Commentary:
Stocks closed higher on Thursday as volume declined. For the third consecutive session all five major indices posted gains. Yesterday’s move was led by the Dow Jones Industrial Average. The blue chip index gained 0.6% for the day. The small-cap Russell 2000 and the S&P 500 both managed 0.4% advances while the S&P MidCap 400 tacked on 0.2% by the close. The Nasdaq spent most of the day in negative territory but “caught a bid” late in the session to close fractionally higher.
Market internals were mixed on Thursday. Volume fell by almost 5% on the Nasdaq but was fractionally higher on the NYSE. Advancing volume once again outpaced declining volume on both indices. The advancing volume to declining volume ratio ended the session at 1.6 to 1 on the NYSE and 1.2 to 1 on the Nasdaq. Due to the decrease in volume Thursday would not be classified as an accumulation day for the broad market. Nonetheless, consolidation following a significant rally is generally considered bullish.
Since undercutting the 50-day MA on April 18th, the SPDR S&P Russia ETF (RBL) has spent the past 6 days consolidating at its 20-day EMA. Over the past three days while RBL has been consolidating, the accumulation/distribution technical indicator had been rising which suggests RBL is being accumulated (bullish divergence). Yesterday, RBL formed an inside candle (Yesterday’s trading range remained within Wednesday’s trading range) as volume contracted. During an uptrend, this combination of price and volume action is generally considered bullish. A move back above the April 27th high of $39.76 may provide a buy trigger for RBL. We are monitoring this setup closely for a possible entry.
The iShares Dow Jones US Home Construction ETF (ITB) recently reclaimed its 50-day MA on a big spike in volume. Over the past four days ITB has retested and is now consolidating above this key mark. A volume propelled move back above yesterday’s high of $13.55 could present a buying opportunity for this ETF.
The market has been demonstrating bullish resiliency as it refuses to sell off since last week’s reversal. Several days of sideways action or a modest pullback would not be unexpected given the recent advance.
Today’s Watchlist:
USCI
Long
Shares = 300
Trigger = 72.14
Stop = 70.72
Target = New swing highs
Dividend Date = n/a
Notes = see commentary from April 28th report
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:
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IEO and XES buy setups triggered.
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Edited by Deron Wagner,
MTG Founder and Head Trader