Stocks put in a good showing on Friday as trade quickened. The Nasdaq led all indices as it tacked on a solid 1.3%. The small-cap Russell 2000 added 1.2%, while both the S&P 500 and the S&P MidCap 400 posted gains of 1.0%. The Dow Jones Industrial Average lagged slightly as it ended the day up 0.9%.

Market internals remained bullish for a second consecutive session. As might be expected on an options expiration day, turnover increased significantly. On the Nasdaq, turnover climbed by 21.0% and on the NYSE by 17.3%. Advancing volume also held the upper hand, as it topped declining volume on the Nasdaq by a factor of 4.8 to 1 and on NYSE by a factor of 4.3 to 1. Institutions were clearly involved in Friday's price action. This resulted in both an accumulation day and a follow through day on both exchanges.

Over the past two weeks, the iShares Dow Jones Select Dividend Index (DVY) has shown relative strength, as it has been one of the few ETFs to regain support of both its 20-day EMA and 50-day MA. DVY could offer a buying opportunity if it continues to consolidate above these key marks. Ideally, we would like to see DVY form a higher low and form a reversal candle as a possible pivot point for a potential long entry. The chart below provides a visual of the hypothetical price action that we view as ideal for a possible long entry. We will continue to monitor DVY closely for a potential long entry.

 

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.