Although the majority of our stock and ETF positions dipped alongside of the broad market yesterday, we would actually welcome a near-term correction in the main stock market indexes because it would create new potential swing trade pullback entries.

As we have mentioned several times in recent weeks, our ETF scans have been coming up mostly dry because the strongest ETFs have been too extended to provide a positive reward to risk ratio for buy entry. Therefore, a short-lived pullback in the broad market could solve this problem (just as long as leading individual stocks continue to hold up well).

Now, we are currently scanning ETFs with relative strength to put on our radar screen for potential pullback buy entry. One such ETFs is Direxion China Bull 3x ($YINN), an international ETF tied of the performance of the Chinese stock market (and leveraged to move at 3x the underlying securities).

As shown on the weekly chart below, notice that $YINN has just broken out above major resistance of its prior highs from January 2013, after four consecutive weeks of massive gains. Now, the ETF is starting to pull back from its recent parabolic run:



The horizontal line that marks prior resistance of the January 2013 highs should now serve as the new support level on the pullback. However, $YINN will likely "undercut" that support level, which would shake out the "weak hands."

Next, take a look at the shorter-term daily chart:



Despite the current pullback off the highs, $YINN is still trading above both its 10 and 20-day moving averages. This is a sign of major relative strength.

Since horizontal price support (from the weekly chart) is around the $21.65 and the 10-day moving average is presently at $21.39, we would anticipate a pullback to the $21 - $21.50 area (an "undercut" of support).

Presently, $YINN is not actionable. However, it's a good one to put one your radar screen. As for entry, we ideally would like to see the formation of a bullish reversal candle coincide with a pullback that undercuts support. If that happens, it would provide us with a low-risk buy entry point above the high of the reversal candle. But for now, we will just have to wait and see how the price action develops.

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.