Potential short setup in (EWH)


For the second consecutive day stocks closed lower, but managed to pare losses late in the session. Technology stocks got hit the hardest, as the small-cap Russell 2000, the Nasdaq and the S&P MidCap 400 dropped 1.6%, 1.4% and 1.3% respectively. The S&P 500 slid 0.8%, while the blue chip Dow Jones Industrial Average fell 0.7% on the session.

In a follow-up to Friday’s action, market internals ended the day mixed on Monday. Volume spiked by 15.4% on the Nasdaq, clearly suggesting institutional distribution. However, turnover on the NYSE was muted, as it fell just under 2% yesterday. The ratio of declining volume to advancing volume increased across the board yesterday. The ratio ended the day at 4.2 to 1 on the NYSE and 4.8 to 1 on the Nasdaq. Yesterday marked the fifth time in nine sessions that the Nasdaq has fell under distribution.

KBE hit its trigger yesterday and we entered a short position in this ETF. Overall the banking sector appears to be weakening, but our biggest concern is the recent lack of follow through in the market. Position details for KBE are posted in the watchlist segment of the newsletter.

Emerging market ETFs struggled yesterday and appear headed for another decline. The iShares MSCI Hong Kong Index ETF (EWH) could provide a short entry trigger below yesterday’s low of $18.49. We are closely monitoring this ETF for a potential entry point.

Last week we shorted the Retail HOLDRS ETF (RTH), but were stopped out of the position. Since then this ETF has continued to exhibit signs of weakness. A drop below yesterday’s low of $104.45 may provide a shorting opportunity for this ETF.

The major indices continue to probe their respective 50-day moving averages. The current chippiness in the market has made for difficult trading environment. As soon as momentum appears to be shifting (up or down) the market has reversed. The market has clearly lacked follow through in recent weeks.

Today’s Watchlist:

There are no official setups for today. As always, 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

    position summary

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  • KBE short setup triggered off yesterday’s watchlist. Per intraday alert, the AMJ long setup did not trigger and was removed from the watchlist.
  • 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.
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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader