Commentary:

After a promising start stocks closed near session lows and snapped a four day winning streak. All five major indices closed in the red with the small-cap Russell 2000 leading the decline as it ended down 2.4%. The S&P MidCap 400 slid 1.5% while the Nasdaq dropped 1.3%. Big cap stocks fared slightly better as the S&P 500 and the Dow Jones Industrial Average contained losses at 1.2% and 1.0% respectively.

Market internals ended the session mixed. Volume fell across the board. On the Nasdaq volume waned by 12.8% and on the NYSE by 10.3%. However declining volume easily topped advancing volume by a ratio of 6.1 to 1 on the NYSE and 4.1 to 1 on the Nasdaq. Although volume was light and we would not classify yesterday as a distribution day, the price action does not bode well for the market in the wake of Wednesday’s choppy reversal action.

The iShares MSCI Mexico Investable Market Index ETF (EWW) formed a massive reversal candle yesterday as it rallied above its 50-day MA and reversed sharply to close near the day’s low. This type of price action serves to sweep poorly placed stops, attract market bulls and shake weak hands out of the market. A volume fueled move below yesterday’s low of $58.47 could provide a shorting opportunity in this ETF. We are placing EWW on the watchlist. Trade details are available to our subscribers in the watchlist segment of the newsletter.

Over the past two sessions the Direxion Energy Bear 3x Shares ETF (ERY) formed two reversal candles as it undercut and then reclaimed support of its 50-day MA. A move back above the two day high of $16.62 may present a long entry trigger for ERY. ERY is also being placed on the watchlist. Trade details are posted in the watchlist section of the newsletter for our subscribing members.

Our position in RWM performed well as the small-cap Russell 2000 saw a follow through day and exhibited relative weakness to the other major indices. EWM also performed well as it formed a reversal candle yesterday and appears ready to make another move lower.

After yesterday’s price action the market appears primed for a move lower. However we do have some concern over the drop off in volume yesterday. Under ideal circumstances we would have liked to have seen a strong volume distribution day. However, the market rarely gift wraps trading opportunities.

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Today’s Watchlist:

EWW
Short

Shares = 350
Trigger = 58.39
Stop = 59.97
Target = n/a
Dividend Date = n/a

Notes = See commentary above

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ERY
Long

Shares = 400
Trigger = 16.69
Stop = 15.19
Target = n/a
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 new 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