Potential Breakout Entry in (PHO)


In Wednesday’s trading, the major indices made swift and powerful advances that put the bears on the defensive. All five indices closed the session up over 2%. Further, the Dow and the S&P 500 rallied decisively out of a ten day trading range. We discussed in the November 26th newsletter that, “the Dow and the S&P 500 most likely hold the key to the next significant move in the market”. Today’s move probably takes the market higher. The only cautionary sign was the decline in volume. The Dow Jones Industrial Average led the rally by posting a robust 2.3% gain. The S&P 500 and the small-cap Russell 2000 both advanced by 2.2%, while the Nasdaq and the S&P MidCap 500 both realized gains of 2.1%. Virtually all industry groups participated in the rally.

Volume was muted when compared to yesterday’s price action. Day over day volume declined on both the NYSE and the Nasdaq. NYSE turnover dropped over 9%, while the Nasdaq saw volume lighten by 7.8%. Although Wednesday’s advance was not accompanied by heavy volume, the advancing volume to declining volume ratio on both indices was decidedly positive. Advancing volume overwhelmed declining volume on the NYSE and Nasdaq by factors of 13 to 1 and 6 to 1 respectively.

Our position in the Proshares Ultrashort MSCI Brazil (BZQ) hit its stop and we exited the trade yesterday. Three new long positions were entered on Wednesday (one inversely correlated). They include: The SPDR Oil & Gas Exploration ETF (XOP), the Market Vectors-Coal ETF (KOL) and the ProShares Ultra Short Emerging Markets ETF (EEV). For our members, trade details can be found in the open positions matrix.

In the November 30th newsletter we provided the following commentary on the Dow; “Yesterday’s price action on the Dow Jones Industrial Average could qualify as shakeout move. It is not uncommon to see an undercut of a major moving average during a pullback in an uptrend. A decline below a key moving average that reverses quickly, “sweeps” the weak hands from the market and often results in a short squeeze that fuels the next advance. It is too early to tell whether or not this is the case for the Dow, but it does serve as an important signal that must be closely monitored. Under no circumstance do we trade from this signal in isolation. The price action over the next several days must be used in conjunction with the possible shakeout candle to determine whether or not the odds favor the resumption of the prevailing trend. For example, a big volume gap up at today’s open would be a good indication that the uptrend may continue. A gap up after yesterday’s reversal would likely create a state of panic among bears”. A review of the charts below provides evidence of the potential power behind this technical setup.

POTENTIAL OUTCOME (Nov. 30th Newsletter Reflecting Closing Data From Nov. 29th)

ACTUAL OUTCOME (Dec. 1st Closing Data for DIA)

The JPMorgan Alerian MLP ETN (AMJ) has been consolidating in a tight trading range for the past 10 days. Despite its underperformance yesterday, AMJ has held very good relative strength to the market during this time frame. It was much stronger than the market last week. AMJ has been exhibiting all of the characteristics of a market leader. A gap up above the December 1st high or a test of the 50-day MA could provide a buying opportunity for this ETF. We will be monitoring AMJ for a possible long entry.

Given the powerful price action yesterday, we anticipate follow through to the upside. It would not be unusual to see the market consolidate or pull back some today, as is often the case after an explosive move. An increase in volume over the next few days would provide further evidence that the market is prepared for another advance.

Today’s Watchlist:


Shares = 400
Trigger = 48.84
Stop = 47.19
Target = New highs (will trail stop)
Dividend Date = n/a

Notes = see commentary in November 30 issue


Shares = 700
Trigger = 18.20
Stop = 17.43
Target = New 52-week high (will trail stop)
Dividend Date = n/a

Notes = see commentary in November 29 issue

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

    position summary

    Having trouble seeing the position summary graphic above?
    Click here to view it directly on your Internet browser instead.


  • Per intraday alert, we added two new positions yesterday in EEV (inverse long) and KOL (long). XOP (long) triggered off the watchlist, while BZQ hit our stop.

  • 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 [email protected] if not already set up for this value-added feature we provide to subscribers.

    Have you had your free 1-month trial to Morpheus Trading Group’s additional ETF and stock trading newsletters?

      Edited by Deron Wagner,
      MTG Founder and
      Head Trader