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The Wagner Daily - May 29, 2008

 May 29, 2008 10:05 AM


Like the previous day, stocks meandered through the session in a choppy, see-saw fashion before finishing in slightly positive territory. This time, however, the Nasdaq lagged behind. The S&P 500 and Dow Jones Industrial Average posted identical gains of 0.4%, but the Nasdaq Composite ticked just 0.2% higher. Considering the tech-heavy Nasdaq more than doubled the gains of the S&P and Dow with its 1.5% advance on Tuesday, it was interesting that the Nasdaq showed such relative weakness yesterday. Small and mid-cap stocks turned in the best performance, as the Russell 2000 and S&P Midcap 400 rallied 0.6% and 0.9% respectively. The broad-based indexes settled near the top of their indecisive, intraday ranges.

[Related -Perfect Storm Driving Gold Higher]

Total volume in the NYSE increased 12% above the previous day's level, while volume in the Nasdaq rose 7%. The gains on higher volume technically enabled both the S&P and Nasdaq to register an "accumulation day," but intraday price action was certainly not very indicative of institutional buying. Turnover in both exchanges also remained well below 50-day average levels. Market internals were nominally positive. In both the NYSE and Nasdaq, advancing volume exceeded declining volume by a margin of less than 3 to 2.

The International sector comprised many of the top-performing ETFs yesterday. The main stock market indexes of the U.S. are more than ten percent below their 52-week highs, but ETFs from several global regions remain at or near their all-time highs. Within the international arena, Market Vectors Russia (RSX) was among the biggest of yesterday's gainers. Cruising 1.9% higher, RSX followed through on the previous day's bullish "hammer" candlestick pattern, breaking out above resistance of its hourly downtrend line in the process. As per our analysis in yesterday morning's Wagner Daily, the breakout caused RSX to trigger our buy entry as well. Presently, RSX is showing an unrealized point gain of seventy cents since yesterday afternoon's entry. We also remain long the Semiconductor HOLDR (SMH) and StreetTRACKS Gold Trust (GLD), both of which are also showing marked-to-market gains. We'll continue trailing stops higher on all open positions in order to protect profits and minimize risk.

[Related -SPDR Gold Trust (ETF) (GLD): 3T Analysis: Target $1,400 but Box Bound]

Turning in an even better performance yesterday was the iShares Brazil Index (EWZ), which raced 3.6% higher yesterday. Bouncing off support of its 20-day exponential moving average after a gentle, one-week pullback, EWZ has a similar daily chart pattern to RSX. Barring any sudden, major weakness in the U.S. markets, both EWZ and RSX are now positioned to set fresh record highs in the coming days.


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