Potential short setup in (XLY)


Equities edged higher on Friday, a quadruple witching options expiration day. The session brought divergence to the market, as small cap stocks vastly outperformed all other groups. The small-cap Russell 2000 closed the day up 1.4%, while the Nasdaq and the S&P MidCap 400 could only manage modest gains of 0.3% and 0.5% respectively. The S&P 500 scrapped its way to a 0.4% improvement, while the Dow Jones Industrial Average posted a 0.7% gain for the day.

Trade was heavy on Friday but this would be expected given options expiration. Nasdaq volume rose by 29.5%, while the NYSE saw an increase of 52%. Advancing volume modestly out performed declining volume across both indices. The advancing volume to declining volume ratio ended the day at 2.4 to 1 on the NYSE and 1.4 to 1 on the Nasdaq. Due to options expiration, we would not consider Friday as an accumulation day for market.

The SPDR Consumer Discretionary Select Sector ETF (XLY) demonstrated significant relative weakness on Friday. It opened at the high and closed near the low of the day. A volume fueled move below the three day low of $37.38 could provide a shorting opportunity for this ETF. XLY is being placed on the watchlist. For our subscribing members, trade details are available in the watchlist segment of the newsletter.

In Friday’s newsletter we stated, “The SPDR S&P Emerging Asia Pacific ETF (GMF) has lost support of the 200-day MA for the second time in as many months. Yesterday, this ETF closed near the low of the session on strong volume. A drop below the three day low of $78.35 could result in significant downside for GMF“. On Friday, GMF continued to exhibit relative weakness and we are now placing it on the watchlist. Trade details are available in the watchlist.

Although we follow the $COMPX in the newsletter, it is noteworthy that the Nasdaq 100 actually closed down 0.2% on Friday. This provides further indication the market may be weakening.

Today’s Watchlist:


Shares = 400
Trigger = 37.31
Stop = 38.33
Target = 34.90
Dividend Date = n/a

Notes = see commentary above


Shares = 300
Trigger = 78.79
Stop = 80.47
Target = 74.85
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

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  • Per intraday alert, we lowered the EUM stop to give the setup a little more breathing room.

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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader