After two days of high volatility, stocks chopped around in a sideways range yesterday before finishing modestly higher. The Nasdaq Composite bounced 0.5%, as both the S&P 500 and Dow Jones Industrial Average gained 0.4%. The small-cap Russell 2000 advanced 0.5% and the S&P Midcap 400 rose 0.8%. The major indices closed just above the middle of the day's directionless trading ranges.

Lower volume gains followed Wednesday's session of higher volume losses. Total volume in the NYSE eased 4%, while turnover in the Nasdaq was 11% lighter than the previous day's level. Market internals in the NYSE were nearly flat, with advancing volume fractionally exceededing declining volume. The Nasdaq adv/dec volume ratio was positive by a ratio of just over 3 to 2.

In the realm of international ETFs, some of the more popular regions right now include countries such as China (FXI), Taiwan (EWT), and Brazil (EWZ). A relatively new ETF that many traders may not yet be familiar with is the Market Vectors Russia (RSX). Launched one year ago, RSX is the first and only ETF comprised solely of publicly traded Russian-based companies. Despite recent weakness in the U.S. markets, RSX surged 4.4% and broke out to its highest level of the year yesterday. Notably, much higher than average volume accompanied the breakout, pointing to institutional demand. This is illustrated on the daily chart of RSX below:



RSX is worthy of consideration if you're looking for an ETF with low correlation to the U.S. markets. If the domestic markets decline further in the near-term, it's quite likely RSX will show relative strength and buck the trend. As for an entry, consider waiting for the 20-period exponential moving average on the hourly chart to rise up and provide support. With breakouts, a pullback to the 20-EMA on the hourly chart is often a low-risk entry point.

Because the main stock market indexes spent yesterday's session consolidating in the bottom third of their previous day's lows, the daily charts have started to form "bear flag" patterns. Unless stocks suddenly jump above yesterday's highs in today's session, odds are good the major indices will follow through to the downside, on the heels of Wednesday's break of the hourly uptrend lines. A breakdown below yesterday's lows in the S&P 500 and Dow Jones Industrial Average would also coincide with a break of their 20-day EMAs, thereby triggering further downside momentum. The Nasdaq Composite is still 1.5% above its 20-day EMA.

If the S&P 500 and/or Dow Jones Industrial Average fall firmly below their 20-day EMAs, expect the next major support to be found at their 50-day MAs. For the S&P, the 50-day MA is at 1,352. The Dow will meet its 50-day MA at 12,498. Our new position in the UltraShort Dow 30 ProShares is showing an unrealized gain, so we will trail the stop higher to protect profits as it moves further into the money.

Open ETF positions:

Long - DXD, UUP
Short - (none)

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and Morpheus Trading Group, a trader education firm launched in 2001 that provides daily technical analysis of the leading ETFs and stocks. For a free trial to the full version of The Wagner Daily or to learn about Wagner's other services, visit MorpheusTrading.com or send an e-mail to deron@morpheustrading.com.