Constant sector rotation has been the theme for 2013. In November, money rotated out of NASDAQ stocks and into Dow and S&P 500. But during the past two weeks, money has been rotating out the Dow and S&P 500 and back into the NASDAQ and small-caps.
With financial stocks in pullback mode, we anticipate our long position in Direxion Daily Financial Bull 3X Shares ($FAS) will pull back to $78. There is support around this area from a rising 10-week MA and prior breakout levels (prior resistance now becomes new support):
First Trust ISE Cloud Computing Index Fund ($SKYY) has formed a bullish 7-week base near its highs. On the chart below, note the bullish support at the 50-day MA during the consolidation.
Volume has really dried up in recent days, which is also a bullish sign because it tells us the bears are not stepping in to sell while the bulls merely take a rest. Yesterday's volume the lowest $SKYY has seen in several months:
The longer-term weekly chart below shows the tight consolidation at highs.
Deron Wagneris the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, andMorpheusTrading.com, a trader education firm.
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