today’s watchlist (potential trade entries):
Below is an overview of all open positions, as well as a report on all positions that were closed only since the previous day’s newsletter. Net P/L figures are based on two separate $50,000 model portfolios (one for ETFs and one for stocks). Changes to open positions since the previous report are listed in a pink shaded cell below. New entries are shaded in green cells. Be sure to read the Wagner Daily subscriber guide for important, automatic rules on trade entries and exits.
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ETF position notes:
- Note the new setup in VNM.
stock position notes:
- Sold ORCL at market on the open for a small loss.
SPECIAL NOTE: The only gap rule we are now using applies strictly to entries, where a setup is automatically cancelled if it opens more than 1.3% above or below the trigger price. For example: If the trigger on a buy setup is $20.00 and the price opens higher than 20.26 (20.00 x 1.013%), then the trade is automatically cancelled. As a reminder, when a stock gaps below the listed stop price we automatically sell the stock “at the market” on the open.
ETF and broad market commentary:
Stocks ended the session higher yesterday on mixed trade. The session began with the major indices trading mixed but in the afternoon the market found a bid and moved higher. The S&P MidCap 400 led all indices as it netted a 1.0% gains. Despite weakness in transportation stocks, the Dow Jones Industrial Average finished a close second with a 0.9% gain. The small-cap Russell 2000 found resistance at its 50-day MA but still posted a solid 0.8% improvement. Both the S&P 500 and the Nasdaq closed the session higher by 0.7%. Homebuilders and consumer electronics were strong on Thursday, while the telecommunications and transportation sectors struggled.
Market internals ended the session mixed. Volume rose on the Nasdaq by 4.2% but fell on the NYSE by 3.7%. The ratio of advancing volume to declining volume ended the day at a positive 2.1 to 1 on the NYSE and a plus 2.3 to 1 on the Nasdaq. The higher volume on the Nasdaq points to institutional buying and an accumulation day for this index.
The SPDR S&P Retail ETF (XRT) recently found support but has now rallied near resistance of the April 19th high of $61.66. A retest of this level (false breakout or overcut), followed by a formation of a lower high, could provide the necessary price action for a potential long entry in this ETF. The blue and red arrows on the chart represent what we would see as the “ideal” price action necessary for XRT to establish a proper base from which to launch a potential rally.
Over the past two months, the Proshares UltraShort MSCI Brazil ETF (BZQ) has reversed a long term down trend and is now in trend reversal mode. Since early March, BZQ has formed a sequence of higher highs and higher lows, as it has move along support of its 20-day EMA. A pullback and undercut of its current uptrend line, followed by the formation of a reversal candle, could provide the needed pivot point for a possible long entry. If the market should remain weak, BZQ would likely be one of the strongest ETFs in a selloff.
Overall, yesterday was a good day for the market. The Nasdaq moved higher on expanding volume. Further, stocks with relative strength continue to break to new highs, which is a bullish signal. However, price action could remain choppy as we recover from the recent sell-off. We remain of the opinion that the market is range bound and may still require further consolidation prior to any potential move higher. As a result, we are keeping our market exposure at modest levels.
With two accumulation days in a row, the Nasdaq volume pattern has improved nicely this week and all we need now is a strong follow through day to confirm that a new uptrend is emerging (in the Nasdaq). Although the market has responded well the past few days, we see no need to rush in to action and load up the portfolio on the long side.
We have one new official setup on the watchlist in UA:
If you are a new subscriber, please e-mail [email protected] with any questions regarding our trading strategy, money management, or how to make the most out of this report.