Potential buy entry in Crude Double Short ETF (DTO)


Stocks closed higher on Friday as volume faded in the pre-holiday session. The major indices all ended the session in the black. The small-cap Russell 2000 led the move as it posted a 0.7% gain. The S&P MidCap 400 and the Nasdaq rose by 0.6% and 0.5% respectively. The Dow Jones Industrial Average and the S&P 500 were the day’s laggards as they posted meager gains of 0.3% and 0.4% respectively.

Friday’s session brought mixed internals. Volume dropped significantly across the board. Turnover on the Nasdaq slid by 12.8% while it plummeted by almost 20% on the Big Board. However advancing volume outpaced declining volume by a healthy 3.0 to 1 on the NYSE and by 2.7 to 1 on the Nasdaq. The weak pre-Memorial Day volume clearly suggests a lack of institutional participation in Friday’s action. Consequently Friday would not be considered an accumulation day for the market.

Since its breakout move on May 5th, the PowerShares DB Crude Oil Double Short ETF (DTO) has been consolidating for the past 16 sessions above the 20-day EMA. Yesterday this ETF formed a bullish “inside” candle as volume fell dramatically. This combination of price and volume action is generally considered bullish. A move back above the two day high of $47.10 could provide a long trigger for DTO. We are placing DTO on the watchlist. Trade details are available to our subscribing members in the watchlist section of the newsletter.

Yesterday the iShares MSCI Japan Index ETF (EWJ) formed a bearish reversal candle on expanding volume. A move back below Friday’s low of $10.06 could present a short entry trigger for this ETF.

The Pharmaceutical HOLDRS ETF (PPH) has maintained excellent relative strength over the past month as it has held support at the 20-day EMA while the broad market has drifted below the 50-day MA. For the past five sessions PPH has been consolidating in a tight range along its 20-day EMA. Yesterday, for the second time in as many days, PPH undercut the 20-day EMA, held support and closed near session highs. A volume fueled move back above $71.35 could offer a but trigger for PPH. We are placing PPH on the watchlist. Trade details are available for our clients in the watchlist segment of the newsletter.

The major indices are at key resistance levels. The DJIA is currently exhibiting the most relative weakness as it has been unable to reclaim its 20-day EMA. It is noteworthy that the Dow Jones Transportation Average formed a clear reversal candle on Friday. All of this information combined suggests that the broad market may be near a turning point.

Today’s Watchlist:


Shares = 200
Trigger = 47.18
Stop = 45.52
Target = New swing high
Dividend Date = n/a

Notes = See commentary above


Shares = 300
Trigger = 71.43
Stop = 70.67
Target = 72.60
Dividend Date = n/a

Notes = See commentary above

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

    Having trouble seeing the position summary graphic above?
    Click here to view it directly on your Internet browser instead.


  • IWM will most likely open at or above our stop price this morning, so gap rules will apply. Our stop will either be 15 cents above 20-minute high or the original stop of 84.09 (whichever is higher).

  • UUP stop triggered on the remaining half position.

  • 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.

    Have you had your free 1-month trial to Morpheus Trading Group’s additional ETF and stock trading newsletters?

      Edited by Deron Wagner,
      MTG Founder and
      Head Trader