S&P MidCap 400 Shows Relative Strength ($IJH) – $MDY $MID

today’s watchlist (potential trade entries):

today's watchlist

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 text below. Be sure to read theWagner Daily subscriber guide for important, automatic rules on trade entries and exits.

open position summary
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closed positions:

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ETF position notes:

  • Per intraday alert, bought TBT for a swing trade to the 200-day moving average.
  • Per intraday alert, sold 100 shares of EPU and IYR to lock in gains.

stock position notes:

  • Per intraday alert, sold PII to lock in a 10% gain.
  • Per intraday alert, bought KORS and STAA.
  • PCYC buy entry triggered adding 75 shares to existing position.

ETF and broad market commentary:

Stocks pared early losses into the close on Tuesday, to finish well off session lows. Four of the five major indices lost ground, with midcap stocks being the sole holdout. By the closing bell, the S&P MidCap 400 managed to eke out a 0.2% gain. The small-cap Russell 2000 was the day’s biggest loser, as it posted a 0.7% loss. The Dow Jones Industrial Average, S&P 500 and Nasdaq dropped 0.5%, 0.4% and 0.2% respectively. Brewers, precious metals, gold miners and coal all had a very rough day. Travel and Tourism, airlines and computer hardware were the big winners on the day.

Market internals were negative but far from bearish. Volume increased on the Nasdaq by 1.0% and on the NYSE by 4.9%. Declining volume outpaced advancing volume on the Nasdaq and NYSE by 2.2 to 1 and 2.5 to 1 respectively. Despite the negative internals, we would not classify yesterday as a distribution day for the broad market. All of the major indices formed distinct reversal candles. This suggests that bulls wrestled control of the market from bears into the close. This type of price action is considered bullish and nullified what could have been a day of distribution on Wall Street. It is also noteworthy that leadership stocks performed extremely well yesterday and this is also considered a good sign of market health.

Yesterday, via an intraday alert, we opened a long position in the ProShares UltraShort 20+ Year Treasury (TBT). Since breaking out of a six month trading range and setting a new swing high on March 19th, TBT pulled back into support of its 20-day EMA. On March 30th, TBT formed a reversal candle as it undercut its 20-day EMA but recovered to close near session highs. The March 30th high provided the perfect entry point for a long entry in TBT. Trade details are available to our subscribers in the open positions segment of the newsletter.

DJIA weekly

Over the past two weeks, the iShares S&P MidCap Index ETF (IJH) has set a sequence of higher lows, as price action has tightened. Yesterday, the S&P MidCap 400 was the only major index to post a winning day. Consequently, IJH is now poised for a possible breakout from a three week consolidation pattern. A volume fueled move above the two day high of $100.31 could present a buying opportunity in IJH. We will be monitoring this setup closely for a potential long entry.

COMPX weekly

Yesterday, we sent out an alert that we were selling one quarter of our position in IYR and one third of our position in EPU. We wanted to lock in some profits since IYR was approaching a big resistance level and EPU had just staged a massive three day rally. For the moment, we intend on remaining in both positions through their next pullback. The market continues to show resiliency, as we once again averted a distribution day. We would not be surprised if the market were to spend several more days consolidating at the current level before attempting another move higher.

stock commentary:

We finally saw our positions show relative strength yesterday, with most stocks in the portfolio posting gains while the broad market averags closed slightly lower. We decided to book profits in PII at 10%, giving us a near 3 to 1 reward to risk ratio on the trade. PCYC is listed twice in the open positions section due to the split stops.

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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.