Earlier this week we mentioned the pick up in buying in the energy sector with $XLE breaking a short-term downtrend line and reclaiming its 50-day MA. The iShares Dow Jones Transportation ($IYT) has also perked up after breaking a year long downtrend line. There is no actionable setup right now, as we'd like to see $IYT form a 5-10 week base while holding above 92.00. An eventual breakout from this base would be the ideal entry point.



In yesterday's report, we listed a potential breakout setup forming in Global X InterBolsa FTSE Colombia20($GXG). Another South American ETF showing in a tight consolidation pattern is iShares MSCI All Peru Capped Index Fund ($EPU). Check out the weekly chart below:



$EPU has been in base mode since last March and has tightened up nicely over the past few months above the 20 and 50-week moving averages. A breakout above the tight range would also result in a break of the long-term downtrend line in blue. We are monitoring the action for a potential entry point within the next few weeks.

After breaking the uptrend line at the lows of its base, the iShares Barclays 20+ Yr Treasury Bond ETF ($TLT) has broken support of the 200-day MA for the third time since September. We also see two consecutive lower swing highs since the price action topped out this summer. $TLT is in danger of establishing a downtrend if it is unable to reclaim the 200-day MA and breaks down below 118.00. The next support level would then be around 111.00.

 

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.