Commentary:

Stocks ended the day mixed on Thursday on light volume. The tech heavy Nasdaq and the small-cap Russell 2000 ended the day higher by 0.6% and 0.4% respectively. The S&P 500 and the S&P MidCap 400 both fell 0.1%, while the Dow Jones Industrial Average ended the session down 0.3%.

Market internals ended the session mixed. Volume was down across the board. Turnover dropped by 17% on the Nasdaq and 10% on the NYSE. Advancing volume was greater than declining on the Nasdaq by a ratio of 1.9 to 1. However, on the NYSE declining volume outpaced advancing volume by a factor of 1.4 to 1.

The PowerShares DB Agriculture ETF (DBA) provides an excellent example of the Accumulation/Distribution technical indicator foreshadowing a price reversal. Notice that as DBA was setting higher highs (see red arrows), the Acc/Dist indicator was down trending. This divergence presents a clear bearish signal. It is important to note that Accumulation/Distribution can diverge from price for weeks or months before price follows. Consequently, this technical indicator is not intended to be used in isolation. As of yesterday, the Acc/Dist histogram is still in a downtrend and this presents a dilemma. DBA has held up well during the recent sell off in the market. Typically, we would not hesitate to consider buying DBA above the two day high. However, given the downtrend in Acc/Dist indicator, it puts into question whether or not a rally above the 2 day high would hold. Conflicting signals are not uncommon when ETFs and markets are reaching extremes.

The Market Vectors Russia ETF (RSX) performed quite well during the recent distribution in the market. After a brief undercut of the 50-day MA this ETF gapped up and closed near the high of the 11 day trading range. A volume fueled rally above yesterday’s high of $39.35 may provide a buying opportunity in RSX.

Because of the recent volatility in the market many potential setups that we had been monitoring were nullified. Nonetheless, volatility generally provides plenty of trading opportunities that meet our technical criteria. During periods of volatile market activity the best trades often develop intraday.

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Today’s Watchlist:

There are no new official setups for today. We will send an Intraday Alert if any new trades are made.

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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:

• Per intraday alert, we sold half of our position in BZQ due to the lack of follow through from our entry point.
• 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