The major indices finished the day mixed on Monday, although there were no major winners or losers. Stocks began the day lower, made an uneventful rally to modest gains, but were met with a burst of selling in the final hour of trading. The absence of volume and late day selling pressure continue to put some overcast on an otherwise sunny market. In yesterday’s session the small-cap Russell 2000 demonstrated the most resiliency as it managed a 0.6% advance. The Nasdaq finished the day slightly up as it posted a 0.1% improvement. The S&P MidCap 400 traded at par for the day, as the S&P 500 and the Dow Jones Industrial Average shed 0.1% and 0.2% respectively. It is noteworthy to mention that commodity ETFs were the shining stars in an otherwise flat day of trade.
Internals were mixed on Monday. For the second consecutive day both the NYSE and the Nasdaq saw volume decrease significantly. Volume on the NYSE was down by 10%, as the Nasdaq realized a slightly bigger decline in volume of 11%. For the first time this month, declining volume edged out advancing volume by a factor of 1.1 to 1 on the NYSE. However, on the Nasdaq, the advancing volume to declining volume ratio closed the day positive by a ratio of 1.5 to 1. For the fourth consecutive session volume has been a stranger to the market. Its absence does pose concern. But, at least for the moment it is not an overwhelming concern. Nonetheless, for the rally to remain healthy the internals probably need to improve soon.
All of our active positions performed admirably on Monday. This is mainly attributable to identifying the right industry groups and sectors that were prepared to break out. Commodities, energy and energy related plays were identified early as breakout candidates and they have performed well since we entered the positions. Five of our seven open positions fall within these industry categories/sectors. XOP, EPU, KOL, PHO, YCS and UNG were all up in Monday’s session, as they posted gains of 0.6%, 0.8%, 0.5%, 1.0%, 0.2% and 4.2% respectively. USO was slightly down on the day. But this is not unusual following a powerful seven day advance. It appears that USO took a breather yesterday, as it slipped 0.3%.
Our long position in the PowerShares Water Resources Portfolio ETF (PHO) is at an important technical crossroad. To rally further, this ETF must be able to hurdle above the resistance established at the previous swing high on April 30th ($18.68). In yesterday’s action, PHO briefly “kissed” this important level, but closed the day 6 cents off the mark at $18.62. It would be quite normal to see a false breakout above this level, followed by several days or weeks of consolidation in preparation for the next advance. Regardless of how the potential advance plays out, strong volume will likely be necessary to fuel the move. Once resolution is found at this key level we will provide our members with trailing stop details.
The Vanguard Pacific ETF (VPL), has been consolidating for the past five weeks between $55.00 and $58.00. After a “shakeout” undercut of the 50-day MA on November 30th, this ETF gapped up sharply the December 1st, and is now positioned to potentially see new highs. A volume led move above $57.66 may offer a buying opportunity in VPL.
We’re still patiently waiting to see signs of improvement with the market internals. We remain bullish, but would welcome a spike in turnover, as it would signal strong commitment on the part of institutional players. We are also monitoring the Dow and S&P 500 closely, as new highs in both indices would likely lead to a surge in buying activity.
There are no new official setups this morning. We will send an intraday alert if any new trades are made.
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
- No changes to our open positions at this time.
- 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.
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Edited by Deron Wagner,
MTG Founder and