Potential short setup in Gold Miners ETF (GXD)


Stocks opened Thursday’s session sharply lower and appeared ready roll over. However, at 10:00 am the market “caught a bid” and the market rallied into the close, erasing most of the day’s losses. Still, results were mixed among the major indices. The S&P MidCap 400 was the shining star of the day, as it climbed 0.6%. The Nasdaq and the S&P 500 ended the day slightly above breakeven. The small-cap Russell 2000 ended the day flat, while the Dow Jones Industrial Average slid 0.1%.

Volume spiked significantly on Thursday. Turnover soared 31.4% on the NYSE and 10.5% on the Nasdaq. Still, market internals ended the day mixed, as declining volume outpaced advancing volume by 1.2 to 1 on the Big Board and 1.3 to 1 on the Nasdaq.

Both our short and long positions continue to act well, demonstrating the divergence among ETF classes. Yesterday we sent out an intraday alert that we were shorting the Market Vectors Gold Miners ETF (GDX). For our subscribing members, trade details can be found in the watchlist segment of the newsletter. As discussed in the intraday alert, “We are keeping a tight stop (on GDX). If the trade does not go in our favor quickly, we prefer to exit and wait for a better entry if presented”.

Over the past two days we have been tracking the progress of GXG. In yesterday’s newsletter we commented: “(referring to Wednesday’s newsletter) Emerging Market ETFs continue to exhibit relative weakness. The Global X/InterBolsa FTSE Colombia 20 ETF (GXG) is no exception. GXG could present a quality short setup if it finds support at the 200-day may and rallies back into resistance”. “(referring to Thursday’s newsletter) A quick glance at the chart below shows that GXG did find support at the 200-day MA. Two possibilities now exist for a potential short entry. The first would be as described above and the second would be a quick reversal back below Wednesday’s low. This second potential option is now on the table due to the weakness in emerging market ETFs”. Yesterday, GXG followed the second of the two options presented (see charts below).

Yesterday we received an email from one of our subscribers stating: “Regarding GXG short: a 30 day chart of EEV shows a pretty classic channel with EEV being in the upper third at present. I would guess that a signal for the GXG short should coincide with EEV breaking out above the channel. My interest stems from trading an IRA account and it’s difficult to play the short side at times” – Paul. Obviously Paul was correct. The inversely correlated EEV should normally serve as a good alternative to shorting an emerging market ETF. There are two caveats however. The holding period for 2x inversely correlated ETFs would generally be shorter due to the daily resets. Further, Country specific ETFs can and do sometimes perform differently than a broad market ETF. Thanks for your question and observations Paul.

The PowerShares Hi-Yield Equity Dividend Achievers ETF (PEY) has undercut and is consolidating just below the 50-day MA. With cooperation from the broad market, a move back above the 8-day high of $8.76 may serve as a trigger for a long entry in this ETF.

Yesterday, the Dow closed lower for the first time in 9 days. Of interest was the lackluster performance by the Dow in light of a major 1.4% gain in the Dow Jones Transportation Average. Given the stellar performance by the transports, it was unusual to see the DJIA underperform.

Today’s Watchlist:

There are no new official setups for today. As always, 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

    position summary

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  • Per intraday alert, sold short 200 shares of GDX.
  • 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 [email protected] if not already set up for this value-added feature we provide to subscribers.
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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader