Tuesday's (March 4) rally was confirmed by impressive breadth readings. Up volume beat down volume on the NYSE by an 8 to 1 ratio, and well over 500 stocks gained 4% on the day with higher volume.

The number of stocks up at least 20% over the past 20 days is also at a very extreme reading. The extreme breadth readings could be signaling that Tuesday's action was the start of a new rally after a V-shaped correction OR it could point to the beginning of an intermediate-term top in the market.

If it is the beginning of a top, then we should see the broad-based averages struggle to push higher this month, while leading stocks outperform.

But if the market is beginning another leg up, $QQQ and $SPY should be able to push much higher over the next few weeks.

As for today's ETF analysis, let's continue with the commodity theme we've been discussing over the past few days.

Physical Paladium Shares ($PALL) cleared its weekly downtrend line on heavier than average volume over the past two days. Volume this week is already greater than last week's volume, with two more days to go.

If the breakout can hold, then we will look for the first pullback to the 10-day moving average, or some type of bull flag as a low-risk buy point.

Typically, bullish chart patterns should tighten up from left to right as the consolidation develops. On the weekly chart of $PALL below, note the higher swing lows since October in the base. The action has clearly tightened up:



US Natural Gas Fund ($UNG) appears to have found support at the 20-day exponential moving average, after a false breakout above $27 a few weeks ago. Volume has declined during the consolidation, which is a good sign (quiet/tight action should be confirmed by quiet or lighter volume).

There is also support from a short-term downtrend line in the same area as the 20-day EMA. Should $UNG fail to hold support of its 20-day EMA, then a test of the 50-day MA is likely, which could also present us with a low-risk buy entry:



We are already long $UNG in The Wagner Daily newsletter, and the trade is showing an unrealized gain of 6.8% since our buy entry.

We are again placing $UNG on today's watchlist to add 25% to our existing position. Subscribing members should note our exact, preset buy trigger, stop, and target prices for this setup 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.