Wagner Daily Lite – February 10, 2012 ($VXX)

Stocks muddled their way through another directionless day of trading to close mixed.  Powered by AAPL, the Nasdaq tacked on 0.4% to lead all indices.  The S&P MidCap 400 and the S&P 500 both gained 0.2% while the Dow Jones Industrial Average eked out a 0.1% advance.  The small-cap Russell 2000 was the session’s underperformer, as it shed 0.4% yesterday.  The strongest performing stocks came from the Internet, software, solar energy, oil services and emerging market sectors.  Under-performing sectors included utilities, healthcare, pharmaceuticals, natural gas, precious metals and real estate.

Since March or 2011, the iShares MSCI Japan Index Fund (EWJ) has been in a major downtrend.  On Wednesday, this ETF rallied above its down-trending 200-day MA for the first time since July of last year.  However, yesterday, EWJ struggled to hold support of this key mark.  EWJ could provide a shorting opportunity on a rally into resistance of its downtrend line or if it loses support of the 200-day MA on a spike in volume.  Although we’re still bullish on the market, EWJ could provide a shorting opportunity should the market correct for a few sessions.  Regardless, when the market does see it’s next reversal, ETFs that are rallying into resistance of long term downtrend lines and down-sloping 200-day MAs will generally provide the best shorting opportunities.

(chart available in today’s Wagner Daily newsletter)

Our open positions continue to perform well.  DVY claimed a new 52-week high yesterday, while IYT remained in consolidation mode.  For the third time in as many days, IYT tested its 20-day EMA and held support at this key mark.  We may consider adding to this position above the 3-day high.  VXX spiked more than 5% yesterday and we must be mindful that an increase in volatility may be upon us.

The commentary above is an excerpt from our nightly Wagner Daily newsletter. Subscribing members receive annotated ETF and stock charts, detailed entry and exit prices for potential swing trade entries, and  additional technical market commentary.

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