Stocks slid lower on Tuesday, as they traded in a tight range for a second consecutive day. Trade was strong, as all the major indices closed near session lows. The S&P MidCap 400 put in the worst performance on the day. By the closing bell, the mid-cap index had shed 0.7%. The small-cap Russell 2000 fell 0.6%, while the Dow Jones Industrial Average and the S&P 500 dropped 0.5% and 0.4% respectively. The Nasdaq showed relative strength by containing losses to a moderate 0.2% yesterday.

Market internals were bearish yesterday. Declining volume held the upper hand on the day, as it outpaced advancing volume by a ratio of 1.9 to 1 on the NYSE and 1.6 to 1 on the Nasdaq. Volume spiked by 20.3% on the Nasdaq and 18.7% on the NYSE. The NYSE posted a distribution day yesterday, as a result of its weak price action and higher volume. Despite the higher volume, the Nasdaq narrowly escaped a distribution as it contained losses to less than 0.3%.

Yesterday, the Direxion Daily Gold Miners 3x Bear ETF (DUST) formed a bullish reversal candle as it undercut its 50-day MA and the two day low, but rallied to close near session highs. Further, this inverse ETF touched and held support of its uptrend line. A volume assisted move above yesterday's high of $51.04 could present a buy entry trigger for DUST.



After testing the three day high yesterday, the Market Vectors Oil Services ETF (OIH) reversed to close near session lows. A loss of support at the three day low of $38.89 could present a shorting opportunity in this ETF. We are placing OIH on the watchlist. Trade details are posted in the watchlist section of the newsletter.

 

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.