After a false breakout attempt above $23.93 late last week, the iShares Dow Jones US Home Construction ($ITB) recovered nicely off the 10-day moving average on Monday. Although we would prefer a two to five-day pullback to the 20-day or 50-day moving average as a low risk entry, $ITB could simply trade in a tight range and attempt to breakout again within the next few days. A short-term pullback would help to work off the V-shaped basing pattern formed by the sharp selloff from 2/20 to 2/25, and subsequent quick recovery from 2/26 to 3/6:



United States Natural Gas Fund ($UNG) has improved technically over the past six weeks by setting a higher low on the weekly chart and clearing the prior high at $20.20:



The 10-week moving average is now sloping higher and should eventually cross above the 40-week MA (similar to a 50-day MA crossing above 200-day MA), while $UNG forms the right side of its base. After a prolonged downtrend, the 10-week MA crossing above the 40-week MA is a bullish trend reversal signal. Still, we would like to see $UNG chop around for a few weeks, in order to create a low-risk entry point and stop level.

Our scans failed to produce much in the way of actionable setups, as most leading stocks are extended after breaking out with the S&P 500 two weeks ago. As with all good bull markets, rotation among leadership stocks is key, so we should eventually see new setups develop IF this market is headed much higher.

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.