Commentary:

Trade was down on Friday as stocks closed lower. All five major indices finished in the red with the small-cap Russell 2000 taking the most punishment. The small cap index fell 1.1% on the day. The S&P MidCap 400 shed 0.7% while the Nasdaq lost 0.6%. The S&P 500 and the Dow Jones Industrial Average fared the best on the session as they dropped by 0.4% and 0.2% respectively.

For the second consecutive day market internals remained unimpressive. Volume on the Nasdaq fell by 8.8%. On the NYSE turnover ended the day lower by 8.4%. Declining volume was greater than advancing volume by a factor of 2.2 to 1 on the NYSE and 1.6 to 1 on the Nasdaq. Although the market has been under selling pressure for the past two sessions, the lack of turnover suggests a lack of institutional participation in the decline. Due to the weak volume we must temporarily conclude that the market is just experiencing a typical pullback. For the current retracement to gain bearish credibility, we would need to see a significant uptick in volume.

The ProShares UltraShort Semiconductor ETF (SSG) has been consolidating for the past 3 days above its 50-day MA. On Friday, SSG reversed dramatically on a burst of volume after gapping down at the open. A move above resistance at the two day high of $51.20 may present a buy entry trigger for SSG. We are placing SSG on the watchlist. Trade details are available to our subscribing members in the watchlist section of the newsletter.

The iPath Dow Jones-AIG Cotton ETN (BAL) has been consolidating near its 52 week high since mid March. Further, this ETF has maintained excellent relative strength to the broad market. During the recent market turmoil, BAL has not once closed below its 50-day MA. Over the past three days, BAL has pulled back to its 20-day EMA. Although we like the relative strength of BAL, we would like to see further tightening in the price action (tightening of trading range) before considering a long entry. We are monitoring this ETF closely for a possible buying opportunity.

It is noteworthy that the Dow Jones Transportation Average ($DJT) plummeted almost 2% yesterday. The trucking and airline groups were hit particularly hard. The skyrocketing price of oil and gasoline appear to be weighing on transports. Since the $DJT is widely considered a leading indicator, we always take notice when volatility hits this index.

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Today’s Watchlist:

SSG
Long

Shares = 150
Trigger = 51.33
Stop = 49.29
Target = 55.30
Dividend Date = n/a

Notes = see commentary above

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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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Notes:

• No changes to our open positions.

• 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