The Wagner Daily


Stocks followed up Monday’s sell-off with a relatively quiet session of trading that left the major indices with mixed results. The broad market drifted lower throughout the first hour of trading, recovered, then stabilized in a tight, sideways range throughout the rest of the day. The S&P 500 eked out a closing gain of 0.2%, but the rest of the main stock market indexes were moderately lower. The Nasdaq Composite lost 0.1%, the Dow Jones Industrial Average 0.2%, the S&P Midcap 400 0.4%, and the Russell 2000 0.7%. The major indices settled near the middle of their intraday trading ranges.

Turnover was light ahead of today’s meeting of the Federal Reserve Board. Total volume in the NYSE declined 14%, while volume in the Nasdaq eased 6%. Volume in both exchanges was below 50-day average levels. Lighter trading during range-bound sessions of consolidation (both bullish and bearish) is common. In the NYSE, advancing volume exceeded declining volume by a margin of just under 3 to 2. The Nasdaq adv/dec volume ratio was fractionally negative.

The Retail Index ($RLX) has been in a wide, choppy range for the past several months, but the sector has recently begun to exhibit substantial relative weakness. While the S&P and Dow are still above support of their May 2009 lows, the Retail HOLDR (RTH) has already fallen to test its May low. If it fails to hold, RTH will break a major area of horizontal price support, as well as its 200-day moving average. The precarious state of RTH is shown on the daily chart below:

Because of the relative weakness it is already exhibiting, RTH should be one of the leading sectors to the downside if the bearishness of the broad market persists in the short to intermediate-term. Those looking for short selling opportunities might consider RTH and/or XRT (another retail ETF), but they’re best entered on the first bounce that follows a break of support, rather than selling short the actual breakdown below support. Real Estate also remains a sector with considerable relative weakness (IYR is a popular ETF in the sector).

When stocks follow-up a large day of gains by trading near the previous day’s highs, on lower volume, and closing near unchanged levels, it is considered to be bullish consolidation that usually leads to a resumption of the uptrend. Conversely, it’s bearish when stocks trade near the previous day’s lows after a substantial sell-off, on lower volume, and finish nearly flat. The latter is exactly what happened yesterday. Typically, this would hint at the likelihood of another leg down in the coming days. However, today’s meeting of the Fed could easily lead to unexpected volatility, as it usually does, especially in the afternoon.

When the Fed announces their latest statement on economic policy, at 2:15 pm ET today, Wall Street will be listening closely for hints at whether or not the Fed intends to raise interest rates in the near future. Though it’s unlikely the Fed will make any surprise statements, one should nevertheless be prepared for the knee-jerk reaction and whippy trading that usually follows in the late afternoon session. As per our usual policy, we will focus on managing existing open positions, rather than entering new ones, ahead of today’s Fed meeting. We’ll keep today’s commentary brief, as there’s not much to say until we see the market’s initial reaction to the Fed meeting.

Today’s Watchlist:

There are no new setups in the pre-market today. With 7 open positions, a mix of bullish and bearish plays, we’re not interested in adding additional positions today. Rather, we’ll focus on managing our existing positions for maximum efficiency.

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):

      SRS long (350 shares [half position] remaining from June 10 and 11 entries) –

      bought 18.85 (avg.), stop 20.89, target 22.70, unrealized points = + 2.99, unrealized P/L = + $1,047

      MZZ long (300 shares from June 22 entry) – bought 39.75, stop 39.28, target 44.50, unrealized points = + 1.60, unrealized P/L = + $480

      IBB long (200 shares from June 8 entry) – bought 70.04, stop 67.12, target 76.48, unrealized points = (0.45), unrealized P/L = ($90)

      UNG long (400 shares from June 11 entry) – bought 15.12, stop 13.59, target 19.80, unrealized points = (0.64), unrealized P/L = ($256)

      INP long (150 shares from June 17 entry) – bought 49.08, stop 44.70, target 64.20, unrealized points = (2.34), unrealized P/L = ($351)

      DBA long (600 shares from June 17 entry) – bought 26.49, stop 25.23, target 28.78, unrealized points = (0.43), unrealized P/L = ($258)

      SLV long (700 shares total — 500 shares on June 8, 200 shares on June 11) –

      bought 14.74 (avg.), stop 13.29, target 19.12, unrealized points = (1.12), unrealized P/L = ($784)

    Closed positions (since last report):


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



    • There are no new changes to the open positions.
    • 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