A weak start to yesterday's session initially caused the S&P and Dow to move out of their tight ranges, but they recovered to once again close near the flat line. Both the S&P 500 and Nasdaq Composite lost 0.1%, while the Dow Jones Industrial Average declined 0.2%. The small-cap Russell 2000 was unchanged, but the S&P Midcap 400 edged 0.1% higher. Each of the major indices finished off their highs, but within the upper third of their intraday ranges.

Total volume in the NYSE increased by 8%, as volume in the Nasdaq was 9% lighter than the previous day's level. Even though the S&P dropped on higher volume, the 0.1% decrease was once again too light to label the session as a bearish "distribution day." It's positive that turnover in the Nasdaq receded, but higher volume in the NYSE was indicative of "churning" that often occurs when institutional traders are selling into strength. In both exchanges, advancing volume was roughly on par with declining volume.

While many sectors chopped around in a sideways range in the latter half of January, one industry that trended steadily higher was Metals and Mining. Launched in June of 2006, the StreetTRACKS Metal and Mining (XME) is a relatively new ETF that provides direct exposure to the sector. After rallying back above its 50-day moving average on January 23, XME broke out to a close at a new high on February 1. Since then, it has been consolidating at its high in a narrow, sideways range. This is illustrated on the daily chart of XME below:



As you can see, XME dipped below its five-day range yesterday, but reversed to finish back in its prior range of consolidation. It is usually bullish when a stock or ETF does this because it shakes out the "weak hands" by running stops that are set too tightly below the range. This, in turn, eats up supply that more easily enables the equity to break out to resume its uptrend by breaking out to a new high. Therefore, we like XME as a long entry if it trades above its February 7 high of 54.01.

In the February 7 issue of The Wagner Daily, we discussed three ETFs we were stalking for potential long entry: iShares Networking (IGN), CurrencyShares Euro Trust (FXE), and the Pharmaceutical HOLDR (PPH). Of the three, IGN has already triggered and FXE is likely to do so within the next several days. PPH fell back below its 20-day MA and may be losing its relative strength.

With IGN, we were looking for a long entry point above the high of its two-month sideways consolidation. It gapped up right to resistance at 33.28 on February 7, then broke out above the range yesterday:



Because of the indecisive and choppy nature of the market, we passed on buying IGN as an "official" play. However, IGN should be one of the leading ETFs if the Nasdaq gets in gear and resolves itself to the upside.

FXE, which tracks the price of the Euro relative to the U.S. dollar, closed yesterday right at resistance of its two-month downtrend line. As illustrated on the weekly chart below, any further gains in today's session will push it above the upper channel of its intermediate-term downtrend:



Regular subscribers should note that we continue to stalk FXE for potential long entry. Trigger, stop, and target prices have been updated in "Today's Watchlist" below. Unlike IGN and PPH, the direction of FXE is not directly correlated to the action in the broad market. Therefore, we are comfortable buying this ETF even if the stock market remains erratic and range-bound.

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.