Our weekend and Monday night scans for bullish chart patterns did not produce much in the way of actionable buy setups in equity based ETFs. Most of the ETF action lately has been in commodity ETFs, and we are positioned well if this trend continues (4 of the 5 ETFs in our swing trading newsletter portfolio are commodity related).

Since our long scans have dried up, let's take a look at potential short selling setups (although we are not ready to fully commit to the short side yet).

After a 250% rally off the lows of 2009, iShares Mexico ($EWW) has reversed its uptrend and is about to break down below a pivotal support level around the $60 level. The 10-week moving average has crossed below the 40-week moving average, and both averages are clearly trending lower.

Support from the lows of 2010 and 2011 (around $45) would be the downside target if/when we decide to enter.



Note that $EWW is not an ideal short setup at its current level, but a bounce to the declining 10-week moving average could present us with a low-risk entry in the near-term.

iShares Brazil ($EWZ) is one of the weakest ETFs in the market, as it has been in a clear downtrend since breaking a pivotal support level at $50 last summer. Currently, the price action is forming a bearish base at the lows, after a 25% selloff from the last touch of the 200-day MA in October.

The declining 50-day MA is resistance, along with the 20-day EMA which is also trending lower. A bounce into the 50-day MA around $40.70 could provide us with a low risk entry on the short side, looking for the high of March 6 to hold:



The combination of last Thursday's ugly sell-off and the 10-day moving averages is obvious resistance for stocks on any attempt to follow through on Monday's bullish move. If the broad market fails to push higher, a test of the 50-day moving averages in the S&P 500 and Nasdaq is likely, along with a few more weeks of consolidation.

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.