ETFs and market commentary:
Stocks recovered from significant early losses to finish the day mixed, and well off session lows. Four of the five major indices closed lower on the day but escaped distribution due to the intraday reversal. The Dow Jones Industrial Average was the strongest index on the day. The big cap index eked out a 0.1% gain. The S&P 500 and the S&P MidCap 400 fell 0.2% and 0.1% respectively. Both the small-cap Russell 2000 and the Nasdaq dropped 0.3% yesterday. Coal, healthcare, steel and telecommunications all performed well yesterday, while home construction, retail and financials showed relative weakness. Still, most sectors posted bullish reversal candles, thereby mitigating the impact of the negative price action.
Market internals ended the session mixed. Volume ended lower by 0.8% on the NYSE and 0.4% on the Nasdaq. However, declining volume held the upper hand on both exchanges. By the closing bell the spread ratio stood at minus 1.5 to 1 on the NYSE and minus 1.6 to 1 on the Nasdaq. Although both the NYSE and Nasdaq finished lower, volume was lighter and a distribution day was averted. Further, the late day price reversal combined with the late day spike in volume suggests that institutions were accumulating stocks into the close. Even if volume had been higher, we would have been hard pressed to categorize yesterday as a distribution day given the massive reversal.
Yesterday, IYR formed a second consecutive reversal candle and now appears ready to make a move higher. Notice how IYR undercut but reversed to hold support of the five day low. Also notice that this occurred on an uptick in volume. All of these factors bode well for IYR if it can find its way back above Wednesday’s high of $61.89. IYR provides an excellent example of why we don’t exit trades before they hit their stops. It’s easy to “choke off” a trade when the pressure is on. Markets often turn on a dime and you must be able to sit through some pain in order to realize potentially bigger gains. Anyone not yet in IYR, could consider entering the trade above this key resistance level.
For the past three sessions, the iShares MSCI Japan Index Fund (EWJ) has been consolidating just below key resistance. Yesterday, EWJ formed a reversal candle and now offers a potential long entry above the three day high of $10.17.
USO hit its stop yesterday and we exited the position. EPU performed particularly well, as it formed a massive shake out candle and closed near session highs. Our positions in IYR, UWM, and UGA remain intact as all three ETFs held key support levels yesterday. Buyers stepped back into the market yesterday preventing what could have been a disaster for market bulls. Another distribution day would have put the market under considerable pressure. Based on yesterday’s action into the close, we wouldn’t be surprised to see the market put in a solid rally in the next few days.
Today’s ETF Watchlist:
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
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Notes:
- USO stop triggered.
- 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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Our stocks held up well yesterday for the most part. Per intraday alert, we sold GNC for a small gain and stopped out on CPHD when it undercut Wendesday’s reversal bar low. The URI buy entry triggered on strong volume above the prior day’s reversal bar. Please note that we canceled the TRAK setup per intraday alert. Upon further analysis the chart is full of false breakouts and weak moves over the past year.
For those of you who are new subscribers please contact me at [email protected] if you have any questions regarding strategy, money management, or how to make the most out of this report.
Today’s Stock Watchlist:
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 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:
- URI long triggered. Per intraday alert, revised stop in CPHD triggered and sold GNC for a small gain. We also cancelled the TRAK setup.
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