Distribution Days Beginning to Pile Up ($GDX)

today’s watchlist (potential trade entries):

today's watchlist

open positions:

Below is an overview of all open positions, as well as a report on all positions that were closed only since the previous day’s newsletter. Net P/L figures are based on two separate $50,000 model portfolios (one for ETFs and one for stocks). Changes to open positions since the previous report are listed in red text below. Be sure to read theWagner Daily subscriber guide for important, automatic rules on trade entries and exits.

open position summary
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closed positions:

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ETF position notes:

  • No trades were made.

stock position notes:

  • Per intraday alert:
    • Sold REGN to lock in a near 1% gain in the portfolio.
    • Sold HSTM and SLXP to lock in a small gain.
    • Sold CPWM at break-even due to the lack of follow through from our entry.
    • Sold partial size in SWI, FTNT, KORS, PCYC, and STAA to get off margin/ reduce our exposure.
    • Re-entered 75 shares each of FTNT and KORS in the final hour of trading near our original exit.

NOTE: The stock market will be closed on Friday, April 6. As such the Wagner Daily will not be published. Normal publication will resume on Monday, April 9. Have a great Holiday weekend!

ETF and broad market commentary:

Stocks got pounded on Wednesday as trade quickened. All five major indices close down 1% or more. The decline was led by the small-cap Russell 2000, which fell 1.7%. The Nasdaq dropped 1.5% while the S&P MidCap 400 lost 1.4%. Both the Dow Jones Industrial Average and the S&P 500 shed 1.0% yesterday.

Market internals were clearly bearish yesterday. Volume rose on the NYSE by 2.9% and on the Nasdaq by 1.1%. Declining volume declining volume overwhelmed advancing volume by a ratio of 5.7 to 1 on the NYSE and 6.9 to 1 on the Nasdaq. This was the biggest disparity we have seen between down and up volume all year. It is safe to say that both the NYSE and the Nasdaq fell under institutional distribution yesterday.

Although we are not at the point of making a bearish call on the market, on ETF that is showing considerable relative weakness is the Market Vectors Gold Miners ETF (GDX). Over the past month, as the broad market has rallied, GDX has entered a clear downtrend. If the market provides us with a sell signal sometime soon, GDX could provide an excellent shorting opportunity on a bounce into resistance. Although we are not yet looking to take on short exposure, it’s always good to be prepared for a shift in market conditions.

DJIA weekly
DJIA weekly

EPU sold off sharply yesterday on higher volume but is now at support of its breakout base. IYR, UWM and UGA all gapped down but held support at key moving averages. TBT gapped down and traded an inside day, as might be expected following Tuesday’s big breakout move. Overall, yesterday was a difficult day on Wall Street. We saw distribution across the board. We now have four distribution days in the past twenty sessions on the Nasdaq and six on the S&P. The market is now close to providing us with a sell signal. It is still too early to suggest that we should be exiting the market entirely, but another distribution day in the next two sessions would be a big cause of concern. Leadership stocks are still holding up well and the number of stocks closing lower by 4% or more has been well below extreme readings. Further, we are still well within the trading range on all of the major indices. However, things can change quickly. The next several sessions should provide an important gauge as to the health of the market. If we see another distribution day in the next two sessions, things could deteriorate quickly.

stock commentary:

It was quite a busy day for us, as we were forced to play a little defence due to the ugly selling action in the broad market during the morning session. We were able to lock in a few winners (REGN HSTM SLXP), while tightening up stops in PCYC and N. By the end of the day we backed off of margin and locked in about $600 worth of winners. We still have eight open positions with 90% exposure, so we should be in good shape if the market is able to gain traction at the lows of the range and push higher.

CPHD was removed from the watchlist.

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relative strength watchlist:

Our 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. This list is comprised of the strongest 100 (or so) stocks in the market over the past six to 12 months. The scan is updated every Sunday, and this week’s RS Watchlist can be downloaded by logging in to the Members Area of our web site.