Potential breakout in (UYM)


The major indices ended Monday’s session mixed on very light volume. For the seventh consecutive session stocks meandered in a tight range. The small-cap Russell 2000 showed the most strength on the session, as it rallied 0.4%. The Nasdaq and the S&P 500 both ended the day up by 0.3%, while the S&P MidCap 400 eked out a 0.1% advance yesterday. The Dow Jones Industrial Average lagged the overall market as it closed down 0.1% on the day.

Turnover was decidedly down across the board on Monday. Some of the drop can be attributed to the extremely high volume associated with options expiration last Friday. Turnover on the NYSE and the Nasdaq plummeted by 46% and 30% respectively. Still, the ratio of advancing volume to declining volume was positive on both indices. The NYSE saw up volume outpace down volume by a factor of 1.8 to 1, while the Nasdaq turned in a less impressive ratio of 1.3 to 1.

The Market Vectors Russia ETF (RSX), has demonstrated excellent relative strength compared to most international ETFs. After a serious, multiple week test of the 50-day MA from November 16th through November 30th, this ETF gapped up and rallied to the previous swing high set on April 16th of this year ($36.90). It has been consolidating at this mark, in a pennant-like formation, for the past 11 trading sessions. A volume fueled breakout above the December 7th high of $37.40, provides a potential buy trigger for RSX. As such, we are carefully monitoring this ETF for a possible long entry. An intraday alert will be sent to our members should we decided to enter this set up.

The ProShares Ultra Basic Materials ETF (UYM), has been consolidating in a tight range since it recording a false breakout on December 7th. The consolidation has been accompanied by declining volume which is often a bullish indicator. Yesterday, UYM rallied above the December 7th high of $48.30. But, it could not hold the breakout and ultimately ended the session back in the trading range. A rally above yesterday’s high ($48.51) could provide a long entry trigger for UYM. A spike in volume likely holds the key to a sustained breakout.

We have recently received several client emails commenting to the lack of follow through in our open positions. The observation is completely accurate and is most likely the result of the lack of conviction in the broad market. Market internals have been weak and the DJIA continues to lag. Further, some market leaders have begun to deteriorate, while market laggards have picked up the slack. This is often the sign of a “tired” or range bound market. Caution is warranted under these circumstances.

Today’s Watchlist:


Shares = 350
Trigger = 33.52
Stop = 31.84
Target = 36.70
Dividend Date = n/a

Notes = see commentary from Dec. 17 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

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  • No changes to our open positions at this time.
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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader