Commentary:

Stocks ended the session not only higher, but also near the day’s highs. All five major indices closed well in the black. The advance was led by small and mid cap stocks. The small-cap Russell 2000 tacked on an impressive 1.3% gain, while the S&P MidCap 400 ended the session up by a robust 1.0%. The Nasdaq and the S&P 500 both posted solid gains of 0.7%. The Dow Jones Industrial Average ended the Wednesday’s session higher by 0.6%.

Volume was solidly higher on Wednesday. Turnover increased by 12.4% on the Nasdaq and by 9.9% on the NYSE. Advancing volume topped declining volume by a ratio of 3.4 to 1 on the Big Board and 2.0 to 1 on the Nasdaq. Market internals suggest that yesterday was an accumulation day for the market.

Yesterday we were stopped out of both RTH and XLF, incurring modest losses. We exited our position in OIH, yielding over four points. Because the major indices are now nearing prior highs, we anticipate higher volatility in the near-term. As such, we have shifted to a more proactive stance of managing positions (both winners and losers) through tighter stops and reduced share size. Consequently, we made a judgment call to sell OIH since it appeared to be losing strength.

The United States Oil Fund LP ETF (USO) has been consolidating along its 20-day EMA for the past two weeks. Further, there is a bullish divergence between the price action in USO and the Accumulation/Distribution technical indicator. As the price of this ETF has been falling, the Accumulation/Distribution Histogram has been on the rise. This suggests institutional accumulation. A volume fueled move above yesterday’s high of $42.02 may provide a buying opportunity in USO.

The iShares MSCI Chile Investable Market ETF (ECH) has rallied into resistance at the 50-day and 200-day moving averages. A drop below the two day low of $70.25 may provide a short entry trigger for this ETF.

All in all, it was a good day on Wall Street. Market leaders have been re-energized by the market’s post earthquake resiliency. Further, the Nasdaq is now positioned well above its 50-day ma. It is noteworthy however, that homebuilder and chip stocks struggled yesterday. This suggests a lack of broad market participation and sector rotation.

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Today’s Watchlist:

There are no new official setups this morning. 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:

• 
  SLV triggered a buy entry after the first five minutes of trading. XLF triggered its stop and we are out with a small loss. Per intraday alert, RTH triggered its gap adjusted stop price for the remaining 100 shares.
  
  
• 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