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 text below. Be sure to read theWagner 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:

• Per intraday alert, bought EPU.

stock position notes:

• Per intraday alert, bought TISA and a half position in MDVN. The light MDVN size is due to our reduced position size and it’s higher cost. A full position in MDVN at 20% of the portfolio value would only come in around 130 shares.

ETF and broad market commentary:

Equities posted solid gains on Tuesday but trade was light. The Nasdaq surged 1.8%, while the S&P 500, S&P MidCap 400 and the small-cap Russell 2000 all added 1.6%. The Dow Jones Industrial Average tacked on 1.5%. Computer hardware, coal and heavy construction were the leading sectors yesterday, while restaurants and brewers underperformed. Every major sector that we track closed up on the day.

Market internals were mixed for a second time in as many days. Volume dropped on the Nasdaq by 3.3% and on the NYSE by 4.2%. However, advancing volume easily outpaced declining volume on both exchanges. The ratio of advancing volume to declining volume ended the session at 7.3 to 1 on the NYSE and 3.8 to 1 on the Nasdaq. Yesterday’s light volume takes much of the luster off the rally and clearly suggests an absence of institutional participation in the day’s action.

Yesterday, on light volume, the SPDR S&P Metals and Mining ETF (XME) formed a reversal candle as it attempted but failed to reclaim its 20-day EMA. A move below yesterday’s low of $48.43 could provide a short entry trigger for XME.

Since finding support at its 200-day MA on April 10th, the S&P Select Materials SPDR Fund (XLB) has climbed its way back into resistance of the 50-day MA. Yesterday, XLB found significant resistance at this key mark and may provide a shorting opportunity below yesterday’s low of $36.41.

The broad market continues to flash a sell signal as we have been unable to post a significant accumulation day in the past two weeks. Until we see a substantially higher close on higher volume, any new positions that we open will be at fifty percent or less of our normal size. We continue to suggest caution under the current market conditions.

stock commentary:

Yesterday’s rally was a disappointment, as we were looking for total volume to expand in order to produce a bullish accumulation day. It’s tough get excited about the upside potential in the market without some accumulation on the board…..but the next follow through day could be just around the corner.

Per intraday alert, we established two new long positions yesterday. Our buy entry in TISA worked out well, as the strong price and volume action confirmed the breakout. We can’t expect a whole lot from the price action over the next few days due to Tuesday’s large move (maybe a few days sideways to digest the gain). With MDVN, we bought a half position around 75.39 because the price action did break above the two-day high, but we wanted to see some follow through above Tuesday morning’s high to enter the full position. The second entry of the MDVN trade did not trigger (note the change to the trigger price in the watchlist section above). The chart below details the second buy entry point in MDVN:

 

Although we added two small long positions yesterday, we do not plan on adding significant long exposure until our timing model generates a buy signal.

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.