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Market Vectors Gold Miners ETF ($GDX) has been in pullback mode since late August, but recently broke the downtrend line of the consolidation (10/22) before stalling out at the 50-day MA.

Yesterday, $GDX sold off sharply in the afternoon, but bounced back immediately, finding support at the 20-day EMA. The action produced a bullish reversal candle on the daily chart, and possibly created a higher swing low IF yesterday’s low is able to hold.

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Since May, iShares MSCI Frontier 100 ETF ($FM) has been tightening up on the weekly chart, with each selloff from swing high to low retracing less than the last. When we examine a stock or ETF’s basing action, we always look for a tightening of the price action and a dry up in volume. If a pattern has these two things going for it then it’s in pretty good shape. Note the dry up in volume during the past three weeks in $FM vs. the 10-week volume average.

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With the market extended in the short term, most of our focus is on monitoring key support levels for low-risk entries on a pullback. The EGShares Emerging Markets Consumer ETF ($ECON) is one of a few pullback setups we are currently monitoring. The daily chart below shows the sharp rally off the lows, which was followed by a few weeks of consolidation above the rising 20-day EMA. We are looking for a pullback to or near the 20-day EMA, around the $27.50 – $27.75 area. Note the bullish moving average crossover, with the 50-day MA crossing above the 200-day MA. This type of moving average crossover is not a buy signal, but it does tell us that the trend is beginning to turn up.

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We continue to monitor a potential short setup that is developing in iShares Dow Jones US Real Estate ($IYR). The nasty breakdown on big volume in May and June was the first major sign that the real estate sector was in big trouble. The bounce off the lows in July that stalled at the declining 10-week MA produced a lower high, which was another clue. The following selloff in August broke the prior swing low, signaling that a potential trend reversal was under way. A rally or over-cut of the 40-week MA (in orange) should provide an excellent shorting opportunity, as the price action should not climb back above the lower highs established in July. The setup is not actionable right now.

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We remain long iShares MSCI Japan ETF ($EWJ) from our pullback entry in early October around $10.70. Although $EWJ has failed to breakout, the price action continues to tighten up in the base, especially over the past few weeks above the 50-day MA. Note the higher swing lows during the base as well. The combination of higher swing lows and tight price action is what we typical look for in basing patterns. We also like the dry up in volume, which is a bullish sign, as traders take $EWJ off their radar because of the choppy action. A breakout above the four week high should quickly lead to new 52-week highs.

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