ETFs and market commentary:

Stocks recovered from Tuesday’s distribution day but trade was light. In a reversal of Tuesday’s performance, the small-cap Russell 2000 led the move higher, as it tacked on 1.1%. The S&P MidCap 400 added 1.0%, while the Nadaq improved by 0.9%. The S&P 500 and the Dow Jones Industrial Average improved by 0.7% and 0.6% respectively. Home construction, home improvement retailers and financials showed relative strength, while non ferrous metals, gold and airlines underperformed.

Market internals ended mixed for the third time in four sessions. Volume fell by 16.0% on both exchanges. Still, advancing volume outpaced declining volume by a factor of 3.9 to 1 on the Big Board and 3.3 to 1 on the Nasdaq. The light volume points to an absence of institutional participation in yesterday’s move higher.

In Tuesday’s newsletter we commented that the United States Oil Fund (USO) may be a pullback long candidate. Yesterday, USO undercut its 20-day EMA for a second consecutive day and held this support level. Further, USO rallied to close near session highs. A move above yesterday’s high of $40.74 could provide a buy entry trigger in this ETF.

The iShares Dow Jones Select Dividend Index (DVY) has pulled back and held support just above its 50-day MA over the past two sessions. Yesterday, DVY formed a reversal candle as it retested Tuesday’s low. A volume fueled move above the two day high of $55.11 could present a buying opportunity in this ETF.

SRS hit its trigger yesterday and we entered the trade. However, this ETF showed little follow through and we decided to sell part of the position shortly after we entered. We didn’t like the price action given the sizeable volume and decided it was prudent to lighten up our exposure. SRS closed near session lows. Yesterday’s light volume made the broad market rally suspect. Nonetheless, our long term view of the market remains cautiously bullish.

Today’s ETF Watchlist:

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 DailySubscriber Guide for important, automatic rules on trigger and stop prices

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

Notes:

• SRS long setup triggered. Per intraday alert, sold 200 shares of SRS due to the lack of follow through.

• 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.
  

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Stocks:

 

With the market in pullback mode, the reward to risk ratios do not favor swing trading the long side. This basically means that new entries may have lower odds of following through and higher odds of stopping out or breaking even. We prefer to remain on the sidelines and mostly in cash until the market settles down and shows some signs of accumulation.

Here are two potential pullback setups that are in play for aggressive traders. These setups are not official and their results will not be tracked.

MANH is pulling back in orderly fashion and is a potential buy entry within the next few days:

Today’s Stock Watchlist:

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 model account size. Changes to open positions since the previous report are listed in red text below.

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

Notes:

• No trades were made.

Relative Strength Watchlist:

The 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. The list is comprised of the strongest 100 (or so) stocks in the market over the past six to 12 months. The scan is based on the following criteria and is updated every Monday:

• Stock is in a well defined uptrend, trading above both the 50-day and 200-day moving averages, with the 50-day moving average above the 200-day moving average (both moving averages should be in an uptrend as well).
• Today’s close is less than 20% off the 52-week high
• Close is greater than $5.
• Volume is greater than 200,000 shares per day (using a 50-day volume moving average).

Click here to view this week’s Relative Strength Watchlist in excel

Click here to view this week’s Relative Strength Watchlist as a text file