Market Nearing Support ($QQQ) ($SPY) ($COMPX) ($SPX.X)

today’s watchlist (potential trade entries):

today's watchlist

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 a pink shaded cell below. New entries are shaded in green cells. Be sure to read the Wagner Daily subscriber guide for important, automatic rules on trade entries and exits.

open position summary
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closed positions:

open position summary
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ETF position notes:

  • Sold SOXS at market on the open to lock in a quick 1% gain in the portfolio on a four day hold.

stock position notes:

  • No trades were made.

ETF and broad market commentary:

Stocks closed mixed on Monday on light trade. The day began with the major indices opening lower but buyers stepped in to move the markets higher for most the session. However, a late bout of selling took the averages off session highs, dampening the day’s results. The S&P MidCap 400 showed the most strength yesterday, as it managed a 0.4% gain. The small-cap Russell 2000 tacked on 0.2%. Both the S&P 500 and the Nasdaq closed flat on the day, while the Dow Jones Industrial Average lost 0.2%.

Market internals were also mixed yesterday. Volume dropped by 6.4% on the NYSE and 9.9% on the Nasdaq. However, on the NYSE, advancing volume modestly outpaced declining volume, while on the Nasdaq just the opposite occurred. Overall, Monday’s market internals provided no indication that the current wave of selling might be weakening.

Since early March, the Market Vectors Russia ETF (RSX) has been one of the weakest ETFs in the market. RSX has been in a clear downtrend for the past 2.5 months, as it has set a sequence of lower highs and lower lows. Last week, on a burst of volume, this ETF lost support near $29.30. A rally back into resistance of this key mark could provide a shorting opportunity in RSX.

Market Vectors Russia ETF (RSX

The SPDR S&P Regional Bank ETF (KRE) has shown relative strength during the most recent round of selling. If KRE can reclaim support of its 20-day and 50-day moving averages and if the market can provide a buy signal, this ETF could be in play as a long candidate.

SPDR S&P Regional Bank ETF (KRE)

As discussed in yesterday’s newsletter, we closed our long position in SOXS at the open for nearly a 9% gain. We will continue to monitor SOXS for a potential re-entry. We remain long EEV. The market showed little signs of life yesterday and our sell signal remains intact. However, as we’ve stressed lately, the market is near an important support level so we intend to be cautious with respect to opening any new trades.

stock commentary:

With our market timing model on a sell signal there is nothing to do on the long side right now other than note stocks that are holding up well. However, it is very tough for many new traders to sit back and do nothing even when they know that trading in current conditions (on the long side) is very risky. For example, NTES triggered a potential buy entry above $60.00 yesterday. We liked the pattern and the big reversal bar action, but market conditions are terrible right now so this is something that we can’t buy today over yesterday’s high. Some may suggest what is wrong with taking a small position but when conditions are quickly deteriorating it becomes very difficult to manage risk, so even a small position can easily turn in to a bigger than expected loss……especially if NTES were to gap down below Monday’s low.


How do we know that NTES will gap down tomorrow? We don’t. However, we have enough experience in the business to know that anything can happen when the major averages are in distribution mode.

There is no change to short-term plan, which is to avoid trading for a few days. With the market in oversold territory we could easily see a quick two to three day reversal to the upside so it is a bit late to establish new short entries here. As for the long side, we are forced to lay low until market conditions improve.

If you are a new subscriber, please e-mail [email protected] with any questions regarding our trading strategy, money management, or how to make the most out of this report.