Consumer Discretionary ($XLY) and US Home Construction ($ITB) triggered long entries in the ETF portfolio last Friday. The $XLY buy setup was covered in our last report, so let's run through the setup in $ITB today.

On the daily chart below, $ITB has been building momentum since late May after breaking the downtrend line of the correction and pushing through the 50-day MA.

The 20-day EMA crossed above the 50-day MA a few weeks ago, which along with the 50-day MA beginning to turn up are bullish signs. All three moving averages are now in order and pointing in the right direction.

$ITB is also trying to form a significant higher swing low, which would be confirmed by a breakout above the prior swing high of June 9.

We look for $ITB to continue to hold the 20-day EMA and eventually punch through the prior swing high. The price action should not break the 50-day MA for the setup to remain intact in the short-term.

 

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.