ETFs and market commentary:
Stocks muddled their way through another directionless day of trading to close mixed. Powered by AAPL, the Nasdaq tacked on 0.4% to lead all indices. The S&P MidCap 400 and the S&P 500 both gained 0.2% while the Dow Jones Industrial Average eked out a 0.1% advance. The small-cap Russell 2000 was the session’s underperformer, as it shed 0.4% yesterday. The strongest performing stocks came from the Internet, software, solar energy, oil services and emerging market sectors. Under-performing sectors included utilities, healthcare, pharmaceuticals, natural gas, precious metals and real estate.
For the first time in three sessions, market internals were mixed. Trade fell 0.6% on the NYSE but rose 9.2% on the Nasdaq. Advancing volume slimly outpaced declining volume by a ratio of 1.2 to 1 on the NYSE and 1.1 to 1 on the Nasdaq. The Nasdaq managed to post another accumulation day yesterday, as the index rose by 0.4% (0.3% is the minimum we require for an accumulation day) on higher volume. This comes as less of a surprise for the Nasdaq since the tech-rich index is trading at an 11 year high. The other major indices have yet to clear last summer’s swing high resistance.
Since March or 2011, the iShares MSCI Japan Index Fund (EWJ) has been in a major downtrend. On Wednesday, this ETF rallied above its down-trending 200-day MA for the first time since July of last year. However, yesterday, EWJ struggled to hold support of this key mark. EWJ could provide a shorting opportunity on a rally into resistance of its downtrend line or if it loses support of the 200-day MA on a spike in volume. Although we’re still bullish on the market, EWJ could provide a shorting opportunity should the market correct for a few sessions. Regardless, when the market does see it’s next reversal, ETFs that are rallying into resistance of long term downtrend lines and down-sloping 200-day MAs will generally provide the best shorting opportunities.
Since late November of last year, the iPath S&P 500 VIX Short-Term (VXX) has been in a severe downtrend. Since that time, VXX has not once been able to rally above its 10-day MA. However yesterday, on a burst of volume, VXX rallied and closed above its 10-day MA. This type of long term volatility contraction combined with a market that has been grinding higher often suggests that a big move may be at hand. Yesterday’s spike in volatility does not necessarily imply a selloff. Quite often it will foreshadow a big breakout move. Given yesterday’s abrupt reversal in VXX, we would not be surprised to see a significant move very soon.
Our open positions continue to perform well. DVY claimed a new 52-week high yesterday, while IYT remained in consolidation mode. For the third time in as many days, IYT tested its 20-day EMA and held support at this key mark. We may consider adding to this position above the 3-day high. VXX spiked more than 5% yesterday and we must be mindful that an increase in volatility may be upon us.
Today’s ETF Watchlist:
XLU
Long
Shares = 500
Trigger = 35.12
Stop = 34.38
Target = 36.60
Dividend Date = n/a
Notes = See commentary above
IAU
Long
Shares = 800
Trigger = 17.13
Stop = 16.47
Target = new swing high
Dividend Date = n/a
Notes = See commentary from Feb. 8 report
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
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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 [email protected] if not already set up for this value-added feature we provide to subscribers.
We added one new position to the Stock Watchlist today in IACI. IACI has pulled back to the 10-day MA after a big volume breakaway gap up. We like yesterday’s wide ranged day as a shakeout and buy signal.
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.
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Notes:
- Since the first stop out in ELN on 2/8 was not listed in yesterday’s report we are listing it today. The second stop out triggered yesterday and the full position is now closed.
- Note the changes to the ONXX setup.
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