One Stubborn Bull? – (DTO) (SRS)


Stocks closed mixed on Tuesday in modestly higher trade. Large cap issues underperformed as the Dow Jones Industrial Average slid 0.2% while both the S&P MidCap 400 and the S&P 500 closed fractionally higher. The Nasdaq added 0.7% and the small-cap Russell 2000 eked out a 0.6% gain.

Market internals were positive but far from impressive. Volume rose by 5.3% on the Nasdaq and 3.0% on the NYSE. Advancing volume edged out declining volume by a factor of 1.4 to 1 on the NYSE and 1.6 to 1 on the Nasdaq. We once again failed to post a follow through day in the market and market internals were not strong enough to suggest that institutions were actively accumulating shares.

Yesterday we entered a long position in PowerShares DB Crude Oil Double Short ETF (DTO) but in the afternoon session our stop was hit and we exited the trade. Subsequent to our exit, DTO reversed and rallied strongly to close near session highs. It is apparent from our quick exit that we set the stop a bit too tight in this trade. When a trade is not successful you must always be willing to re-enter the position in the event that a new setup presents itself. Remember, each trade stands of its own merits. We liked the late session price action in DTO and are therefore adding it to the watchlist. A move back above yesterday’s high of $63.63 should present a buying opportunity in this inverse ETF.

The ProShares UltraShort Real Estate ETF (SRS) is once again in play as a potential long candidate. A volume fueled moved above yesterday’s high of $16.79 may provide a quality long entry trigger for this ETF.

The current rally appears to be reaching a point of exhaustion but there are still only a few sectors that have begun to form reversal candles. If the last five days are all the market has to offer in terms of bullishness, it seems likely that market bears will soon gain control of the price action.

Today’s Watchlist:


Shares = 150
Trigger = 63.74
Stop = 59.21
Target = 72.70
Dividend Date = n/a

Notes = See commentary above

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

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  • Per intraday alert, we entered DTO and stopped out late in the afternoon.
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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader