Commentary:

Equities closed higher on Monday on modestly higher trade. The market gapped up at the open and consolidated near session highs for most of the day. However, around 1:30 pm the market sold off sharply, before recovering into the close. Stocks did however finish well off the highs. All five major indices ended higher with the small-cap Russell 2000 leading the way. The high beta index ended the day up 1.6%. The S&P MidCap 400 tacked on 1.3%, while the Nadaq added a solid 1.1%. The S&P 500 closed 1.0% higher, while the Dow was the day’s laggard, as it posted a more modest 0.65% gain.

Market internals were moderately bullish on Monday. Volume closed up on the Nasdaq by 2.2% and on the NYSE by 2.4%. Advancing volume outpaced declining volume on both exchanges. By the closing bell the spread ratio stood at 6.1 to 1 on the NYSE and 3.0 to 1 on the Nasdaq in favor of advancing volume.

Yesterday, on a massive spike in volume, the Market Vectors Junior Gold Miner ETF (GDXJ) formed a reversal candle, as it overcut its 20 and 50 day moving averages and closed near the lows of the the day. Also notice the divergence between the Accumulation-Distribution Histogram and the price action in this ETF. A move below yesterday’s low of $29.40 may present a shorting opportunity in this ETF. We are placing GDXJ on the watchlist. Trade details are available to our subscribers in the watchlist section of the newsletter.

For the second time in as many days, the iShares 20yr+ Lehman Treasury Bond ETF (TLT) gapped down, but rallied to close near session highs. Further, this ETF is now poised to break above resistance of its 20-day EMA. A volume assisted move above yesterday’s high of $118.83 could provide a buying opportunity in this ETF. We are watching this setup closely for a potential entry.

EUO posted another accumulation day yesterday, as it recovered from an early morning gap down, to close in the black and near session highs. Despite the positive price action and positive internals yesterday, we are not inclined to classify the session as an accumulation day. Over the past several days the market appears to be churning. Each time it has attempted to move higher, the bid has dried up. It is also concerning that the dollar has been moving higher with the broad market.

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Today’s Watchlist:

GDXJ
Short

Shares = 250
Trigger = 29.33
Stop = 30.93
Target = 26.60
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 trades were made.
• 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