Can The ($SPY) Reclaim Support?


Stocks reversed sharply intraday to post the first winning session in 9 days. All five major indices posted gains with the Nasdaq leading the way. The tech rich index ended the session higher by 0.9%. The small-cap Russell 2000 added 0.7% as both the S&P MidCap 400 and the S&P 500 posted gains of 0.5%. The Dow Jones Industrial Average lagged on the day as it posted a small 0.25% advance.

Market internals were bullish as the market reversed for higher ground. Volume spiked by 8.6% on the Nasdaq and 11.3% on the NYSE. Advancing volume outperformed declining volume by a factor of 1.4 to 1 ont eh NYSE and 2.4 to 1 on the Nasdaq. Given the strength of the reversal and the solid internals, it is reasonable to conclude that institutions were actively accumulating stocks on Wednesday.

Over the past two sessions the S&P Depository Receipts (SPY) has lost support of its prior swing low ($126.19), 200-day MA and two year uptrend line. Yesterday SPY formed a reversal candle and may be prepared to reclaim these key support levels. However, these levels should serve as formidable resistance for SPY now that it is attempting to recover from eight days of heavy selling. SPY may present a shorting opportunity on a rally back into resistance at its 20, 50 and 200-day moving averages. We will be watching SPY closely for a possible shorting opportunity.

The iShares MSCI Malaysia Index (EWM) has been performing admirably during the recent market carnage. As most ETFs have seen a significant decline EWM has consolidated and held support of its 50-day moving average. Should the market reverse, EWM’s relative strength could make it a possible long candidate. Ideally we would like to see several days to several weeks of basing action before any possible breakout move in this ETF. Basing action typically acts as a spring board for the next move.

Yesterday via an intraday alert we exited our positions in BZQ for solid 1.3 point gain. The broad market as measured by the S&P 500 is now at a crossroad as it has lost horizontal support, support of the long term uptrend line and support of the 200-day MA. Further, we have set a “lower-low”. Unless the market makes a strong move back above these key levels we will be inclined to short into any rallies.

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

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  • Per intraday alert, we sold BZQ to lock in a quick 1% gain in the model portfolio.
  • 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