Potential short setups in (EPU) and (ECH)


The major indices posted healthy gains on Wednesday, but on mixed volume. Stocks gapped up at the open and consolidated at the highs for the remainder of the day. All five indices closed at their highest level since the market rally began in early 2009. The S&P 500 led the advance by posting a 0.9% gain on the session. Following closely, the small-cap Russell 2000 and the Nasdaq both finished the day 0.8% higher. The Dow Jones Industrial Average rose 0.7% while the S&P MidCap 400 posted a 0.6% advance.

Turnover finished mixed for the second consecutive day. Volume on the NYSE increased by 2.7%, while the Nasdaq saw volume decline by 1.3% in yesterday’s session. Even though trade was somewhat muted, advancing volume outpaced declining volume on both indices. The advancing to declining volume ratio ended the session at 4.7 to 1 on the NYSE and 3.5 to 1 on the Nasdaq. Stocks continue to rally in the absence of serious volume.

IEV hit its stop yesterday and we exited the trade. We are removing THD from the watchlist as we have found it difficult to borrow shares. All other positions remain intact. PHO and PBW have been performing particularly well. PBW finished the day up 1.6% while PHO posted a 1.9% gain.

The iShares MSCI Chile Investable Market ETF (ECH) could provide a shorting opportunity with a rally back to the declining 20-day EMA. Prior to yesterday, ECH was under heavy selling pressure for six consecutive sessions. This selloff shattered a seven month trend line in this ETF. ECH found support just below the 20-week EMA (see weekly chart). Note that the horizontal resistance line found on the weekly chart corresponds almost exactly with the 20-day EMA. We will continue to monitor ECH as a possible short candidate.

The iShares MSCI All Peru Capped Index ETF (EPU) recently broke its trend line and lost support of the 20-day EMA and the 50-day MA amidst substantial volume. A rally back into resistance at these key moving averages, or a drop below the January 10th low of $46.85, may present an opportunity to short EPU.

Due to the recent whipsaw price action and accompanying gaps, we are inclined to wait for new setups to form rather than chase the market. We are wary that breakouts may not follow through because of light volume in the broad market.

Today’s Watchlist:

There are no 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

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  • IEV triggered the stop yesterday.

  • An alert to sell 600 shares of PBW into the close yesterday was sent out but not received by all clients. To be fair, we will officially sell 600 shares of PBW at 9:35 am this morning. A few intraday alerts by the Stalk Sheet were sent by mistake to Wagner Daily subscribers yesterday. Please ignore these emails. We apologize for the confusion.

  • 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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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader