This is my primary focal point today

Stocks chopped around in a lazy,
sideways range throughout last Friday’s session
before finishing the day mostly higher. The Nasdaq Composite advanced 0.3% and
the S&P 500
(
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PowerRating) eked out a 0.1% gain, but the Dow Jones Industrials
(
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lost 0.1%. The mid-cap S&P 400 rallied 0.4% and the small-cap Russell 2000
gained 0.6%, enabling the latter index to squeak by with a new all-time closing
high.

Curiously, turnover again declined in both exchanges. Total
volume in the NYSE was 5% lighter, while volume in the Nasdaq
(
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PowerRating) came
in 12% lower than the previous day’s level. The overall drop in turnover means
that volume levels in both exchanges came in below average every day last week.
Friday was the Nasdaq’s lightest volume day of the year, while it was the second
lightest day of the year in the NYSE. When a market is printing its lowest
volume levels in months, it cannot be trusted because it could easily make a
sharp move in either direction when instituional activity eventually returns.
Without even looking at any technical chart patterns, the unusually low volume
levels alone give astute traders sufficient reason for caution on both sides of
the market.

After an orderly correction down to its 50-day moving average,
the iShares Gold Trust (GLD) has begun to resume its six-month uptrend. We
recently discussed GLD when it touched its 50-day MA two weeks ago, but first
wanted to see confirmation of price stabilization and the formation of a base of
support before re-entering gold-related shares. After bouncing off its 50-MA on
February 16, GLD subsequently traded in a tight, sideways range for the next
four days before popping over its 20-MA on Friday. We like its recent action and
feel GLD will probably set another new high in the near future. Looking at the
chart below, notice how GLD perfectly bounced off convergence of its uptrend
line and 50-day MA two weeks ago and has once again begun to resume its uptrend:

Although we are not presently in GLD, we did buy individual
stock Newmont Mining (NEM) last Friday (as per the setup in the February 23
issue of

The MTG Stalk Sheet).

As for the broad market, last Friday’s action did nothing to
change the overall technical picture. The pivotal 1,295 resistance level on the
S&P 500 remains our primar focal point going into today. As mentioned in the
February 24 issue of

The Wagner Daily,
that level is a key make it or break it” point for the entire broad market. Just
as important is that the Nasdaq Composite closed right at resistance of its
daily downtrend line. A sharp move in either index is likely to pull the other
along with it because of the closely-followed resistance levels in both indices.

It goes without saying that now is definitely not the time to
be making aggressive bets on either side of the market. However, the major
indices are likely to resolve themselves in one direction or the other within
the next one to three days. When they do, being already positioned mostly in
cash will enable you to quickly and easily initiate new positions in the same
direction as the trend. In the meantime, be sure to have a list of stocks and
ETFs that are showing relative strength and relative weakness. Above all,
remember to trade what you see, not what you think!

Open ETF positions: