Since its strong surge off the 50-day MA in late January, Coffee ETF ($JO) has paused for a few days, correcting more by time than price (shallow correction).

The combination of tight trading range and light volume over the past few days is bullish, so $JO should eventually move higher after a short-term break:



We have added $JO to today's ETF watchlist as a potential buy candidate. Regular subscribers of our swing trading newsletter should note our exact entry, stop, and target prices for this setup in the "Watchlist" section of today's report.

Biotech ETF ($PBS) broke out from a continuation pattern on Tuesday, after three-weeks of tight price action above $40. A test of the $42 area or a touch of 10-day MA could present us with a low risk entry point on weakness (if it pulls back in):



The volume pattern in the Nasdaq has cleaned up nicely, with two of the past three sessions registering a bullish accumulation day:



The Nasdaq is running into resistance of the prior high, so a short-term pullback to or just below the 50-day MA could develop within the next few days.

How the Nasdaq reacts volume wise to a potential selloff will be key, as we do not want to see multiple distribution days.

The S&P 500 reclaimed the 50-day MA on a pick up in volume. If the S&P 500 is able to hold the 50-day MA this week, then our market timing model could shift back into buy mode, as most leading stocks have held up well.

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.