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. Mr. Wagner teaches his trading methodology to nearly 3,000 subscribers of his free weekly newsletter, The Wagner Weekly, and is also well-known in the trading community for his subscription-based newsletter, The Wagner Daily, which provides daily technical analysis of ETFs and educational broad market commentary. In addition to publishing his daily commentary and analysis through Morpheus Trading Group, his work appears daily on several popular financial web sites.
Mr. Wagner also appears on his best-selling video, Sector Trading Strategies (Marketplace Books, June 2002), and is co-author of both The Long-Term Day Trader (Career Press, April 2000) and The After-Hours Trader (McGraw Hill, August 2000). He is also a regular contributor to Stock Futures and Options magazine, and has also written for Active Trader magazine. Past television appearances include CNBC, ABC, and Yahoo! FinanceVision. He is a frequent guest speaker at various trading and financial conferences around the world and can be reached by sending an e-mail to deron@morpheustrading.com or by visiting MorpheusTrading.com.
It's looking more and more like a test of the 50% retracement levels is going to happen, but Deron Wagner notes that that doesn't mean there won't be some violent short squeezes and counter-trend retracements along the way.
Deron Wagner notes that iShares Brazil (EWZ) has recovered all the way to a new all-time high, and is perhaps showing the most relative strength of any international ETF right now.
Aside from the relative strength and divergent patterns in a few specialty ETFs, Deron Wagner is not enthused about being heavily positioned in anything other than cash right now.
It's positive that the S&P is breaking out of its recent range and a few more industries have moved to new highs, but negative factors such as low volume levels and relative weakness in the Nasdaq may counter the breakout.
A massive rally in the final thirty minutes of trading on Friday enabled the major indices to erase their intraday losses of more than 1% and close back in the middle of their two-week sideways ranges.
If the Nasdaq can't muster up enough strength to break out above its recent range very soon, be prepared for the 20-day EMA to push the index back down to test its January lows.
As soon as Deron Wagner regains confidence that the choppy, sloppy times have passed, we'll be ready to jump back in the market in the direction of the near-term trend.
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