market timing model: 

SELL (click here for more details)

today’s watchlist (potential trade entries):

open positions:

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 red shaded cells below. Be sure to read the Wagner Daily subscriber guide for important, automatic rules on trade entries and exits.

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closed positions:

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ETF position notes:

• No trades were made.

stock position notes:

• No trades were made.

ETF and broad market commentary:

Stocks finished modestly higher on Tuesday, on mixed trade. All of the major exchanges ended the day higher, with the Nasdaq and S&P MidCap 400 leading the advance. Both indices closed up by 0.6%. The S&P 500 added 0.5%, while the small-cap Russell 2000 and the Dow Jones Industrial Average improved by 0.4% and 0.3% respectively.

Market internals were mixed on Tuesday. Volume rose on the Nasdaq y 7.6% but fell on the NYSE by 2.2%. Advancing volume slightly outpaced declining volume on the NYSE by 1.9 to 1 and on the Nasdaq by 1.5 to 1. The Nasdaq posted an accumulation day, as advancing volume, total volume and price action all ended the session higher on the tech-rich index.

In Tuesday’s newsletter we stated, “If (the Direxion Daily Gold Miners 3x Bear ETF DUST) can form either a reversal candle or an inside candle, then (we could be provided with) a buying opportunity” in DUST. Yesterday, DUST traded within its three day range and closed in the middle of its intraday range. This price action was accompanied by light volume, which is typical for an ETF or stock during consolidation prior to a significant move. A volume fueled move above the three day high of $50.25 could provide a buy entry trigger for this inverse ETF. We are placing DUST on the watchlist. Trade details are available to our subscribers in the watchlist section of the newsletter.

During the current round of selling in the broad market, the iShares Nasdaq Biotechnology ETF (IBB) has shown excellent relative strength. Notice that IBB has held support of it 10-day MA, while the Nasdaq is currently hovering below its 20-day EMA. A volume assited move above the six day high of $128.91 could provide a buying opportunity in this ETF. We will continue to monitor IBB closely for a possible long entry.

All of our open ETF positions retraced modestly on Tuesday but remain well above key support levels. Yesterday’s modest recovery was of no surprise in the wake of Monday’s big sell off. Although the Nasdaq posted an accumulation day, the price action was far from impressive, and only twenty of one hundred and four sectors that we monitor finished up by more than 1.0%. We continue to hold a bearish bias but make sure to remind ourselves that one big accumulation day could shift the sentiment in the market quickly to the bull camp. We are also respectful that the market is once again approaching support of the 200-day MA.

stock commentary:

CROX sold off sharply after breaking down below the 200-day MA in late April and has since formed a six week base at the lows. The price action has tightened up the past two weeks near the lows of the range. We look for CROX to break the 6/21 low and take out the six week low shortly thereafter.

 

Our unofficial long entry in ALXN triggered yesterday but volume was weak. We’d look to raise the stop beneath yesterday’s low and take a quick profit on a move to the 99-100 area. We plan to lay low on the long side until the Nasdaq Composite prints a 1% or more up day on higher volume.

If you are a new subscriber, please e-mail rick@morpheustrading.com with any questions regarding our trading strategy, money management, or how to make the most out of this report.

 
relative strength watchlist:

Our Relative Strength (or RS) Watchlist makes it easy for subscribers to import data into their own scanning software, such as Tradestation, Interactive Brokers, and TC2000. This list is comprised of the strongest 100 (or so) stocks in the market over the past six to 12 months. The scan is updated every Sunday, and this week’s RS Watchlist can be downloaded by logging in to the Members Area of our web site.