Commentary:

Stocks ended the session split amidst see-saw price action on Friday. Among the major indices, the day’s only winner was the Dow Jones Industrial Average. The blue chip index eked out a 0.2% gain. Both the small-cap Russell 2000 and the S&P 500 ended the session flat while the S&P MidCap 400 closed fractionally lower. The Nasdaq struggled the most on Friday, as it slid 0.6%.

Market internals ended the session mixed. Volume was down sharply on the Nasdaq but only fractionally lighter on the NYSE. By the closing bell trade had dropped a healthy 21.2% on the Nasdaq but was only 0.6% lower on the NYSE. Advancing volume marginally outpaced declining volume on the NYSE by 1.1 to 1. However, on the Nasdaq declining volume held the upper hand as it topped advancing volume by a ratio of 1.6 to 1. Although Friday did not bring a third consecutive distribution day, the market was unable to bounce on the heels of two distribution days. Our market timing model has registered a sell signal and for the moment, we are inclined to avoid the long side of the market.

For the past four sessions the ProShares UltraShort Euro ETF (EUO) has been consolidating just above its 20-day and 50-day moving averages. A volume assisted move above the two day high of $18.91 could provide a buying opportunity in this inverse ETF.

During the recent market rally the iShares MSCI EAFE Index ETF (EFA) has shown relative weakness as it was unable to even get close to its 200-day MA. EFA is now below support of all of its moving averages. A move below the two day low of $49.03 could present a short entry trigger for this ETF.

Trading has been difficult lately as the market struggles to find an identity. Although many stocks were showing promise as potential new leaders, the market has lacked follow through. We are now inclined to look for short entries but will likely look to trade with small size. As of this writing it appears as if the market will gap down sharply on Monday morning. We have no desire to chase the market lower should a big gap down occur.

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Today’s Watchlist:

There are no official setups for today. As always, we will send an intraday alert if any new trades are made.

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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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Notes:

• No trades were made.
• 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 support@morpheustrading.com if not already set up for this value-added feature we provide to subscribers.

Edited by Deron Wagner,
MTG Founder and
Head Trader