Much like the past two to three days, the broad market averages basically chopped around all day and closed with modest gains across the board yesterday. The market has been overbought for quite some time, so a week or two of rest would be welcome, especially if it produces new buy setups.

There hasn't been a whole lot to do on the ETF side the past few days due to the dry up in setups from our scans. Most of our open ETF positions (all of which are presently showing unrealized gains) are either a bit too extended to add to the position, or have just broken out and need more time to confirm the breakout. However, we are stalking the Claymore/MAC Global Solar Index ($TAN) for a potential pullback entry (adding to existing position) if it can touch the rising 10-day MA or short-term uptrend line. This is shown on the daily chart below:



A pullback to the 26.00 - 26.50 area would be ideal, allowing the 10-day MA (currently at 25.67) to catch up and provide additional support at the uptrend line. Last week's high was 25.94, and last month's high was 25.96, so there should be quite a bit of support around 26. Remember that a prior level of resistance becomes the new level of support, after the resistance is broken.

$TAN's volume this week has been quite strong, so the odds favor the price action closing near the highs of the week, so we could see a pullback develop next week to the aforementioned support level.

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.