These ETFs are set to move higher

The major indices closed modestly
higher last Friday, wrapping up a week of solid
gains for the broad market. After trading in a narrow, sideways range throughout
the entire session, the S&P 500
(
SPX |
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PowerRating), Nasdaq Composite
(
COMP |
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PowerRating), S&P
Midcap 400
(
MDY |
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PowerRating), and Russell 2000
(
RUT |
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PowerRating) indices each closed 0.3%
higher. The Dow Jones Industrials
(
DJX |
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PowerRating) gained 0.4%. Each of the major
indices finished near their intraday highs and at their best levels for the
week. The Nasdaq gained 1.6% for the week, while the S&P 500 advanced 1.2%. We
sold half of our long position in BBH into strength and locked in a gain
of 8 points. Because it continues to consolidate near its highs, we plan to
continue holding the remaining shares with a trailing stop below the hourly
uptrend line.

Due in part to the Veteran’s Day holiday, turnover declined
sharply on both exchanges last Friday. Total volume in both the NYSE and Nasdaq
was 26% lighter than the previous day’s levels and below their average levels as
well. Although the broad market advanced on lighter volume, it was positive that
the bears did not take advantage of the opportunity to sell into strength. Lack
of demand from a low volume rally always presents an ideal chance for sellers to
step in, but there not many to be found in Friday’s session. Market internals
were positive, as advancing volume exceeded declining volume by a ratio of
approximately 2 to 1 in both exchanges.

In the November 10 issue of The Wagner Daily, we
pointed out the bullish setup that was taking place in the Gold and Silver Index
($XAU). The sector retraced a small percentage later that day, but surged 2.9%
higher the following day. Like November 9, the $XAU index was the leading
industry sector in last Friday’s session. Last week’s 5.2% gain in the $XAU
caused the index to clearly break out above resistance of its daily downtrend
line from the September 30 high. This also resulted in $XAU setting its first
“higher low” and subsequent “higher high” since the correction began on
September 30:

Because the primary uptrend line on the weekly chart remains
perfectly intact, we have strong reason to believe the $XAU index will soon
break out to a fresh multi-year high. Spot gold has also begun moving in sync
with the gold and silver mining stocks, so we sent an intraday e-mail alert to
subscribers last Friday, informing them of our new entry in
(
GLD |
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PowerRating) (StreetTracks
Gold Trust). Obviously, we expect GLD to set a new high in the coming days as
well.

Taking an updated look at some of the other industry sectors
we have recently discussed, you will see that the Semiconductor Index
(
SOX |
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PowerRating)
remains in the middle of last month’s range. Because it is in “no-man’s land,”
we feel it is risky to take aggressive position in the $SOX right now unless you
are only looking to trade momentum with holding periods of no more than a day or
two. Conversely, the Biotech Index
(
BTK |
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PowerRating) closed last week at a new 4-year
high. The Biotech HOLDR
(
BBH |
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PowerRating) set its highest weekly closing price since the
week ending March 10, 2000! The prior week ending March 3, 2000 was its all-time
closing high of $242.75. As the weekly charts below illustrate, there is little
resistance of overhead supply to get in the way of both the $BTK Index and BBH:

Although we have not discussed it much, the Financial sectors
also did quite well over the past week.
(
XLF |
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PowerRating) (Financial SPDR) closed last
week at a record high of $31.61, so its prior highs should now act as support.
The monthly chart of XLF below shows the breakout:

As for the broad market ETFs, QQQQ is the only one that closed
last week at a new 52-week high. SPY is close to doing the same, but it still
has overhead supply to contend with. Therefore, we recommend focusing any broad
market long entries in the Nasdaq, although a few S&P type sectors such as
Financials are outperforming.

Open ETF positions: