The Wagner Daily


Stocks meandered through a wobbly session yesterday, but finished solidly higher across the board. Though the broad market stayed out of the red, the major indices oscillated between the flat line and substantially higher territory several times throughout the session. Cruising to a 1.9% gain, the Nasdaq Composite resumed its recent trend of leadership. The S&P 500 advanced 1.2%, the Dow Jones Industrial Average just 0.6%. The small-cap Russell 2000 rose 2.4%, as the S&P Midcap 400 climbed 1.5%. The main stock market indexes closed around the upper quarter of their intraday ranges.

Total volume in the NYSE increased 5% above the previous day’s level, a bullish follow-up to several days of lighter volume losses. In the Nasdaq, however, turnover was 1% lower. In both exchanges, volume was well below 50-day average levels. This was not surprising, considering the approaching holiday weekend. Advancing volume in the NYSE exceeded declining volume by a ratio of 5 to 2. The Nasdaq adv/dec volume ratio was positive by a margin of nearly 4 to 1.

Next week, look for a potential breakout in the S&P Utilities SPDR (XLU). The setup is illustrated on the daily chart below:

Notice that the 50-day moving average (the teal line) has converged with the high of XLU’s multi-week consolidation. As such, a rally above the $26.50 area should confirm a breakout above both the consolidation and 50-day MA, thereby sparking upward momentum for a short-term swing trade. The 20-day exponential moving average (the beige line) has provided support for the past couple of weeks, causing XLU to reverse higher after each probe below that short-term indicator of trend. If buying XLU on a breakout, a protective stop could therefore be placed below the April 7 “swing low” of $25.41, which is firmly below the 20-day EMA as well.

We also continue to like the tight price consolidation in iShares Brazil (EWZ), which is trading at its year 2009 highs:

The dashed horizontal line marks prior resistance of EWZ, which has now become a new level of support. This is a good example of the most basic tenet of technical analysis; a prior level of resistance becomes the new support level, after the resistance is broken. Market Vectors Russia (RSX) is another international ETF consolidating at its year 2009 high. On the daily chart below, notice that RSX is poised to make another leg higher, as its new intermediate-term uptrend develops:

Yesterday’s indecisive price action was as we anticipated it would be ahead of the holiday weekend. Today, expect volume to be even lighter, and trading to be choppier, especially in the afternoon. Traders often leave their desks early ahead of three-day weekends, so we don’t expect much to happen today. Even if stocks follow through on yesterday’s rally, we would not place a high degree of trust in a rally that’s backed by very light volume. After traders return to work next week, we’ll get a much better feeling for the stock market’s true strength or weakness at this juncture, especially as more quarterly earnings reports are released.

NOTE: The stock market will be closed tomorrow, April 10, in observation of Good Friday holiday. As such, The Wagner Daily will not be published tomorrow, but regular publication will resume on Monday, April 13.

Today’s Watchlist:

There are no new ETF setups in the pre-market, as we now have eight open positions in our portfolio. Advanced traders may consider “self-serve” breakout trades in XLU, EWZ, or RSX, if they trigger, but these will not be “official” entries we track. Note that the portfolio of the ETF Portfolio Tracker, a sister newsletter of The Wagner Daily, is already positioned in RSX for a longer-term play.

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.

    Open positions (coming into today):

      HHH long (200 shares from March 23 entry) – bought 35.25, stop 32.49, target 41.80, unrealized points = + 1.51, unrealized P/L = + $302

      UGA long (175 shares from March 4 entry) – bought 23.41, stop 22.61, target 31.30, unrealized points = + 1.35, unrealized P/L = + $236

      TAN long (500 shares from March 31 entry) – bought 7.05, stop 5.88, target 9.75, unrealized points = + 0.33, unrealized P/L = + $165

      ERX long (150 shares from April 1 entry) – bought 24.52, stop 20.40, target 39.90, unrealized points = + 0.78, unrealized P/L = + $117

      USO long (150 shares from March 17 entry) – bought 29.08, stop 27.66, target 38.70, unrealized points = + 0.41, unrealized P/L = + $62

      SKF long (60 shares from April 8 entry) – bought 91.24, stop 81.30, no target (will trail a stop), unrealized points = (2.72), unrealized P/L = ($163)

      UDN long (700 shares from March 25 entry) – bought 25.70, stop 24.84, target 27.45, unrealized points = (0.42), unrealized P/L = ($294)

      SLV long (400 shares from March 5 entry) – bought 13.14, stop 11.71, target 16.35, unrealized points = (1.00), unrealized P/L = ($400)

    Closed positions (since last report):


    Current equity exposure ($100,000 max. buying power):



    • Per Intraday Trade Alert, SKF triggered for long entry yesterday afternoon. We bought SKF as it broke out above the high of a five-day consolidation, intending it to be a quick, momentum-based trade to only stay in for a few days. With seven long positions, we also wanted to hedge our risk by adding a little bearish exposure to the portfolio. The stock market’s strength in the final thirty minutes of trading caused SKF to fall back below its pivot, but we’ll keep a close eye on it today. If the market is very strong and/or SKF shows no signs of moving back above the $91 area, we may just sell it for a small loss, ahead of the actual stop price. If any action is taken on SKF today, we’ll promptly send an alert.
    • The market is in pullback mode, but we plan to hold our positions in anticipation of catching the next leg up in the market. Our stops should be loose enough to allow this to happen.
    • 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.

    Click here for a free trial to Morpheus Trading Group’s other newsletter services.

    Please check out the Wagner Daily Subscriber Guide to learn how to get the most from your subscription.

Edited by Deron Wagner,
MTG Founder and
Head Trader