Commentary:

Stocks closed mixed on Tuesday on higher volume. The session began with a strong wave of selling, hitting the higher beta sectors particularly hard. The major indices remained under bearish pressure until 1:00 pm, at which time the market stabilized and rallied modestly into the close. The Dow Jones Industrial Average demonstrated the most relative strength, as it ended the day up by 0.2%. The S&P 500 fell 0.1%, while the Nasdaq, S&P MidCap 400 and the small-cap Russell 2000 shed 0.4%, 1.1% and 1.6% respectively.

Turnover was up across the board in yesterday’s session. On the Nasdaq, volume rose by almost 5% on the day. The Big Board saw turnover increase by 7.2%. Declining volume got the best of advancing volume by a ratio of 1.5 to 1 on the NYSE, and 1.1 to 1 on the Nasdaq. Based on the increase in volume and the weak performance of many market leaders, Tuesday could be characterized as a distribution day for the Nasdaq, the S&P MidCap 400 and the small-cap Russell 2000

Yesterday, we made a judgment call and took half of the position in GSG off the table. Due to yesterday’s volume and price action in IJR we have removed it from the watchlist. Our positions in PBW and UNG held up well during Tuesday’s volatile session. Please note changes made to stops in all open positions.

The Market Vectors Junior Gold Miner ETF (GDXJ), appears to be in danger of losing support. For the second time in the last eight sessions this ETF has closed below the 50-day MA. On December 23rd GDXJ gapped below the 50-day MA, but quickly recovered and filled the gap on January 3rd (Overcut 20-day EMA). Yesterday GDXJ gapped below the key 50-day MA mark, and formed a very bearish reversal candle. A move below yesterday’s low of $37.21 provides a potential short entry in GDXJ. We are placing GDXJ on the watchlist. For our subscribing members, trade details can be found in the watchlist.

Since finding support at the 200-day MA on December 28th, the iShares FTSE China 25 Index ETF (FXI), has rallied into significant resistance at its down-trending 50-day MA. Further, there is convergence between the 50-day MA and two Fibonacci retracement levels (38.2% and 50.0% retracements). An overcut and move back below the 50-day MA could present a shorting opportunity in FXI. We like this setup and will be watching it closely for a possible short entry.

Although the market recovered from what could have been a disastrous day of trading, the price and volume action was unsettling. Recent leadership from the Russell 2000 and the S&P MidCap 400 was seriously threatened. A gap-down or move below yesterday’s lows in the Nasdaq could spell trouble for market bulls.

---

Today’s Watchlist:

GDXJ
Short

Shares = 250
Trigger = 37.14
Stop = 39.67
Target = 31.90
Dividend Date = n/a

Notes = see commentary above

---

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

Having trouble seeing the position summary graphic above?
Click here to view it directly on your Internet browser instead.

Notes:

• 
  Per intraday alert, we made a judgement call to sell half (175 shares) of GSG due to the bearish price and volume action the past few days. IJR has been removed from the watchlist.
  
  
• 
  Per intraday alert, we corrected the open and closed positions graphic Tuesday morning to properly show USO as a closed position (USO hit our target on Monday).
  
  
• 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