Following through on momentum of the previous day's decline, stocks trended lower throughout the first half of yesterday's session. However, the bulls returned in the afternoon, enabling the S&P 500 and Nasdaq Composite to close near their intraday highs. The rest of the main stock market indexes showed a bit of relative weakness, causing mixed results in the broad market. The Nasdaq ($COMPQ) ticked 0.2% higher, the S&P 500 ($SPX) was unchanged, and the Dow Jones Industrial Average ($DJIA) slipped 0.2%. The S&P MidCap 400 ($MID) and small-cap Russell 2000 indices declined 0.2% and 0.3% respectively.

Total volume in both the NYSE and Nasdaq was 7% lighter than the previous day's levels. Across the board, declining volume marginally exceeded advancing volume. Given the combination of mixed closing prices of the major indices and decreased turnover, yesterday's market internals lacked any type of significant signal.

The iShares Nasdaq Biotechnology ETF ($IBB), which we have been long in the model ETF trading portfolio of The Wagner Daily since August 14, showed relative strength by rallying 0.9% while the S&P 500 was flat yesterday (August 22). More importantly, it closed just above an area of near-term horizontal price resistance. For swing traders who missed our original August 14 buy entry, $IBB is now presenting a secondary buy setup (or a place to add additional shares to existing position). The first chart below is of the hourly timeframe, which shows yesterday's breakout above the near-term technical price resistance (the dotted blue line):



Shifting to the daily timeframe, notice that yesterday's rally in $IBB also correlated to a breakout above the downtrend line from the July 27 high (the descending blue line). Since this ETF has broken out above resistance levels on two different timeframes, it further increases the odds of $IBB moving higher from here. If looking for a secondary buy entry into $IBB, consider a buy trigger above yesterday's high of $134.32, which would confirm the breakout above resistance:

 

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.