The Wagner Daily ETF Report For January 24 |
By Deron Wagner |
Published
01/24/2013
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Stocks
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Unrated
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The Wagner Daily ETF Report For January 24
The iShares MSCI Emerging Markets ETF ($EEM) has been in consolidation mode over the past few weeks, holding above support of its rising 20-day exponential moving average and oscillating in a tight trading range. This is shown on the daily chart below:
We are looking for a tight 4-week consolidation to form, with Wednesday's low potentially setting a "higher low" within the base. $EEM may need another week or two of sideways action before breaking out and resuming its uptrend. Nevertheless, we will continue to monitor the action for a low-risk entry point.
United States Gasoline Fund ($UGA) has been in consolidation mode since last October. After finding support at its 200-day moving average in November and December, the price action is now back above the 50-day moving average, and the 20-day exponential moving average has crossed above the 50-day moving average (all bullish technical signals when a base is being formed). Note that the price has also formed two "higher swing lows," which is what we look for in all basing patterns:
Although $UGA broke out above the high of its range on Tuesday range high on Tuesday (January 22), it has not yet followed through on the breakout. If the breakout stalls, we could see a 3-5 bar pullback that dips to the 20-day EMA, which could present us with a low-risk pullback entry. This would be a similar entry strategy to the Market Vectors Coal ETF ($KOL) which we entered a few days ago and have discussed several times in recent weeks.
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.
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