Since Breaking above resistance of the 200-day MA on December 14th, the Direxion Gold Miners 3X Bear ETF (DUST), has been consolidating above this key mark, as its price action has tightened. Twice over the past three sessions, DUST has found resistance near $42.60. Ideally, we would like to see DUST form an inside candle as this could serve as a launching pad for a move higher. A breakout above the three day high of $42.65 on an uptick in volume, could present a buying opportunity in this ETF.
Since finding a bottom on December 14th, the ELEMENTS Rogers International Commodity Agriculture ETN (RJA) has rallied back into resistance of its 20-day and 50-day moving averages. RJA could offer a potential short setup if it forms a reversal candle at the current level, or on a breakdown below the two day low of $8.64. We are monitoring this ETF carefully for a possible short entry.
During our research last evening, we noticed quite a few Head & Shoulders patterns in the market. In particular, the Dow Jones Industrial Average has formed a very distinct bullish Head and Shoulders. Notice the projected rally for the DJIA should it breakout above its neckline. The projected rally for a H&S pattern is the distance from the head to the neckline, projected above the neckline. The S&P 500 is also forming a distinct H&S, while the Nasdaq is not offering a similar setup. This is not surprising given the way the Nasdaq has lagged the broad market as of late.
Yesterday, via intraday alert, we entered a small position in the ProShares UltraShort Silver ETF (ZSL). Since breaking out on December 14th, ZSL has spent five sessions forming a bullish pennant. We took small size at this level with a small stop in anticipation of a breakout. Since we got in early we set a wide stop. Depending on how ZSL sets up from here, we may consider adding to the position if the setup warrants doing so.
Since late November, the ProShares UltraShort Yen (YCS) has been setting a series of higher lows as it has consolidated along its 20-day EMA. A move above Monday’s high of $42.08 could present a long opportunity in this ETF. Yesterday, the Market Vectors Retail ETF (RTH) gapped up and formed an inside candle. Further, it closed back above both its 20-day and 50-day moving averages. A volume fueled move back above Monday’s high of $111.84 could provide a buying opportunity in this ETF.
Since its big breakout move on December 12th, the ProShares UltraShort Euro ETF (EUO) has been consolidating for the past four days at the highs of the move. EUO has also formed a pennant like formation as it has held support at the 20-period EMA on the 60-minute chart. A move back above the three day high of $20.21 could provide a buy entry trigger in this ETF. Above this key mark a partial trade position could be entered and the remainder of the position above the four day high of $21.32. Alternatively, EUO offers a possible entry on a pullback into its 20-day EMA.
Recently, we made a quick profit shorting the Market Vectors Junior Gold Miners ETF (GDXJ). Over the past three sessions GDXJ has been forming a base and it appears that it may be ready for a bounce. GDXJ may provide a shorting opportunity on a rally into the 20-day EMA. We will be monitoring this ETF closely for a possible re-entry.
On December 12th, on a massive spike in volume, the S&P Select Technology SPDR ETF (XLK) gapped down and tested support at its 20-day EMA. On December 13th, XLK formed a bearish engulfing pattern and closed at session lows, just below support of the 50-day MA. Over the past two sessions this ETF has been consolidating at its two day lows, below support of its 200-day MA. A volume fueled move below the two day low of $24.99 could provide a short selling opportunity in this ETF.
Since undercutting its 20-day EMA on December 8th, the iShares JP Morgan US Dollar Emerging Market ETF (EMB) has been consolidating along this key mark for the past four sessions. A move above the two day high of $109.25 may present a buying opportunity in this ETF. Over the past two sessions, the SPDR S&P Bank ETF (KBE) has attempted to reclaim its 20-day and 50-day moving averages. However, on both occasions, KBE has reversed to close near session lows below these key marks. A move below the two day low of $18.65 could present a shorting opportunity in this ETF.
Yesterday, EUO hit our target and we exited the trade with a solid profit. Last week we turned a nice profit on GDXJ and we are also slightly in the money on AGA. AGA appears very close to breaking out. Also yesterday, via intraday alert, we entered a long position in the ProShares UltraShort Gold ETF (GLL). Shortly after our entry, GLL broke out to set a new swing high and we are now solidly in the money on the trade. We decided to enter GLL because it was showing relative strength, as it quickly reclaimed its 5 minute high after selling off at the open. We waited for GLL to overcut Monday’s high of $17.83 and then entered the trade on a pullback. Details for this trade are available to our clients in the open position segment of the newsletter.