The Wagner Daily


Our commentary in yesterday’s Wagner Daily expressing our
suspicion about the sharp rally of February 25 turned out to be justified
because the market gave back all of those gains yesterday just as quickly as
they appeared. The volatile action of the past two days is proof that we remain
in a news-driven environment where technicals are taking a back seat to
geopolitical rumors and news. This makes being short equally as dangerous as
being long the market. However, despite the erratic nature of the market during
the past month, there are a few general trends we have been noticing that are
important to be aware of.

Let’s first talk about multi-day “swing”
trading. While the focus of The Wagner Daily is, and always has been,
multi-day “swing” trades, we have not been very actively involved in them over
the past several weeks. Although we would love to be in several overnight trades
on both sides of the market at all times, the reality is that trading conditions
do not justify such activity. Daily charts, which usually serve as the basis for
overnight trade setups, are not reliable because of the recent lack of
follow-through in the direction of trends. This is evidenced by the pattern of
bullish candlestick patterns such as hammers being followed by bearish
candlestick patterns such as engulfing bars and then hammers again the next day.
As we often remind you, the best trade is often not making a trade at all, and
that could not be more true in the current environment. We would be doing you,
our subscribers, a great disservice by recommending an abundance of trades when
the risk/reward ratios are not in our favor. But, when the time is right, there
will be plenty of trade calls!

For active intraday traders, such as
those of you who subscribe to our ETF Real-Time Room, we want to share our
intraday observations with you. The first thirty minutes of trading, into the
morning reversal period, has been very tricky to trade because half the time the
gap follows through, but the next time it fades with no distinction between the
factors that caused the gap. Therefore, our advice to you is to wait until the
market enters the 10:00 am reversal period each day before attempting to trade
the markets. Most of our profitable trades during the past month have come from
trading the trend or chart pattern that follows through from 10:00 am to 11:30
am EST. That 90-minute period has been the most stable trending time each day in
general. The chart below illustrates how we shorted a break of support in QQQ
yesterday, which occurred during this time period:

From 11:30 am to 1:30 pm, the mid-day doldrums, volume has been very
light and most breakouts and breakdowns have failed. We have been using this
time to adjust stops on our open positions, but rarely have entered new
positions during that period. Then, there is one more tradeable period from
around 2:00 pm to 3:15 pm EST. The trend during this period of the day has often
been the exact opposite of the morning trend, so we always re-assess the market
and look for new trade setups in the opposite direction of the trend so that we
are prepared for the reversals that have been frequently coming. The final 45
minutes of trading has been a roll of the dice because it has been very
unpredictable. The bottom line is if you wish to decrease your risk and ensure
that you are not overtrading during the day, we recommend you focus on doing
most of your trades from 10:00 am to 11:30 am EST and 2:00 pm to 3:15 pm EST.

I am presenting a seminar on ETF Trading at the Online Trading Expo. in
NYC today, so Steve Bell will be covering for me in the ETF Real-Time Room
today. This is the first time since inception that I have missed a day in the
room, but you’re in great hands with Steve because he is an excellent trader and

Today’s watch list:

There are no
specific trade setups listed today because I am presenting a seminar on ETF
Trading at the Online Trading Expo. in NYC today. Therefore, I will not be
around in the morning session to e-mail updates or alerts to changes in any
positions and would rather not provide trade setups unless I am around to keep a
close eye on them for our subscribers. After scanning the markets, there are not
a lot of good looking setups out there anyway.

Daily Reality Report:

Below is Morpheus Trading Group’s daily
performance report of closed trades and an update on all open positions from
The Wagner Daily (ETF Intraday Real-Time Room trades are reported
separately in The Wagner Weekly).



Open Positions:

    RTH long (from Feb. 26) –
    Bought 66.80, new stop at 65.70, open points =
    (0.67), open P/L = ($70)

Notes: We bought RTH when it broke
out yesterday, but broad market weakness caused the breakout to fail. We still
like the setup because RTH is consolidating nicely on the daily chart and has
moving average support on several intraday charts just below current price. MTG
recommends a mental stop rather than a mechanical stop on RTH due to its wide
spread. For a better idea of the true fair value of RTH, we recommend following
the RTH HOLDR Index throughout the day, which is $IRH.X.

We also had a
profitable day through several shorts in SMH and a short in QQQ yesterday in the
ETF Real-Time Room. Those stats will be reported in the next weekly

Click here for
a detailed explanation of how daily trade performance is calculated.

Click here for a detailed
cumulative report of MTG’s trading performance (updated weekly)

Glossary and Notes:

Remember that opening gaps that cause stocks
to trigger immediately on the open carry a higher degree of risk because the
gaps (both up and down) often do not hold. Use caution if trading stocks with
large opening gaps.

Trigger = Exact price that stock must trade
through before I will enter the trade. If a long position, I will only enter the
stock if it trades at the trigger price or higher. For a short position, I will
only enter the stock if it trades at the trigger price or lower. It is really
important to only enter the position if the trigger price is hit, otherwise the
trade becomes riskier.

Target = The anticipated price I am
expecting the stock to go to. However, this does not mean that I will
always hold the stock to that price. If conditions warrant, I will sometimes
take profits before that price, in which case I will notify you of the

Stop = The price at which I will have a physical stop
market order set. As a position becomes profitable, this stop price will often
be adjusted to lock in profits. Again, you will always be notified of such
changes in the next daily report or intraday if you subscribe to intraday

SOH = Sit On Hands (Don’t Make Trades)

Closed P&L
under Deron’s Report Card is based on the actual price I closed my trade at, not
just the theoretical target or stop price listed for each stock. Open P&L is
based on the closing prices of the most recent trading day.

otherwise noted, average holding time is 1 to 3 days once a position is
triggered. Updates on open positions are provided daily.

Yours in success,

Deron M. Wagner

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