Shorts Around The Corner? (SMN)


In what has been a rare occurrence over recent sessions, stocks ended the day mixed on light volume. Stocks began the session on a high note but by 10:30 am the market reversed and stocks slid to session lows. However by 2:00 pm stocks recovered and pared losses. The S&P 500 managed to eke out a 0.1% gain while the DJIA closed fractionally higher. Both the tech-rich Nasdaq and the S&P MidCap 400 lost 0.5%. The small-cap Russell 2000 slid a minimal 0.1%.

Market internals also ended the session mixed. Volume was lower across the board. Turnover decreased by 7.9% on the Nasdaq and by 14.6% on the Big Board. Advancing volume topped declining volume by a factor of 1.5 to 1 on the NYSE. However on the Nasdaq declining volume beat out advancing volume by 1.7 to 1. The combination of mixed price action and mixed internals suggest indecision in the market. Institutional money was nowhere to be found on Wednesday.

Since its breakout move which began on August 2nd, the ProShares UltraShort Basic Materials ETF (SMN) has pulled back to support of its 20-day EMA. Over the past four sessions SMN has been consolidating in a tight trading range and holding support of its 20-day EMA. Yesterday this ETF formed a reversal candle as it sold off, touched its 20-day EMA and recovered to close near the session high. A volume fueled move back above the two day high of $21.16 could offer a buying opportunity in this inverse ETF.

The Direxion Emerging Markets Bear 3X ETF (EDZ) undercut its 20-day EMA and formed a distinct doji star candlestick yesterday. A doji star suggests that there is a tug of war occurring between bulls and bears and that the pullback move may be losing momentum. We now must wait for a setup to present itself. We will be monitoring EDZ carefully for a possible long entry.

Via an intraday alert we opened a short position (half) in the DOW Jones US Real Estate Index Trust ETF (IYR). Trade details are available to subscribers in the open positions segment of the newsletter.

The recent move higher appears to be weakening. However, setups are still forming. Many ETFs are now approaching resistance and it appears that more short setups are on the horizon.

Today’s Watchlist:

There are no new setups for today. As always, 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

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  • Per intraday alert, we established a half position in IYR. Just prior to the closing bell we were stopped out of our position in BZQ. This is the second time we had a legitimate entry in BZQ but were stopped out. Although we have lost on this trade twice we must not let this affect our thinking if another legitimate setup presents itself. Each trade stands of its own merits.
  • 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