Bill Cara's Blog for May 31, 2012
CTA Trading Desk Morning Report[7:00am ET] Good morning. Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Vad's Catch of the Day
Kaimu's Sound Money
Deron's Daily ETF Analysis
Yesterday, the S&P Select Consumer Discretionary SPDR ETF ($XLY) fell back below its 20-day exponential moving average (EMA), which the ETF had previously moved back above for just one day. In an uptrend, the 20-day EMA provides near-term support and a low-risk entry point to buy on a pullback. Conversely, a rally into the 20-day EMA in a downtrend acts as resistance that sets us up with an ideal short sale entry point. The inability of XLY to reclaim and hold above its 20-day EMA means the intermediate-term downtrend of $XLY remains intact, and the recent bounce provides a positive reward-risk ratio for potential trade entry on the short side.
Because XLY gapped down and closed near yesterday's session low after running into resistance of its 20-day EMA, a higher volume breakdown below yesterday's low of $43.07 could now provide a potential short entry trigger for this ETF. Regular subscribers to The Wagner Daily stock newsletter should note our detailed entry, stop, and target prices in the "watchlist" section of today's newsletter. Note there is no inverse ETF for the consumer discretionary sector, but $XLY should be easy to borrow for short selling from most direct access brokerage firms.
If you are new to my ETF commentary, it is important to understand the quantity of technical ETF swing trades I am targeting for potential entry on any given day is based primarily on broad market conditions, as defined by my disciplined, rules-based market timing model. Over the past month, for example, I have not been entering many ETF trades. The few swing trades that were entered turned out to be profitable, but they were on the short side of the market. Conversely, I was positioned in as many as 4 or 5 simultaneous ETF swing trades, and on the long side of the market, when the uptrend of the broad market was quite solid several months ago. I only point this out to you to let you know that sometimes the ETF analysis in this column may be brief, while other times will be more extensive with several simultaneous technical trade setups.
The commentary above is an excerpt from The Wagner Daily newsletter, which we have been publishing since 2002. Subscribers to the full version receive our exact entry and exit prices for swing trades of the top ETF and stock picks, access to our market timing model, and more. To get started today, sign up for your 30-day risk-free trial to our Wagner Daily stock newsletter or visit our trading blog to learn more about our proven technical trading strategy.
Cara on the Metalminers
Cara on the International Markets
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report