Commentary:

In a roller coaster session stocks closed modestly down on Monday. The day began with stocks gapping higher but immediately being met with selling pressure. The markets slumped until the lunch hour, consolidated at the lows until 2:45 pm and then caught a bid and rallied into the close. The S&P MidCap 400 and the small-cap Russell 2000 both ended the day lower by 0.7%. In similar fashion both the S&P 500 and the Nasdaq slid 0.4%. The Dow Jones Industrial Average clawed its way back to post a slim 0.1% deficit on the day.

Market internals ended the trading day mixed. Volume was strong as it closed above its 50-day moving average for the fourth consecutive day. However, day over day, volume fell by 3.0% on the Nasdaq and by 4.5% on the NYSE. For a second consecutive day declining volume outpaced advancing volume on both exchanges. By the closing bell the spread ratio stood at -1.7 to 1 on the NYSE and -1.9 to 1 on the Nasdaq. Monday’s drop in volume was all that stood in the way of another distribution day in the broad market.

Since breaking below its 200-day MA in late June the iShares MSCI EAFE Index ETF (EFA) has set a sequence of lower highs as it has struggled to reclaim this key moving average. Yesterday EFA gapped up above its 200-day MA but that marked the session high. EFA sold off for most of the day and formed a bearish engulfing candle. A move below yesterday’s low of $57.50 could present a shorting opportunity in this ETF.

The iShares MSCI Indonesia Investable Market ETF (EIDO) has exhibited impressive relative strength as it has rallied while the broad market has sold off sharply. However, EIDO may have become a bit over-extended and appears poised for a pullback. Yesterday after setting a new all time high this ETF formed a reversal candle and closed in the bottom half of its intraday range. We are monitoring EIDO as a possible long candidate on a pullback into the 20-day EMA.

Yesterday was a wild ride on Wall Street. The news of a debt deal obviously wasn’t enough to carry the market to higher ground. Yesterday’s price action provided a good example of why we don’t trade news. What was painted as a positive in the media wasn’t met with the same enthusiasm by market.

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Today’s Watchlist:

There are no new 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 changes to our open position.
• 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