ETFs and market commentary:
Stocks surged higher on Thursday but on lighter trade. Following Wednesday’s poor performance, bulls stepped back into the market yesterday, carrying the major indices well into the black. Yesterday’s rally easily erased all of Wednesday’s losses. Higher beta issues dominated the action, as the small-cap Russell 2000, S&P MidCap 400 and Nasdaq posted gains of 2.0%, 1.6% and 1.5% respectively. The S&P 500 added 1.1%, while the DJIA climed 1.0%. Technology issues caught fire resulting in a strong showing by the semiconductor, networking and software sectors. The banking, insurance and oil services sectors also outperformed. The homebuilder and defense sectors were the day’s big losers
Although Thursday’s price action was quite bullish, market internals ended the session mixed. Turnover fell on the Nasdaq by 5.0% and on the NYSE by 1.3%. Advancing volume easily topped declining volume on both exchanges. By the closing bell the spread ratio stood at a plus 5.7 to 1 on the NYSE and a plus 4.2 to 1 on the Nasdaq. Yesterday felt like an accumulation day but the light volume suggests that institutions were not fully vested in the day’s action.
Yesterday, on above average volume, the iShares MSCI Malaysia Index Fund (EWM) formed a bullish reversal candle. EWM undercut its 20-day EMA but roared back to close near session highs. A volume powered move above Thursday’s high of $14.42 could provide a buying opportunity in this ETF. On pullback entries, we generally look to enter long positions just above big reversal candles.
The iShares MSCI EAFE Small Cap Index Fund (SCZ) undercut its 200-day MA and held support at the three day low yesterday. Futher, SCZ formed a reversal candle and is now poised to make a move higher if it can get above the two day high of $39.18. We will be monitoring SCZ closely for a possible long entry.
XLU hit its trigger yesterday and we entered the trade. SOXL rallied strongly and closed at session highs (up over 7%). We may look to exit this position if it gaps up in the morning. DVY ripped higher on big volume and also closed near session highs. Our watchlist candidates, PPH and IAU, both closed at session highs and are now within striking distance of their entry triggers.
After being placed under duress on Wednesday, the market demonstrated bullish resiliency, as it recovered to set new highs. Once again buyers stepped in to buy the pullback and reverse the tables on market bears. The only thing missing from yesterday’s rally was strong volume. It would have been nice to see the market put in an accumulation day in the wake of Wednesday’s selling.
Today’s ETF Watchlist:
Note: The old watchlist is replaced by the excel graphic below:
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 DailySubscriber Guide for important, automatic rules on trigger and stop prices
Having trouble seeing the position summary graphic above? Click here to view it directly on your Internet browser instead.
Notes:
- SOXL is listed twice in the open positions section due to the split stops. XLU buy setup triggered yesterday and we are long.
- 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 [email protected] if not already set up for this value-added feature we provide to subscribers.
The market put in a nice reversal following Wednesday’s half distribution day (NYSE saw distribution only) and remains quite resilient. Per intraday alert, we re-entered TSCO and added back the shares of IACI we sold, which followed through nicely to the upside. We have one new official setup today in BWLD, which is a pullback buy on the hourly chart. The first pullback / undercut of the 20-period EMA in a fast moving stock is sometimes the only pullback we get. Since the setup is based on an intraday chart we are using reduced share size.
NOTE: We are changing the name of the Full-Serve watchlist to the “Stock Watchlist” to reduce confusion so that both newsletters use the same terminology. Because of this, we will no longer have a Self-Serve watchlist.
Daily Stock Summary
Below is an overview of all “full-serve” open positions, as well as a performance report on all “full-serve” positions that were closed only since the previous day’s newsletter. Net P/L figures are based on the $50,000 model account size. Changes to open positions since the previous report are listed in red text below.
Having trouble seeing the position summary graphic above? Click here to view it directly on your Internet browser instead.
Notes:
- BIIB buy setup triggered and we are now long.
- Per intraday alert, sold AKRX on a bounce yesterday to lock in gains. We also added back the 75 shares of IACI that we sold yesterday at 45.35, giving us an average entry price of 45.01 which is highlighted in red.
- Although a text alert to sell OPK at 5.11 was sent yesterday, the email alert did not go through. We are selling OPK at market, 5 minutes after the open, due to the lack of follow through from our entry point. We no longer like the setup, as it has taken too long to recover off the lows. Cancel the buy setup at 5.38.
Relative Strength Watchlist:
The Relative Strength (or RS) Watchlist makes it easy for subscribers to import data into their own scanning software, such as Tradestation, Interactive Brokers, and TC2000. The list is comprised of the strongest 100 (or so) stocks in the market over the past six to 12 months. The scan is based on the following criteria and is updated every Monday:
- Stock is in a well defined uptrend, trading above both the 50-day and 200-day moving averages, with the 50-day moving average above the 200-day moving average (both moving averages should be in an uptrend as well).
- Today’s close is less than 20% off the 52-week high
- Close is greater than $5.
- Volume is greater than 200,000 shares per day (using a 50-day volume moving average).
Click here to view this week’s Relative Strength Watchlist in excel
Click here to view this week’s Relative Strength Watchlist as a text file