Commentary:
Stocks ended the session modestly lower yesterday on mixed trade. All of the major indices lost ground on the session. Once again the small-cap Russell 2000 demonstrated the most relative weakness as it dropped 0.6% on the day. The tech rich Nasdaq fell almost 0.5% while the S&P MidCap 400 shed 0.3%. The Dow Jones Industrial Average and the S&P 500 appear to have been the benefactors of a flight to quality as they slid a modest 0.2% and 0.1% respectively.
Market internals were mixed on Tuesday. Turnover was up 4% on the Nasdaq but down 1.3% on the NYSE. The spread ratio fell in favor of advancing volume by a factor of 1.1 to 1 on the NYSE. However, on the Nasdaq declining volume held the upper hand to advancing volume by a ratio of 1.3 to 1. The mixed market internals suggest an absence of institutional participation during yesterday’s session.
UUP continues to consolidate above its 20-period EMA on the 60-minute chart since breaking out on Monday. This is the type of price action we look for as confirmation to the strength of a breakout move. IWM continues to exhibit relative weakness to the broad market as it closed near session lows. Further, for the second consecutive day the Russell 2000 has led the market lower.
We entered a new short position in the iShares Russell Microcap ETF (IWC) via an intraday alert yesterday. We liked the trade as a minor diversification from our position in IWM since IWC was showing signs of being the slightly weaker of the two. The 20-day EMA has clearly crossed below the 50-day MA on the daily chart of IWC while this is not yet the case with IWM. Trade details are available to our subscribers in the open positions segment of the newsletter.
Since selling off sharply and surrendering a key support level in early May, the Oil Service HOLDRs ETF (OIH) has been consolidating below its 20-day EMA. Yesterday, for the third time in four days, this ETF found resistance near this moving average. A loss of support at Tuesday’s low or an “over cut” of the 20-day EMA followed by a quick reversal off this level could provide a shorting opportunity in this ETF. We are monitoring this trade carefully for a possible entry.
The broad market continues to struggle. It is noteworthy that both bank and international ETFs are being met with stiff resistance. We are looking for possible short entries into a bounce. As of this writing both the Nasdaq and S&P futures are trading modestly lower. Should this trend hold and/or strengthen we may look to cover some our short positions into weakness. We believe it is important to evaluate potential exit strategies in advance of the opening bell when a potentially favorable move involves a gap.
Today’s Watchlist:
There are no new official setups for today. 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
- Per intrady alert, we sold short IWC.
- 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 [email protected] if not already set up for this value-added feature we provide to subscribers.
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Notes:
Edited by Deron Wagner,
MTG Founder and
Head Trader