market timing model: 

BUY (click here for more details)

today’s watchlist (potential trade entries):

open positions:

Below is an overview of all open positions, as well as a report on all positions that were closed only since the previous day’s newsletter. Net P/L figures are based on two separate $50,000 model portfolios (one for ETFs and one for stocks). Changes to open positions since the previous report are listed in red shaded cells below. Be sure to read the Wagner Daily subscriber guide for important, automatic rules on trade entries and exits.

Having trouble seeing the open positions graphic above? Click here to view it directly on your web browser instead.

closed positions:

Having trouble seeing the closed positions graphic above? Click here to view it directly on your web browser instead.

ETF position notes:

• We are closing UNG at market on Monday’s open.

stock position notes:

• Sold LF at market on the open.
• LNKD hit stop at 106.99 for half the position.

ETF and broad market commentary:

How Serious Was Friday’s Selloff? ($XLP) ($UNG)

For the second day in a row, internals ended the day mixed. While volume slid on the NYSE by 9.3%, it rose on the Nasdaq by 2.3%. However, declining volume held the upper hand on both exchanges. By the closing bell, the ratio of declining to advancing volume ended at 4.6 to 1 on the NYSE and 3.8 to 1 on the Nasdaq. Based on the higher volume and negative price action, we would classify Friday as a distribution day on the Nasdaq. The light volume on the NYSE suggests that institutions were not seriously involved in the selling on this index. Still, on a relative basis, volume was quite light for the third consecutive day and this makes the distribution day on the Nasdaq somewhat suspect. With the Holiday out of the way, volume should pick up in the coming week.

From March through Late June of this year, the S&P Select Consumer Staples SPDR ETF (XLP) consolidated, forming a potential support base for a breakout. On June 29th, XLP broke out from this base to set a new 52 week high. Further, this breakout occurred on a substantial uptick in volume. Over the past two sessions, XLP has pulled back and could provide a buying opportunity on an undercut of its 10-day and/or 20-day moving averages. We are monitoring this ETF closely for the formation of a reversal candle that could serve as an entry pivot in XLP.

UNG reversed sharply on high volume yesterday and now appears in jeopardy of testing the June 28th swing low. Based on Friday’s poor performance, we are making a judgment call and exiting UNG at the market on the open. It’s always difficult to gauge market action when volume is light. Last week’s market action was further complicated by the Holliday shortened trading week. Our market timing model still reflects a buy signal but we now need to see better price action from our open positions. Ultimately, in trading, price action is all that matters.

stock commentary:

Although Friday’s volume was much lower than the 50-day moving average of volume on the Nasdaq Composite, it was technically a distribution day. Distribution so close to a buy signal is not a good sign for the timing model, especially since the majority of recent breakouts have not been impressive. Although the timing model is in buy mode, we prefer to let our open positions play out rather than add more exposure. Trading will certainly be tricky the next week or two, as the Nasdaq Composite must deal with plenty of overhead resitance.

There are no new official setups for today. A few charts that are looking decent are: GET, BWLD, EAT, ONXX, and SNAK. With earnings season coming up please make sure to check for earnings before taking on new positions.

If you are a new subscriber, please e-mail rick@morpheustrading.com with any questions regarding our trading strategy, money management, or how to make the most out of this report.

 
relative strength watchlist:

Our 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. This list is comprised of the strongest 100 (or so) stocks in the market over the past six to 12 months. The scan is updated every Sunday, and this week’s RS Watchlist can be downloaded by logging in to the Members Area of our web site.