Commentary:

Stocks closed mixed of Friday on light volume. High beta stocks showed relative weakness on the day as the small-cap Russell 2000, S&P MidCap 400 and Nasdaq finished lower by 0.6%, 0.3% and 0.1% respectively. The Dow Jones Industrial Average closed higher by 0.2% while the S&P ended fractionally up on the day.

Market internals ended mixed on the day. Volume fell dramatically on both exchanges. By the closing bell turnover on the Nasdaq was down by over 35.0% and on the NYSE by 30.0%. Advancing volume ended the session fractionally higher across the board. Market internals reacted much as would be expected as the market took a rest following Thursday’s big accumulation day.

As we stated in Friday’s newsletter we are of the opinion that the market may be approaching an overbought level. Our broad view of the market remains bullish but we also believe caution is now warranted on the long side of the market for the short run. A quick look at the NYSE, S&P 500 and Nasdaq support this reasoning. The NYSE is now approaching the neckline of the head and shoulders pattern that it formed over the summer. As you may recall, the NYSE was the index that provided us with the biggest clue that the market could be in for a big move lower back in late July. Notice that all three indices are at important resistance levels and very close to big reversal days that were the fuel for the recent bear market.

As stated earlier, we feel that caution is warranted for the moment. Although we have received a bullish signal in the market, we are still not seeing the emergence of new leadership stocks. We expect these stocks to being breaking out soon. However, until they do, we cannot eliminate the possibility that the market could reverse quickly at the current levels.

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Today’s Watchlist:

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

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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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Notes:

• No trades were made.
• 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 support@morpheustrading.com if not already set up for this value-added feature we provide to subscribers.

Edited by Deron Wagner,
MTG Founder and
Head Trader