A Little Bear With That Chile(ECH)


Stocks moved modestly higher on Friday on very light trade. All the major indices ended the session up with the Dow Jones Industrial Average leading the move. By the closing bell the blue chip index tacked on 1.1%. The Nasdaq added 0.6% while both the S&P 500 and S&P MidCap 400 rose 0.5%. The small-cap Russell 2000 was the session laggard as it posted a small 0.3% gain.

Market internals were both mixed and unimpressive. Volume plummeted by 29.0% on the Nasdaq and the NYSE. The spread ratio fell slightly in favor of advancing volume by a ratio of 1.4 to 1 on the Nasdaq and 1.5 to 1 on the NYSE. The substantial drop off in volume makes Friday’s rally suspect. There is little doubt that institutional buyers were absent from the market on Friday.

The ProShares Ultrashort Financials ETF (SKF) pulled back and held support of its 20-day EMA on Friday after selling off briskly at the open. This inverse ETF showed excellent relative strength on Friday as it rallied with the market. Further, the recent pullback in SKF has occurred on declining volume. SKF is in a distinct trend reversal and we are monitoring it as a potential long candidate. Ideally we would like to see SKF move sideways and consolidate for a few days before potentially moving higher.

On Friday the iShares MSCI Chile Investable Market Index ETF (ECH) formed a reversal candle as it found resistance at the 50% Fibonacci retracement level (drawn from July 7th swing high to August 8th swing low). An ideal short setup would be for ECH to consolidate for a few days, retest the high of yesterday’s reversal candle and overcut the 20-day EMA before possibly resuming its current trend lower. We have ECH on the radar as a possible short candidate.

Friday provided the least volatility that we have seen in several weeks. Both volume and price action contracted significantly on Friday but the VIX (VXX) is consolidating above key support of the 20-day EMA. Our bias is still on the short side of the market and therefore we are actively scanning for bearish setups. Via an intraday alert on Friday we entered a long position in BZQ (Inverse Brazil ETF). Trade details are available in the open positions segment of the newsletter.

Today’s Watchlist:

There are no new setups for today. As always, we will send an intraday alert if any new trades are made.

Daily Performance Report:

Below is an overview of all open positions, as well as a performance report on all positions that were closed only since the previous day’s newsletter. Net P/L figures are based on the $50,000 Wagner Daily model account size. Changes to open positions since the previous report are listed in red text below. Please review the Wagner Daily Subscriber Guide for important, automatic rules on trigger and stop prices

    position summary

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  • Per intraday alert, bought BZQ on a pullback.
  • Reminder to subscribers – Intraday Trade Alerts to your e-mail and/or mobile phone are normally only sent to indicate a CHANGE to the pre-market plan that is detailed in each morning’s Wagner Daily. We sometimes send a courtesy alert just to confirm action that was already detailed in the pre-market newsletter, but this is not always the case. If no alert is received to the contrary, one should always assume we’re honoring all stops and trigger prices listed in each morning’s Wagner Daily. But whenever CHANGES to the pre-market stops or trigger prices are necessary, alerts are sent on an AS-NEEDED basis. Just a reminder of the purpose of Intraday Trade Alerts.
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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader