Stocks faded modestly on Monday, on mixed trade. All five major indices closed in the red yesterday. The small-cap Russell 2000 saw the most weakness, as it fell 0.6%. The S&P MidCap 400 lost 0.5%, while both the Nasdaq and the DJIA faded 0.4%. The S&P 500 showed the most resiliency yesterday, as it slid just 0.2%.

Internals ended the session mixed for a second consecutive day. Volume dipped on the NYSE by 9.2%, but increased by 5.3% on the Nasdaq. However, declining volume outpaced advancing volume across the board. On the NYSE the ratio of declining to advancing volume ended the day at 1.6 to 1 and on the Nasdaq it finished at 1.3 to 1. The Nasdaq fell under modest distribution yesterday. The tech-rich index dropped by over 0.3% on higher volume, which suggests institutional involvement in the day's action. Yesterday was a benign day for the NYSE, as its decline came on light volume.

Since reclaiming its 200-day MA in October of last year, the ProShares UltraShort Euro ETF (EUO) has been in a significant uptrend. EUO is now within striking distance of setting a new 52-week high and could provide a buying opportunity on a correction. A pullback and undercut of the 20-day EMA could present an ideal buy entry point for this ETF. As always, we will be looking for a reversal candle or similar setup, as a potential signal to enter this trade.



Since testing its 50-day MA on July 3rd, the ProShares UltraShort Silver ETF (ZSL) has reclaimed its 20-day EMA and has been consolidating along this key mark for the past eight sessions. On Thursday, ZSL formed a reversal candle as it undercut the 20-day EMA, but recovered to close near session highs. A volume fueled move above yesterday's high of $68.60 could present a buying opportunity in this ETF. We are placing ZSL on the watchlist. Trade details are available for our subscribers in the watchlist section of the newsletter



The market continues to struggle to find an identity. Yesterday's price action was predictable given the sizeable run-up that started with last Thursday's reversal. We remain cautious in our trading and will continue to trade conservatively until the market establishes a definitive trend.

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.