Stocks ended the session higher yesterday on mixed trade. The session began with the major indices trading mixed but in the afternoon the market found a bid and moved higher. The S&P MidCap 400 led all indices as it netted a 1.0% gains. Despite weakness in transportation stocks, the Dow Jones Industrial Average finished a close second with a 0.9% gain. The small-cap Russell 2000 found resistance at its 50-day MA but still posted a solid 0.8% improvement. Both the S&P 500 and the Nasdaq closed the session higher by 0.7%. Homebuilders and consumer electronics were strong on Thursday, while the telecommunications and transportation sectors struggled.

Market internals ended the session mixed. Volume rose on the Nasdaq by 4.2% but fell on the NYSE by 3.7%. The ratio of advancing volume to declining volume ended the day at a positive 2.1 to 1 on the NYSE and a plus 2.3 to 1 on the Nasdaq. The higher volume on the Nasdaq points to institutional buying and an accumulation day for this index.

The SPDR S&P Retail ETF (XRT) recently found support but has now rallied near resistance of the April 19th high of $61.66. A retest of this level (false breakout or overcut), followed by a formation of a lower high, could provide the necessary price action for a potential long entry in this ETF. The blue and red arrows on the chart represent what we would see as the "ideal" price action necessary for XRT to establish a proper base from which to launch a potential rally.



Over the past two months, the Proshares UltraShort MSCI Brazil ETF (BZQ) has reversed a long-term down trend and is now in trend reversal mode. Since early March, BZQ has formed a sequence of higher highs and higher lows, as it has move along support of its 20-day EMA. A pullback and undercut of its current uptrend line, followed by the formation of a reversal candle, could provide the needed pivot point for a possible long entry. If the market should remain weak, BZQ would likely be one of the strongest ETFs in a selloff.



Overall, yesterday was a good day for the market. The Nasdaq moved higher on expanding volume. Further, stocks with relative strength continue to break to new highs, which is a bullish signal. However, price action could remain choppy as we recover from the recent sell-off. We remain of the opinion that the market is range bound and may still require further consolidation prior to any potential move higher. As a result, we are keeping our market exposure at modest levels.

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.