Commentary:

Stocks gapped up sharply on Tuesday and steadily rallied the entire day, to close at session highs. All five major indices ended the session up more that 2.75%. The small-cap Russell 2000 led the surge as it added a whopping 4.2%. The S&P MidCap 400 improved by 3.5%, while the Nasdaq tacked on 3.2%. The S&P and the Dow Jones Industrial Average advanced by 3.0% and 2.9% respectively.

Market internals were decidedly bullish yesterday. Volume improved by 14.5% on the Nasdaq and 7.5% on the NYSE. Advancing volume overpowered declining volume by 35.4 to 1 on the NYSE and 10.5 to 1 on the Nasdaq. The sharp jump in volume points directly to institutional participation in the move. Yesterday was a definitive accumulation day for the broad market.

Since late November, the ProShares UltraShort Yen (YCS) has been setting a series of higher lows as it has consolidated along its 20-day EMA. A move above Monday’s high of $42.08 could present a long opportunity in this ETF.

Yesterday, the Market Vectors Retail ETF (RTH) gapped up and formed an inside candle. Further, it closed back above both its 20-day and 50-day moving averages. A volume fueled move back above Monday’s high of $111.84 could provide a buying opportunity in this ETF.

It is days like today that test the mental fortitude of a trader. Not only is it important to have sound trading rules, but it is also important to honor those rules. Naturally, it’s upsetting when trades unexpectedly gap against you the way these positions did yesterday. However, you can’t become a deer in the headlights or beat yourself up over a legitimate entry. Further, you CANNOT allow hope to enter your thinking. Hope is a dangerous emotion because it leads to very bad trading habits such as not honoring stops and adding to losing trades.

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Today’s Watchlist:

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

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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

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Notes:

• Per intraday alert, sold EDZ ahead of the stop due to the sharp reversal action. SMN triggered our protective stop.
• 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.
• For those of you whose ISPs occasionally deliver your e-mail with a delay, make sure you’re signed up to receive our free text message alerts sent to your mobile phone. This provides a great way to have redundancy on all Intraday Trade Alerts. Send your request to support@morpheustrading.com if not already set up for this value-added feature we provide to subscribers.

Edited by Deron Wagner,
MTG Founder and
Head Trader