Commentary:
Retaining all the gains of the previous day’s advance, and then some, the main stock market indexes edged modestly higher yesterday. After opening slightly lower, stocks immediately reversed into positive territory, then consolidated in an extremely tight, sideways range throughout the rest of the day. Again taking the lead, the Nasdaq Composite tacked on another 0.4% to the previous day’s 3.1% gain. The S&P 500 and Dow Jones Industrial Average registered identical gains of 0.2%. Small caps kept the bullish momentum going, as the Russell 2000 rallied 1.0%. The S&P Midcap 400 was higher by 0.3%. The major indices closed near the middle of their narrow intraday ranges.
Total volume in the NYSE declined 7%, while volume in the Nasdaq was 9% lighter than the previous day’s level. Though we typically like to see “up” days accompanied by higher volume, lower volume consolidation days that follow an “up” day of large gains is actually bullish. This is because it indicates traders and investors are not quickly selling into strength of the preceding session. Conversely, higher volume during a tight-ranged day of consolidation would hint at bearish “churning.”
Now that most of the broad-based indexes have broken out above their bases of consolidation, we are back in buying mode. However, since the strongest ETFs are now well above their breakout levels, and we’ve just sold a few positions into strength, we’re now waiting for proper entry points to enter new positions.
ETFs that have not already broken out could be declared laggards, and are probably best avoided. Rather, we’re focused on buying pullbacks to support in the trending ETFs with relative strength, just as we did with our buy entry into Claymore Global Solar Energy (TAN) a few weeks ago. Below are the charts of a few strong ETFs we’re now stalking for pullback buy entries:
The S&P 500, Nasdaq Composite, Russell 2000, and S&P Midcap 400 indices have each reclaimed their 200-day moving averages, a generally encouraging sign for the longer-term view of the stock market. Yet, the popular barometer the general public follows, the Dow Jones Industrial Average, remains (barely) below its 200-day moving average. In actuality, an index comprised of just thirty blue-chip stocks is not a very accurate indicator of the state of the overall stock market. Nevertheless, public perceptions have a significant role in moving markets. As such, we feel it’s important for the Dow to join the rest of the gang; otherwise, it’s a very real possibility the Dow will keep further gains of the rest of the broad market in check.
Today’s Watchlist:
With the major indices having recently broken out above their bases of consolidation, we are in buying mode, primarily focused on buying pullbacks to support. Though there are no new setups in the pre-market today, we’ll promptly send an Intraday Trade Alert if we enter anything new.
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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Open positions (coming into today):
- No changes to the open positions above.
- 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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OIH long (100 shares from May 29 entry) – bought 106.51, stop 104.70, target 120.40, unrealized points = + 4.97, unrealized P/L = + $497
FXY long (250 shares from April 24 entry) – bought 102.41, stop 100.80, target 112.20, unrealized points = + 1.73, unrealized P/L = + $433
Closed positions (since last report):
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(none)
Current equity exposure ($100,000 max. buying power):
- $37,183
Notes:
Edited by Deron Wagner,
MTG Founder and
Head Trader