Commentary:

The market appeared headed for a big down day on Friday, but a late session rally brought stocks well off the lows of the day. Nonetheless, all five major indices ended the day in the red. The Dow Jones Industrial Average, S&P 500 and S&P MidCap 400 all ended the day lower by 0.7%. The technology rich Nasdaq fell by 0.5%, while the small-cap Russell 2000 shed 0.4% on Friday.

Market internals ended the session mixed. Turnover fell 6% on the Nasdaq and 2.2% on the Big Board. Declining volume outpaced advancing volume by a factor of 3.1 to 1 on the NYSE and 2.1 to 1 on the Nasdaq. The decline in volume may have assisted in preventing a more significant pullback in the market on Friday.

In Friday’s newsletter we stated, “The JPMorgan Alerian MLP Index ETN (AMJ) has been consolidating for almost three weeks in a tight range. A potential buying opportunity exists with a move back above yesterday’s high of $38.22 and/or the three day high of $38.34. One strategy would be to purchase a partial position above yesterday’s high and add to the position should AMJ rally above the March 1st high”. Based on yesterday’s price and volume action in this ETF we are placing it on the watchlist. A reversal after Friday’s selloff could power this ETF to new highs. For our subscribing members trade details are located in the watchlist section of the newsletter.

The PowerShares DB Base Metals ETF (DBB) has been consolidating over the past week on declining volume. This price and volume action is often a technical clue that an ETF is preparing to continue the prevailing trend. A rally back above $25.45 May present a buying opportunity in DBB.

The SPDR Series KBW Bank ETF (KBE) reversed sharply on Friday, as it gapped down following a strong gap up and rally last Thursday. This reversal occurred on increasing volume further compounding the bearishness of the move. A loss of support near $25.75 could result in a further downward pressure on this ETF. KBE is being placed on the watchlist. Details of the setup are available in the watchlist segment of the newsletter. For those of you trading in qualified accounts, taking a long position in the inverse ProShares UltraShort Financials ETF (SKF) offers a possible alternative to shorting KBE.

The market continues to exhibit indecision amidst strong divergence among sectors. Leadership has not yet abandoned the market but the market picture has become more clouded in recent weeks.

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Today’s Watchlist:

AMJ
Long

Shares = 500
Trigger = 38.28
Stop = 37.71
Target = New High
Dividend Date = n/a

Notes = see commentary above

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KBE
Short

Shares = 500
Trigger = 25.68
Stop = 26.43
Target = 24.20
Dividend Date = n/a

Notes = see commentary above

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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:

• Two new setups added to the watchlist.
• 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