Potential short setup in Gold Miners ETF (GXD)


Stocks finished Wednesday’s session modestly down, but on higher volume. However, the Dow Jones Industrial Average managed to eke out a fractional gain, making it the 8th consecutive up day for the blue chip index. The S&P MidCap 400 fell 0.2% on the session, while both the Nasdaq and the S&P 500 lost 0.3%. The small-cap Russell 2000 was Wednesday’s worst performer, as it slid by 0.4%.

Volume was up and stocks were down, resulting in a distribution day for the market. Volume rose by 6.3% on the Nasdaq and 6.0% on the NYSE. Declining volume outpaced advancing volume by a ratio of 1.7 to 1 on both indices.

We covered half of our position in ECH for approximately a 2 point gain. We made a judgment call to cover part of the position into weakness, as the 200-day MA looms just below. In yesterday’s newsletter we stated, “Emerging Market ETFs continue to exhibit relative weakness. The Global X/InterBolsa FTSE Colombia 20 ETF (GXG) is no exception. GXG could present a quality short setup if it finds support at the 200-day may and rallies back into resistance”. A quick glance at the chart below shows that GXG did find support at the 200-day MA yesterday. Two possibilities now exist for a potential short entry. The first would be as described above and the second would be a quick reversal back below Wednesday’s low. This second potential option is now on the table due to the weakness in emerging market ETFs.

Our position in the iShares Latin America 40 Index ETF (ILF) is close to losing a five month support level. Yesterday, this ETF tested the $50.50 mark for the fourth time in the past five months. We wouldn’t be surprised to see a bounce or hesitation at this level. However, given the weakness exhibited by ILF it could easily plummet to lower ground with a move below yesterday’s low of $50.40.

The Market Vectors Gold Miners ETF (GDX) appears ready to continue its recently established downtrend. A move below yesterday’s low of $56.10 may provide a short trigger for this ETF.

Emerging market ETFs showed extreme weakness on Wednesday. With just a minor pullback in the market the majority of these ETFs fell 1% or more. This price action demonstrates how powerful relative weakness/strength can be.

Today’s Watchlist:

There are no new 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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  • Per intraday alert, covered 150 shares of ECH into weakness to lock in gains. We remain short 150 shares.
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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader