iShares Silver Trust (SLV) breaks out


Stocks snapped their four-day losing streak yesterday, as the major indices reversed early losses to close moderately higher. Equities opened substantially lower, grinded back to the flat line by mid-day, then moved into positive territory in the afternoon. The Nasdaq Composite, off 1.0% after the first 30 minutes of trading, reversed to a closing gain of 0.8%. The S&P 500 Index rose 0.3% and the Dow Jones Industrial Average edged 0.2% higher. The small-cap Russell 2000 Index bounced back with a 1.5% advance. The S&P MidCap 400 climbed 0.7%. All the main stock market indexes closed in the upper quarter of their intraday trading ranges.

Total volume in both the NYSE and Nasdaq was 5% lighter than the previous day’s levels. A higher volume “accumulation day” would have been better, but at least turnover was still slightly above recent levels, and nearly right on par with 50-day average levels. Market internals were quite weak in the morning, but improved as the day progressed. In the Nasdaq, advancing volume exceeded declining volume by a ratio of 2 to 1. The NYSE adv/dec volume ratio was positive by less than 3 to 2.

The inversely correlated ProShares UltraShort Europe (EPV) has broken out above a three-month downtrend line, and has also reclaimed support of its 50-day moving average. This positions the ETF for potential buy entry in the near future, in anticipation of a new, intermediate-term uptrend. The daily chart of the EPV below illustrates the setup:


Technically, EPV is already at a decent level for new buy entry, at support of its 50 day EMA, and just above its prior downtrend line. However, with yesterday being only the first day of a bounce in the U.S. markets, we prefer to wait at least a day or two to see if a bullish momentum develops off the lows. If it does, European markets will likely move higher as well, thereby causing EPV to “undercut” its breakout level, providing us with a lower risk entry point. Still, we have placed EPV on our radar screen, and will be stalking it for potential buy entry in the coming days. As always, regular subscribers will be instantly notified via Intraday Trade Alert if we buy it.

Yesterday, iShares Silver Trust (SLV) gapped up above resistance of a downtrend line that has been in place for more than three months. Volume in SLV also surged to more than double its average daily level, confirming institutional buying behind the move. Now, a pullback to the area of yesterday’s breakout level, or near yesterday’s intraday low, presents a low-risk buy entry into SLV. The breakout on high volume is shown on the daily chart of SLV below:


In yesterday’s Wagner Daily, we said, “After two weeks of choppy, range bound action, the major indices made a technically significant move yesterday, with a confirmed breakdown below horizontal price support levels we discussed in yesterday’s newsletter. This increases the odds of further follow-through to the downside, most likely a retest of the July 2010 lows. However, this does not necessarily mean it will happen today, or even with the next few days. Since this market has a way of being choppy and indecisive, we think there’s a good possibility stocks will try to stage a short-term bounce and catch the bears off guard, now that they (the major indices) have broken down below obvious levels of support.” Given yesterday’s bullish intraday reversal that followed this commentary, the scenario of “catching the bears off guard” indeed seems to be playing out. From here, very short-term traders may selectively look for buying opportunities to take advantage of the bounce. Traders not comfortable with a short holding period of just a few days may alternatively prefer to wait on the sidelines, in anticipation of new short selling opportunities developing after stocks bounce into substantial levels of price resistance, as well as their 20 and 50 day moving averages. Either way, we’re not seeing an abundance of quality setups, so we continue to lay low overall.

Today’s Watchlist:


iShares Silver Trust (SLV)

Shares = 600
Trigger = $18.31 Limit (pullback to that price or lower)
Stop = $17.31
Target = new high (will trail stop)
Dividend Date = n/a

Notes = See commentary above for explanation of the setup.

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 $50,000Wagner 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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    • No changes to our open positions today.
    • 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’sWagner 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