Commentary:
A late session surge carried stocks modestly higher on Friday. Friday marked the end of a third consecutive week that stocks have finished higher. The Dow Jones Industrial Average demonstrated the most strength yesterday, as it finished 0.6% higher. The S&P 500 and the small-cap Russell 2000 both posted 0.2% gains, while the Nasdaq and the S&P MidCap 400 both finished the session 0.1% higher.
Volume was substantially higher across the board on Friday, but much of the increase is likely attributable to options expiration. Big spikes in volume are common during options expiration. The Advancing Volume to Declining Volume Ratio was virtually at par on both the NYSE and the Nasdaq. Advancing volume was fractionally lower than declining volume on the NYSE, but fractionally higher than declining volume on the Nasdaq. For all practical purposes the ratio finished at 1 to 1 on both indices.
Given the recent run up in the market, and the fact that it has been almost two years since the market bottomed, we felt it was a good time to step back and evaluate the broad market. Below are charts of the SPY, the Dow Jones Industrial Average and the Nasdaq. From all appearances, the major indices may very well be reaching a reversal point. All three indices are not only approaching key Fibonacci resistance, but also the end of the predicted rally of failed head and shoulders patterns. Further, volume during this most recent move has been noticeably light. Although not presented on the charts, we may also be reaching the end of a Fibonacci time cycle. There are many other technical indicators that have recently been suggesting a correction is near.
It is our opinion that the market is probably reaching a reversal point and over the past month we have repeatedly suggested the need for caution. Nonetheless, our obligation as traders is to honor the trend until the market tells us otherwise. As we’ve commented in previous newsletters, “markets are neither rational nor irrational.they just are”. What is irrational is to trade based on personal feelings about the market.
Today’s Watchlist:
There are no new official setups for today. 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
- DJP buy setup 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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Notes:
Edited by Deron Wagner,
MTG Founder and
Head Trader