market timing model: 

SELL – Signal generated on the close of July 10 (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.

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closed positions:

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ETF position notes:

• No new trades were made.

stock position notes:

• Sold IOC in the afternoon as it hit our target (77.40) for an 8% gain.

ETF and broad market commentary:

Stocks faded modestly on Monday, on mixed trade. All five major indices closed in the red yesterday. The small-cap Russell 2000 saw the most weakness, as it fell 0.6%. The S&P MidCap 400 lost 0.5%, while both the Nasdaq and the DJIA faded 0.4%. The S&P 500 showed the most resiliency yesterday, as it slid just 0.2%.

Internals ended the session mixed for a second consecutive day. Volume dipped on the NYSE by 9.2%, but increased by 5.3% on the Nasdaq. However, declining volume outpaced advancing volume across the board. On the NYSE the ratio of declining to advancing volume ended the day at 1.6 to 1 and on the Nasdaq it finished at 1.3 to 1. The Nasdaq fell under modest distribution yesterday. The tech-rich index dropped by over 0.3% on higher volume, which suggests institutional involvement in the day’s action. Yesterday was a benign day for the NYSE, as its decline came on light volume.

Since reclaiming its 200-day MA in October of last year, the ProShares UltraShort Euro ETF (EUO) has been in a significant uptrend. EUO is now within striking distance of setting a new 52-week high and could provide a buying opportunity on a correction. A pullback and undercut of the 20-day EMA could present an ideal buy entry point for this ETF. As always, we will be looking for a reversal candle or similar setup, as a potential signal to enter this trade.

Since testing its 50-day MA on July 3rd, the ProShares UltraShort Silver ETF (ZSL) has reclaimed its 20-day EMA and has been consolidating along this key mark for the past eight sessions. On Thursday, ZSL formed a reversal candle as it undercut the 20-day EMA, but recovered to close near session highs. A volume fueled move above yesterday’s high of $68.60 could present a buying opportunity in this ETF. We are placing ZSL on the watchlist. Trade details are available for our subscribers in the watchlist section of the newsletter

The market continues to struggle to find an identity. Yesterday’s price action was predictable given the sizeable run-up that started with last Thursday’s reversal. We remain cautious in our trading and will continue to trade conservatively until the market establishes a definitive trend.

stock commentary:

IOC was sold at 77.40 for an 8% gain on a two day hold:

For those who are new to the service, we will eventually see more trades like this when the market timing model shifts to confirmed buy mode. If you signed up for this service within the past month or two you have seen us operate basically in capital preservation mode, where we trade with reduced share size and tight stops. When market conditions are choppy and very little is following through to either side of the market, we prefer to lay low and play solid defense. There is no point in taking on heavy exposure when risk is high and the reward is low. When conditions are in our favor, we get aggressive with our share size and exposure in hopes of maximizing profits while the market is in trend mode.

 

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.