdaq. The sharp jump in volume points directly to institutional participation in the move. Yesterday was a definitive accumulation day for the broad market.

Since late November, the ProShares UltraShort Yen (YCS) has been setting a series of higher lows as it has consolidated along its 20-day EMA. A move above Monday's high of $42.08 could present a long opportunity in this ETF.



Yesterday, the Market Vectors Retail ETF (RTH) gapped up and formed an inside candle. Further, it closed back above both its 20-day and 50-day moving averages. A volume fueled move back above Monday's high of $111.84 could provide a buying opportunity in this ETF.



It is days like today that test the mental fortitude of a trader. Not only is it important to have sound trading rules, but it is also important to honor those rules. Naturally, it's upsetting when trades unexpectedly gap against you the way these positions did yesterday. However, you can't become a deer in the headlights or beat yourself up over a legitimate entry. Further, you CANNOT allow hope to enter your thinking. Hope is a dangerous emotion because it leads to very bad trading habits such as not honoring stops and adding to losing trades.

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.