Wagner Daily Lite – Feb. 13, 2012 ($IWM, $IYZ, $IYT, $DVY)

Stocks slid lower on Friday, but on lighter trade. All five major indices fell into the red, with higher beta issues leading the decline. By the closing bell, the small-cap Russell 2000 and the S&P MidCap 400 had shed 1.4% and 1.1 % respectively. The Nasdaq shed 0.8%, while both the S&P 500 and the Dow Jones Industrial Average lost 0.7%. Stocks suffered their worst setback of the year.

The iShares Russell 2000 Index Trust (IWM) lost support of its short-term 10-day moving average last Friday, and it now appears this ETF may rejoin its 20-day exponential moving average for the first time since January 5th of this year. As annotated on the chart below, support of the uptrend line coincides with this key moving average. A pullback, followed by consolidation at this level, could provide a buying opportunity in IWM in the coming days. As such, we are monitoring IWM for a possible long entry. The setup is explained on the daily chart of IWM below.

(charts and trade details restricted to Wagner Daily subscribers)

Recently, we exited the iShares Dow Jones US Telecom Sector ETF (IYZ) for a solid profit. Since closing the position, IYZ has been consolidating for the past six sessions, above its last breakout of $21.70. A retest of this level and/or an undercut of the 10-day/20-day moving averages could present a buying opportunity in this ETF.

(charts and trade details restricted to Wagner Daily subscribers)

On Friday, DJ Telecom ETF (IYT) undercut its 20-day EMA and formed a bullish reversal candle. If Friday’s low holds, IYT is likely prepping for another move higher. Similarly, DVY has been showing excellent relative strength over the past two sessions, as has been consolidating above the gap formed on February 2, 2012. DVY is also holding support of its 10-day MA. The market continues to hold up well, but we are still may have to withstand a few more days of selling pressure prior to a potential move higher in the market. For the moment, we will likely have to exercise patience, since it may take some time for new setups to develop.

The commentary above is an excerpt from our nightly Wagner Daily newsletter. Subscribing members receive annotated ETF and stock charts, detailed entry and exit prices for potential swing trade entries, and additional technical market commentary. Click here to become a member for as low as $58 per month. Your full satisfaction is guaranteed.