NYSE Head and Shoulders


Stocks were obliterated on Thursday on a massive spike in trade. Stocks opened at the high and closed at the dead lows of the day. Over 2000 stocks closed down more than 4.0%. All five major indices closed down more than 4.25% and not a single industry group was spared from the carnage. Small cap stocks took the brunt of the beating as the small-cap Russell 2000 and the S&P MidCap 400 plunged 6.0% and 5.9% respectively. The Nasdaq was pelted 5.1%. The S&P 500 dropped 4.8% while the Dow Jones Industrial Average tumbled 4.3%. Needless to say it was a brutal day for Wall Street.

Market internals were overwhelmingly negative. Volume rose by 26% on the Nasdaq and 31.5% on the NYSE. What was even more stunning was the ratio of declining volume to advancing volume. By the closing bell the spread ratio stood at a lofty 84 to 1 on the NYSE and 71 to 1 on the Nasdaq in favor of declining volume. Market internals do not get much worse. Institutions were clearly bailing out of the market on Thursday.

It now appears that the NYSE will fulfill the predicted drop of the head and shoulders pattern that we have discussed several times over the past ten days. Below is both a daily and weekly chart of the NYSE. Yesterday, this index definitively lost support of the Neckline of its recently formed head and shoulders pattern. The NYSE is now within approximately 350 points of its predicted drop. However, a review of the weekly chart suggests that the NYSE could find support at the current level since it is coming into support of the 200-day MA on the weekly chart.

We are glad to be flat the market and to have booked some winners this week. On Thursday we took profits in BZQ and yesterday in SLV. Combined these trades netted a gain of nearly 2% for the model portfolio.Thursday’s tumble was the worst since the banking crisis in 2008. Given the capitulation that we saw in the market yesterday we fully expect a sharp reversal in the next few days but further downside is still possible because volume continues to expand. It would be unwise to consider taking any short positions this late in a market correction. Our plan is identify potential shorting opportunities into a bounce.

Today’s Watchlist:

There are no new setups for today. As always, we will send an intraday alert if any new trades are made.

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 Daily Subscriber Guide for important, automatic rules on trigger and stop prices

    position summary

    Having trouble seeing the position summary graphic above?
    Click here to view it directly on your Internet browser instead.


  • Per intraday alert, we sold SLV to lock in a $400 gain due to the sharp reversal action on the hourly chart.
  • 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.

    Have you had your free 1-month trial to Morpheus Trading Group’s additional ETF and stock trading newsletters?

      Edited by Deron Wagner,
      MTG Founder and
      Head Trader