ETFs and market commentary:

Equities ended the session mostly higher as trade quickened for a second consecutive day. Four of the five major indices closed in positive territory. Larger cap issues fared better on Tuesday as the DJIA added 0.3%. The S&P 500 and S&P MidCap 400 produced mirror results as they both added 0.2%. The Nasdaq closed 0.1% higher while the small-cap Russell 2000 closed 0.1% lower. The oil and oil services sectors outperformed today, while the vast majority of sectors muddled sideways.

Market internals flashed a modestly bullish signal of Tuesday. Turnover moved higher by 5.6% on both exchanges. Advancing volume topped declining volume by 1.2 to 1 on both the NYSE and the Nasdaq. Although yesterday’s price action was not significant enough to officially call it an accumulation day, the price action was bullish. The fact that we are consolidating at the highs and every round of selling continues to find a bid, it appears likely that we are headed higher. An index must increase by 0.3% or more on higher volume in order for an advance to be considered an accumulation day. None of the five major indices met these criteria yesterday.

In yesterday’s newsletter (February 7, 2012), we stated that “an undercut of the 20-day EMA could provide a possible buy entry point for IAU”. However, it appears that IAU may have completed the pullback with an undercut of the 10-day MA. As we have discussed in the past, if an ETF enters a strong trend, quite often the 10-day will serve as support for an extended period of time. Tuesday’s reversal in IAU has now provided us with a trigger to enter the trade. A move above the three day high of $17.07 may provide a buying opportunity in this ETF. We are placing IAU on the watchlist. Trade details are available to our clients in the watchlist section of the newsletter.

Our open long position in DVY acted well yesterday as it moved to a new high on expanding volume. IYT gapped down yesterday but formed a reversal candle as it undercut its 10-day MA but managed to reclaim this key mark and close near intraday highs. IYT probably needs a few days or more to consolidate prior to any possible move higher.

Yesterday, on increasing volume, the S&P Select Utilities SPDR Fund (XLU) undercut the four day low and reversed to close near session highs. A volume fueled rally above yesterday’s high of $35.04 could present a buy entry trigger for this ETF. We are monitoring this setup closely for a possible long entry.

Over the past several sessions, fewer long setups are being revealed from our research. This suggests that the market may need additional time to consolidate for new setups to form. It also suggests that we may be nearing exhaustion in this most recent leg higher in the market.

Today’s ETF Watchlist:

IAU
Long

 

Shares = 800
Trigger = 17.13
Stop = 16.47
Target = new swing high
Dividend Date = n/a

Notes = See commentary above

PPH
Long

 

Shares = 300
Trigger = 74.04
Stop = 72.22
Target = new swing high
Dividend Date = n/a

Notes = We’ve been monitoring this trade for potential entry and it remains on our 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:

• 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.
  

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Stocks:

We added one new long position yesterday in TSCO. The breakout was confirmed by strong price action and heavier than average volume. Per intraday alert, we sold ELN for a scratch ahead of earnings. If ELN gaps to new highs after earnings then it could be a potential buy entry for us. We will send an intraday alert if any action is taken.

NOTE: We are changing the name of the Full-Serve watchlist to the “Stock Watchlist” to reduce confusion so that both newsletters use the same terminology. Because of this, we will no longer have a Self-Serve watchlist.

 

Daily Stock Summary

Below is an overview of all “full-serve” open positions, as well as a performance report on all “full-serve” 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:

• TSCO buy entry triggered.
• Per intraday alert, sold ETN ahead of earnings for a scratch.

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