Commentary:

Stocks traded strongly on Friday, as all major indices finished higher on the session. Tech stocks led the charge, with the Philadelphia Semiconductor Index finishing at its highest level since late 2007. The small-cap Russell 2000 posted a 0.9% advance, while the technology rich Nasdaq closed up 0.7% in Friday’s action. The S&P 500 and the S&P 400 also registered increases of 0.7% yesterday. The Dow Jones Industrial Average lagged all indices but still rose by 0.5% on Friday.

Market internals were bullish across the board yesterday. Turnover was up by an impressive 13.3% on the Big Board and by over 5% on the Nasdaq. Advancing volume outpaced declining volume on the Nasdaq by a factor of 1.9 to 1, while the ratio on the NYSE was slightly better at 2.3 to 1. Friday’s market internals suggest institutional accumulation.

The PowerShares DWA Developing Markets Technical Leaders ETF (PIZ) has been in tight consolidation zone since its breakout in early December. A move back above the three day high of $23.41 provides a possible buy trigger for PIZ.

For the past six weeks the SPDR S&P Select Consumer Discretionary ETF (XLY) has been consolidating in a narrow trading range between $37.00 and $38.00. A volume assisted rally above the six week high of $38.06 could very well present a buying opportunity in this ETF. We are patiently monitoring XLY for a potential entry.

On Friday, the PowerShares Emerging Markets Sovereign Debt ETF (PCY) gapped down and is now testing a seven day support level. A break below Friday’s low of $26.59 may present an opportunity to short this ETF.

Both our long and short positions performed well on Friday. However, we are paying particularly close attention to our short trades since the broad market has broken out to a multi-year high. We still like the trades, but even weak ETFs are susceptible to being pulled along with a strong move in the market.

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Today’s Watchlist:

PIE
Long

Shares = 800
Trigger = 18.76
Stop = 17.94
Target = 20.60
Dividend Date = n/a

Notes = see commentary from Jan. 14th report

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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:

• 
  There are no changes to our open positions.
  
• 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