On a pop in volume, the SPDR S&P Metals and Mining ETF (XME) formed a bearish reversal candle as it tested its two day high, but weakened dramatically to close near session lows. A drop below yesterday’s low of $38.55 could provide a short entry trigger for this ETF. We are placing XME on the watchlist. Trade details are available to our clients in the watchlist section of the Newsletter. For those of you trading qualified accounts, the Direxion Daily Gold Miners 3x Bear ETF (DUST) would serve as a reasonable, although not precise, proxy to XME. DUST is not an official trade.

Since its pullback began on July 24th, over the past four sessions, the Direxion Daily China Bear 3x Shares ETF (YANG) has been consolidating just above its uptrend line. Over the past three sessions, YANG has unsuccessfully attempted to rally above its 20-day and 50-day moving averages each day. A move above the July 31st high of $16.48 could provide a buy entry trigger for this ETF.

Yesterday, the Direxion Daily Gold Miners 3x Bear ETF (DUST) formed a bullish reversal candle as it undercut its 50-day MA and the two day low, but rallied to close near session highs. Further, this inverse ETF touched and held support of its uptrend line. A volume assisted move above yesterday’s high of $51.04 could present a buy entry trigger for DUST.

The SPDR S&P Biotech (XBI) has been consolidating in a tight range at the highs the past few weeks. XBI could pull back in to support this week and present us with a low risk entry point if it holds support of the 20-day EMA. On the weekly chart below, the SPDR S&P Homebuilders (XHB) has formed a 14-week consolidation just below the 52-week high. There are two potential entry points. One is on a breakout above $22.00 and the other is on a pullback to the 21.20 – 21.30 area (the 20-day EMA on the daily chart).

Yesterday, on a burst of volume, the ProShares UltraShort Euro ETF (EUO) formed a bullish reversal candle and closed near session highs. EUO offers two possible long entries. The first possible long entry could occur if EUO rallied above the two day high of $22.16. Alternative, EUO could offer a potential buying opportunity if it were to sell off further and reverse at its 50-day MA. We will continue to monitor EUO for a possible buy entry.

We are keeping YANG on the watchlist, as the setup is still intact. Tomorrow’s price action will likely determine whether or not we cancel the setup. If we lose support of yesterday’s low, it is likely that the trade will be nullified, because UNG will either break down or a better setup will develop.

Yesterday, on an uptick in volume, the Direxion Daily China Bear 3x ETF (YANG) formed a bullish engulfing candle, as it gapped down, held support of its trendline and the 20-day EMA, and reversed to close at session highs. Further, it marked the second consecutive day that YANG formed a bullish reversal candle. A volume propelled move above the two day high of $17.75 could present a buy entry trigger in this ETF. We are placing YANG on the watchlist. Trade details are available to our subscribers in the watchlist section of the newsletter.

After three days of selling, the broad market is now at the lower trend line of the trend channel we originally discussed in the July 10th issue of The Wagner Daily. In that issue we stated that, “the price action in (both QQQ & SPY) has been contained by a tight trend channel (Red lines) since the June 4th swing lows. We further commented that “trend channels provide an excellent gauge for determining support and resistance levels.” (See July 10th charts of QQQ & SPY below). Since that time, both QQQ and SPY have continued to find resistance near the top line of the trend channel, and support at the bottom line of the trend channel.

Since rallying to reclaim its 200-day moving average in mid May of this year, the Direxion Daily China Bear 3x ETF (YANG) has been consolidating in a range between fourteen and eighteen dollars. Over the past ten sessions, YANG has been holding support of its uptrending 20-day EMA. Yesterday, on a pickup in volume, this ETF gapped up and momentarily rallied above resistance of the trading range. YANG could offer a buying opportunity on a pullback into support of its 20-day EMA. We will be following this inverse ETF closely as a potential long candidate.

Yesterday, the SPDR S&P Bank ETF (KBE) formed a massive reversal candle, as it tested the four day high, but reversed to close near the nine day low. A volume fueled move below yesterday’s low of $21.40 could present a short entry trigger for this ETF. UNG performed well on Friday, but volume was light and has been declining over the past two days. We would have liked to have seen volume expand on the breakout. Consequently, we are raising our stop in UNG. Trade specifics can be found in the open positions segment of the newsletter. The market continues to struggle in finding a direction and yesterday’s distribution suggests market bears could soon gain control of the action. Given Friday’s higher volume selling, we would expect to see follow through to the downside, at least at the open, on Monday.