Reverse Your Thinking

By Deron Wagner |
The Wagner Daily


Commentary:

Stocks advanced for a third consecutive day but on mixed trade. The major exchanges also improved for a third straight day. The Dow Jones Industrial Average led the move as it rose by 1.3% on the session. The Nasdaq followed closely by posting an impressive 1.2% gain while the S&P 500 tacked on 1.0%. The small-cap Russell 2000 and the S&P MidCap 400 advanced by 0.8% and 0.7% respectively.

Market internals were mixed on Thursday. Volume was down 0.3% on the NYSE but rose 3.4% on the Nasdaq. The spread ratio ended the day at 3.3 to 1 on the NYSE and 4.3 to 1 on the Nasdaq in favor of advancing volume. Thursday’s mixed internals did little to overshadow a strong day for the market. Nonetheless, we wouldn’t classify yesterday as an accumulation day for the market.

Given the extent of the recent rally, now would be a good time to evaluate the state of the broad market. A brief look at the S&P 500 ($SPX.X) shows that we are at key resistance of the downtrend line and the 50-day MA. Over the next two trading sessions we would expect to see more short setups begin to develop. In most cases sharp reversals back into resistance following a protracted decline, offer the chance to get short.

The DB Commodity Index Tracking Fund has begun to exhibit signs of relative weakness ahead of the broad market. Yesterday, as the major indices were setting new four day highs, DBC formed a reversal candle by overcutting its 20-day EMA and reversing to close near session lows. A move below the two day low near $28.75 may provide a short entry trigger for this ETF. We are carefully monitoring DBC for a possible short entry.

Yesterday, via an intraday alert, we made a judgment call and exited our long position in SLV for a small gain. Our long position in EWM and our short position in COW remain intact. After three successive days of strong gains the market has reached key resistance and a pullback would not be a surprise. We reiterate from yesterday’s newsletter that caution is warranted as many of our momentum indicators suggest the broad market may be overbought.

NOTE: In observance of Independence Day, The Wagner Daily will not be published on Monday, July 4. Regular publication will resume on Tuesday, July 5. Have a great holiday weekend!

Today’s Watchlist:

There are no new official setups for today. We will send an Intraday Alert if any new trades are made.

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

    position summary

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    Notes:

  • Per intraday alert, sold SLV for a scratch due to the lack of follow through from our entry point.
  • 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 [email protected] if not already set up for this value-added feature we provide to subscribers.

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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader