ETFs Show the Upside of 'Undercutting' Lows Page 2
In the short term, my overall plan is to wait for the major indices to approach support of their 20-period exponential moving averages on the hourly chart (20-EMA/60 min). During trend reversals, waiting for the major indices to touch their 20-EMA/60 min., rather than chasing a parabolic rally, is an ideal way to participate in the bullishness with a controlled level of risk. The touch of the 20-EMA/60 min. could come from a short period of sideways consolidation or a pullback in price. Either way is preferable to seeing another day of large gains without giving the market a chance to catch its breath.
Next week, I'll take a look at trade setups in the industry sectors and international ETFs that may provide the best chance for outperformance if the market's rally gets some legs. For now, all bets are off on the short side unless Thursday's intraday lows are broken -- yikes!
P.S. Will you be there when Cramer makes his next move?
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ETFs Short ETFs Can Work for the Vigilant Bear 11/11/2008 11:46 AM EST This can be a good choice for small investors who feel the market will fall - but keep an eye on it.
ETFs Good Time to Go to the Gold Mine 11/5/2008 2:29 PM EST This gold-mining ETF should benefit from new political leadership and persistent inflation.
At the time of publication, Wagner had no positions in the ETFs mentioned.
Deron Wagner is the founder and head trader of Morpheus Trading Group. His daily focus is managing and trading the Morpheus Capital Hedge Fund, which he founded in April of 2004. He also teaches his trading methodology with The Wagner Daily, The MTG Stalk Sheet, and The Wagner Weekly newsletters.
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