Stocks ended mostly down on Monday, but barely. The S&P 500 was the day's only winner, as it closed higher by a meager 0.1%. For the second time in as many days, the S&P MidCap 400 closed flat. Both the Nasdaq and the Dow Jones Industrial Average slid 0.1%, while the small-cap Russell 2000 was the weakest performer on Monday, as it shed 0.2%. The market was listless yesterday.

Internals were mixed yesterday. Volume slid on the Nasdaq by 14% and on the NYSE by 19.8%. On the NYSE plus volume outpaced minus volume by a ratio of 1.3 to 1, while on the Nasdaq declining volume topped advancing volume by 1.2 to 1. For a second straight day, market internals have provided no guidance with respect to the day's price action. The light volume suggests that institutions "took a breather" from the market.

The S&P Select Consumer Staples ETF (XLP) has been consolidating along its 20-day EMA since pulling back on January 13. Over the past four sessions this ETF has formed four reversal candles, as it has consistently held support at the 20-day EMA. A move above the January 19 high of $32.46 could present a buying opportunity in XLP. We are placing XLP on the watchlist. Trade details are available in the watchlist segment of the newsletter.



Since its breakout move last December, the iShares Dow Jones Dividend Index (DVY) has pulled back and has been setting a sequence of higher lows along its 20-day EMA. This is quite bullish price action. A volume-fueled move above the January 17 high of $54.54 should provide the impetus for a move higher in DVY. DVY is also being added to the watchlist. Trade details are available to our subscribers in the watchlist portion of the newsletter.



Yesterday we exited our long position in DUST, well ahead of its stop, for a small loss. Please note that we have raised the stops in the remainder of our open positions. See the open positions section of the newsletter for specifics. The Nasdaq, S&P 500, S&P MidCap 400 and small-cap Russell 2000 all formed long legged doji candlesticks. Doji stars are clear hesitation patterns, suggesting the market may be looking to pull back. However, if we break the highs of these candlesticks, the market will likely catch a strong bid.

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.