After a decent morning advance, stocks sold off in the afternoon with most averages closing just about flat on the day. Turnover eased on both exchanges, which is a good sign, as stalling action accompanied by higher volume is known as churning (selling in to strength).

Since selling Market Vectors Semiconductor ETF ($SMH) at $38.44 on May 13 (locking in a 9% gain of $1,100), the price action of this tech ETF has chopped around in a tight range near the highs of the last move up. The shallow correction is a bullish sign, indicating that the uptrend is very strong:



With $SMH holding the 10-day MA, the current consolidation may be all we get in terms of a pullback off the high. If so, we do not want to miss the next wave up. As such, we are adding $SMH to today's watchlist as a potential breakout entry (re-entry). If $SMH pulls back in before breaking out, then we could possibly see a pullback entry develop.

Claymore/AlphaShares China Real Estate ETF ($TAO) is forming a cup and handle type pattern on the daily chart below. We are already long $TAO (with partial size) from a pullback to the 10-day MA on May 1. On a recent pullback, $TAO held support of the rising 20-day EMA and has pushed higher.



The pullback from February to April formed the cup portion of the pattern, while the recent consolidation off the highs of May is the handle. We plan to add to our existing long position in $TAO on a breakout, unless the the price action consolidates for another week below 23.50, which could then lead to a lower entry point.

Energy Select Sector SPDR ($XLE) was added to our model trading portfolio yesterday, as it triggered a breakout buy entry on the open (see yesterday's ETF commentary for further details). $XLE followed through on last week's breakout with a solid 1.5% move yesterday. iShares MSCI Indonesia ($EIDO), which we also mentioned yesterday, broke out to new highs as well and is in good shape.

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.