E-mailed to you each morning before the market opens, The Wagner Daily provides concise commentary and technical analysis on the ETFs, major market indices, and industry sectors that are setting up for potential trade entry. Rather than focusing on only the popular ETFs such as the S&P 500 SPDR (SPY) and the Nasdaq 100 Tracking Stock (QQQQ), Morpheus Trading Group monitors and looks for trade setups from the complete universe of ETFs traded on the U.S. markets. If you have not already done so, please download and print the free Morpheus ETF Roundup guide, an excellent reference tool designed to help you get the most out of your Wagner Daily subscription.

The user-friendly format of each edition of The Wagner Daily consists of the following three sections that are explained in detail below. In order to get the most from your subscription, we suggest printing this user guide:

• Commentary - This section discusses how the previous day's action may affect the next trading session, highlights the technical state of the broad market, and highlights specific sectors and ETFs that we are stalking for potential entry on both the long and short side of the market.



• Legend to chart annotations - On the charts included in each day's issue, here is a key for the various indicators on the charts:



• purple dashed line = 10-day SMA (simple moving average)
• beige line = 20-day EMA (exponential moving average)
• teal line = 50-day SMA
• thick orange line = 200-day SMA


• Today's Watchlist - When clear ETF trade opportunities present themselves, this is where the specific details of the technical setup are explained. An annotated graph, explanation of the setup, share size, trigger, stop, and target prices are all provided. The frequency of setups provided is dependent on both market conditions and our current number of open positions, but we typically target one to two new ETFs for entry each week. Holding times vary, but average between 1 to 3 weeks. Rather than inundating you with an unrealistic number of trades to follow, we use an actual model account that ensures we are never positioned beyond its maximum buying power. The model account is $50,000 that can use 2 to 1 margin, giving a total buying power of $100,000. Traders can simply divide or multiply our pre-determined share size in order to match the proportionate size of their own trading account. Here is an explanation of the terms used in this section:
  
  
  • Shares - The share size we are targeting for entry, based upon the $50,000 model account explained above. Maximum risk per trade (share size times the number of points to the stop) is 2% of the model account size ($1,000). However, most trades are sized for a risk of approximately 1% of capital.
  
  
  
  • Trigger - Exact price that the ETF must trade through before we will enter the trade. For a "long" setup, the ETF must trade at or above the trigger price. For a "short" setup, it must trade at or below the trigger price. Unless informed otherwise via Intraday Trade Alert to your e-mail or mobile phone, we will only enter the position if the trigger price is hit. Entering a trade before it trades through its pre-determined trigger price substantially increases the risk of loss, and is not recommended.
    
    Whenever the opening trade of an ETF would cause it to immediately trigger for entry, we always wait until 9:35 am ET (five minutes after the open), then make sure the current price still exceeds the trigger price, before entering the trade. If the ETF opens beyond our trigger price, but is trading back below the trigger price at 9:35 am ET, we wait for the ETF to subsequently trade through our trigger price again before entering. This key rule prevents rogue opening trades outside the actual market price from falsely triggering our setups for entry.
    
    Because of the above rule, we do not recommend the use of GTC (good 'til canceled) stop orders to enter positions. Subscribers who are unable to physically place orders during opening market hours should take advantage of "conditional orders" that many online brokers offer. With TradeStation, for example, traders can place an order, while the market is still closed, that specifies the order will not go live until 9:35 am.
  
  
  
  • Stop - If the setup triggers, this is the initial price at which we will have a protective stop market order. As a position becomes profitable, this stop price will often be trailed higher in order to lock in profits. If any changes occur intraday, an alert will be promptly sent. Adjustments to the stop price are also reported in the following day's newsletter, under the "Daily Performance Report" section.
    
    All protective stops that trigger within the first five minutes of trading are automatically ignored. If an ETF trades through its stop price within the first five minutes of trading, a new, firm stop is automatically placed fifteen cents below the low of the first five minutes. This key rule prevents rogue opening trades, well outside of actual market prices, from falsely triggering any protective stops.
    
    Because of the above rule, we do not recommend the use of GTC (good 'til canceled) stop orders to close positions. Subscribers who are unable to physically place orders during opening market hours should take advantage of "conditional orders" that many online brokers offer. With TradeStation, for example, traders can place an order, while the market is still closed, that specifies the order will not go live until 9:35 am.
  
  
  
  • Target - This is the roughly anticipated price we expect the ETF will move to. Unless informed otherwise, we automatically close trades as soon as they hit their target prices. However, this does not mean we will always hold the ETF to that price. When conditions warrant, we will sometimes take profits before the target price. Again, any pre-market changes to the target price are reported under the "Daily Performance Report," while you will be informed of intraday changes via e-mail or mobile phone alert.
  
  
  
  • Dividend Date - In recent years, dividend payments have become a key benefit to trading certain types of ETFs. While dividends in most broad-based or industry sector ETFs are not substantial, certain families of ETFs pay rather large dividends based on the underlying manner in which they are composed. Just like individual stocks, the prices of ETFs are always adjusted lower by the amount of the dividend payment on the date they trade "ex-dividend." Since you get paid the cash dividends, you're not losing any money on such transactions, but the price adjustment can affect the stop and target prices of our technical setups. Therefore, we automatically adjust our stop and target prices for the trade if we are holding any ETFs through their "ex-dividend" date. When this occurs, changes to the dividend-adjusted stop and target prices will be noted under the "open positions" section of the "Daily Performance Report."


• Daily Performance Report - An overview of all open ETF positions, as well as a performance report on all closed positions, is listed here. For the sake of simplicity, only positions that have been closed since the previous day's newsletter are reported each day. A cumulative performance report of all past trades can be found on the MTG web site. When changes to open positions such as stop or target prices have been made, they are highlighted in red text for easy reference. "Unrealized P/L" of open positions is based on the closing marked to market value of the most recent trading day. "Net P/L" of closed positions is based on the model account size and includes realistic commission fees of one cent per share. When reporting closed positions, we use realistic entry and exit prices that account for normal slippage, rather than the exact, theoretical prices that were listed in the setup.