The Wagner Daily


As anticipated, the 50-day moving average caused the S&P 500 and the major indices to retrace last Friday, despite a breakout of the prior trading range the day before. The Nasdaq Composite trended lower throughout the entire day and closed 1.0% lower, giving back all of the previous day’s gains. Both the S&P 500 and Dow Jones Industrial Average lost 0.8%, which means they not only lost the prior day’s gains, but lost an additional 0.2% as well. The one positive, however, is that total market volume declined by 11% in both the NYSE and Nasdaq. Most of the recent down days have been on higher volume, but Friday’s lighter volume selloff means it did not coincide with institutional distribution. In fact, it was the first lighter volume down day the Nasdaq has had in three weeks.

Because of Friday’s bearish action, the Nasdaq is right back down to its 200-day MA “magnet” that we have been discussing extensively. As for the S&P 500, traders clearly were ready to sell into resistance of its 50-day MA, especially considering that the index did not have firmly higher volume buying during the gains of the prior four days. The bottom line is that the broad market conditions are still a choppy mess that makes it very challenging to swing trade. Without follow-through, trends cannot develop and swing trades cannot realize large gains. Therefore, we continue to feel that the best odds of success (other than being in cash) can be found by trading individual sector ETFs that trade independently of the broad market. As for our current positions, we are long PPH and BBH because both are showing recent relative strength and should be the first sectors to rally when or if the major indices do. We are also short IWM because it has been among the weakest of the broad-based ETFs, which makes it a good “hedge” against our two long positions.

This week kicks off quarterly corporate earnings season. As if traders have not yet had enough satisfaction from the broad market’s choppy and indecisive action, we can expect more of the same as earnings reports are released. But the good news is that the eventual cessation of earnings reports should enable the major indices to develop a trend in one direction or the other. Most likely, institutional volume has been light on the buy side due to the pending release of earnings reports from important companies.

Today’s watch list:

There are no new trade setups for today, as we now have three open positions with PPH long, BBH long, and IWM short.

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 (Intraday Real-Time Room trades are reported separately in The
Wagner Weekly). Net P/L figures are based on the quantity of shares represented
in the MTG
Position Sizing Model

Closed Positions:


Open Positions:

    IWM short (from April 1) –
    shorted 121.79, new stop 123.75, target 117.70, unrealized points = + 0.49, unrealized P/L = + $49

    PPH long (from April 7) –
    bought 72.80, stop 71.80, target 77.60, unrealized points = + 0.40, unrealized P/L = + $40

    BBH long (from April 7) –
    bought 145.15, stop 143.20, target 151.50, unrealized points = (0.99), unrealized P/L = ($99)


We have tightened the IWM stop, but no other changes to open positions.

Edited by Deron Wagner,
MTG Founder and