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Wagner Daily Lite – Mexican ETF heating up ($EWW)

March 20, 2012

Stocks closed higher on Monday, but faded into the close on lighter trade. The small-cap Russell 2000 finally set a new 52-week high, as it cleared resistance of the 833 level. By the closing bell, the Russell had tacked on 0.9%. The Nasdaq finished a close second, as it added 0.8%. The S&P 500 improved by 0.4%, while the S&P MidCap 400 saw a 0.2% advance. The Dow Jones Industrial Average was the day’s laggard, as it closed only fractionally above breakeven. Telecommunications, construction and utilities were among the weakest sectors. Gaming, tourism and computer hardware showed relative strength.

Yesterday marked the fourth consecutive day that internals were mixed. Volume plunged on the Nasdaq by 23.9% and on the NYSE by 44.9%. However, advancing volume held the upper hand over declining volume by a ratio of 1.2 to 1 on the NYSE and 2.0 to 1 on the Nasdaq. Based on Monday’s light volume, it is safe to say that institutions were not active in the market. Neither the Nasdaq nor the NYSE posted an accumulation day.

Over the past four sessions, the iShares MSCI Mexico Investable Market ETF (EWW) has been consolidating in a tight, pennant-like formation. A move above yesterday’s high of $61.50 could provide a buying opportunity in this emerging market ETF:

The breakout in the small-cap Russell 2000 to a fresh 52-week high was a positive development yesterday and should spur more buying activity in the market. Ideally, we would now like to see the small-cap index hold the breakout and close the gap with the other major indices before pulling back to test its new-found support.

The commentary above is a partial excerpt from The Wagner Daily, our nightly stock and ETF swing trading newsletter. Subscribing members additionally receive specific entry and exit prices for all swing trade setups, more technical market commentary, annotated ETF and stock charts, and access to our Live Trading Room. Click here to become a member for less than $2 per day (based on annual subscription). Your full satisfaction is guaranteed.

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