Commentary:
Following a sizeable morning gap down, stocks fought their way back to close near session highs. Trade was light. All five major indices closed lower, with the small-cap Russell 2000 incurring the biggest loss on the day. The high beta index slid 0.8%. The S&P MidCap 400 dropped 0.5% while the S&P 500 lost 0.25%. The Nasdaq pared early losses to close less than 0.2% lower. The DJIA was the day’s best performer as it minimally lower. Strong sectors included, gold, biotechs, semiconductors, software, transportation and internet. The natural gas, defense, utilities, insurance and banking sectors all struggled.
For a second time in a row, market internals ended the session mixed. Turnover slid 5.8% on the Nasdaq and 8.6% on the Big Board. Declining volume held the upper hand on advancing volume by a factor of 2.4 to 1 on the NYSE and 1.6 to 1 on the Nasdaq. Despite the mixed internals, yesterday’s price action provided the feel of a reversal. If nothing else, we would label yesterday as a consolidation day for the broad market.
Yesterday, on an uptick in volume, the Direxion Daily Semiconductor 3x Bull ETF (SOXL) formed a bullish reversal candle. SOXL gapped down at the open, undercut its 10-day and 200-day moving averages but by the closing bell had almost reclaimed both key marks. Further, SOXL closed near session highs. A move above yesterday’s high of $36.62 could provide a buy entry for this ETF. We are placing SOXL on the watchlist. Trade details are posted in the watchlist section of the newsletter.
Our open positions all held up well yesterday with IYT showing the most relative strength. IYZ, DVY and XLP all came within pennies of stopping out. However, all three formed reversal candles and closed near session highs. It’s important that all three of these trades get back into their two week trading ranges or we may consider exiting them early.
Overall we would have to consider yesterday a good day for the market. Despite the early morning gap down, the market recovered strongly and all but one of the major indices closed near session highs. The Russell 2000 underperformed but still managed to close in the middle of its intraday range. Yesterday’s price action is typical for a market that wants to head higher. The crowd continues to buy the dips and we’ve still only booked one distribution day since late December.
Today’s Watchlist:
SOXL
Long
Shares = 250
Trigger = 36.71
Stop = 34.78
Target = 44.50 – 45.00 (will send alert)
Dividend Date = n/a
Notes = see commentary above
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
- 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.
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Notes:
Edited by Deron Wagner,
MTG Founder and
Head Trader