After any corrective phase in the market there are a few things we look for to let us know that conditions are improving:

-- The market must find some traction and set a higher swing low (A new uptrend can not form if the averages are making lower lows).
-- NYSE and NASDAQ volume patterns must turn bullish (Multiple accumulation days with little to no distribution).
-- Leading stocks must be forming bullish patterns.

If the answer to all the above is yes, then conditions are improving and a new bull market is potentially under way. However, the bull market can not be confirmed until leading stocks break out on solid price and volume action.

Last Friday's false breakout above the downtrend line in the S&P 500 could spark a short-term pullback to the 50-day MA, and we could potentially see an undercut of last Thursday's low. However, as long as the low of June 6 holds and the market avoids distribution (heavy selling), then the timing model will remain on a buy signal.



Guggenheim Solar ETF ($TAN), which is one of the top performing ETFs this year continues to impress, with a tight consolidation above the rising 20-day EMA. Last week's dip below the 20-day EMA could create a higher swing low within the base, if the price action can recover and hold above $24 this week.



We are stalking $TAN for potential swing trade in today's issue of The Wagner Daily. Subscribing members should note our exact, preset trigger, stop, and target prices in the watchlist section of today's report.

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.