Commentary:

Equities closed mixed on the session as volume spiked. With the exception of the Nasdaq the major indices finished higher on Friday. The Dow Jones Industrial Average, S&P 500, S&P MidCap 400 and small-cap Russell 200 posted gains of 0.4%, 0.3%, 0.2% and 0.1% respectively. However, technology stocks continued to get punished as the Nasdaq dropped 0.3% for the day.

Friday’s mixed internals suggest the market may be trying to stabilize. Volume was up across the board. Turnover on the Big Board was up by an impressive 34.0% while it spiked by 22.0% on the Nasdaq. However, declining volume outpaced advancing volume on the Nasdaq by a ratio of 1.6 to 1 as the NYSE saw advancing volume outpace declining volume by a factor of 2.0 to 1. While technology stocks moved lower on increasing volume, large and mid cap stocks moved higher on increasing volume. This price and volume action indicates that distribution was still present on the Nasdaq while the NYSE may have seen an accumulation day. Regardless, the significant increase in volume suggests that institutions were actively participating in the market action yesterday.

On Friday we opened a long position in the Direxion Daily Energy Bear 3X Shares inverse ETF (ERY). We liked both the price action and the risk/reward potential for this ETF so we decided to take a half position on what we considered an early entry. Since there was no definitive buy trigger we reduced our size. We may add to this position should it break above current resistance levels. For our members, trade details are available in the open positions segment of the newsletter.

The iPath DJ-UBS Livestock Total Return Sub-Index ETN (COW) recently lost support of its 10 month uptrend line on May 3rd and sold off sharply. Over the past two weeks COW has recovered from the lows but is now at resistance of its 50-day MA, 200-day MA and the former uptrend line. Now that COW is testing resistance we will be watching carefully for a reversal candle and other signs that the downtrend may continue.

The SPDR KBW Regional Bank ETF (KRE) rallied strongly above its 200-day MA yesterday but was met with stiff resistance and quickly retreated below this key mark. A volume assisted move back below Friday’s low of $24.71 may present a shorting opportunity in this ETF.

Overall the market seems to be having difficulty in finding traction. Nonetheless, it is our belief that the market will likely seek higher ground over the next few days. However, if the market is unable to bounce and continues to consolidate at the current levels we will likely see a significant and rapid selloff.

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Today’s Watchlist:

There are no new official setups this morning. 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:

• Per intraday alert, established a new inverse long position in ERY.
• 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