Commentary:
Picking up where the previous day’s close left off, stocks continued whipsawing between positive and negative territory throughout most of yesterday’s session. By day’s end, the bulls won the dizzying tug-of-war. The S&P 500 rose 0.7%, the Nasdaq Composite 0.5%, and the Dow Jones Industrial Average 0.4%. The small-cap Russell 2000 and S&P Midcap 400 indices climbed 0.5% and 0.8% respectively. Closing near their intraday highs, the major indices also settled in the area of their previous day’s highs. As such, the choppy trading range in the broad market continues.
Easing substantially from the prior day’s level, total volume in the NYSE retreated 37%. Total volume in the Nasdaq was just 4% lighter. The lower turnover across the board prevented stocks from registering another bullish “accumulation day.” Trading in the NYSE was the slowest since July 2, the session right before the Independence Day holiday. However, an unplanned outage in the NYSE may have partially been to blame for the much slower pace of trading.
A short-term, continuation trade setup may be developing in iShares Xinhua China 25 (FXI). Over the past week, FXI has traded in a tight, sideways range, right above support of its 20-day exponential moving average. If FXI rallies above the high of that narrow base of consolidation, it could lead to at least short-term bullish momentum that carries it to a fresh 52-week high. The setup is illustrated on the daily chart below:
Over the past two days, energy-related ETFs have begun to show relative strength. Most have been consolidating, building a base of support just above their 20 and 50-day moving averages. If the relative strength persists, several ETFs in the sector will breakout over the next week. PowerShares Oil Fund (DBO), which we bought on August 5, appears poised to make another leg up:
The Oil Service HOLDR (OIH) is also perking up, and could soon see a breakout above its multi-month downtrend line. Its 20 and 50-day moving averages are providing support just below its current price:
Yesterday, volume in Market Vectors Steel (SLX) moved above its average level for the first time in three weeks. The increased turnover was accompanied by a gain in SLX that put the ETF within striking distance of breaking out above a lengthy period of consolidation. This is shown on the daily chart below:
As explained in yesterday’s commentary, we’re not focusing on the broad-based ETFs right now because they’re stuck in a choppy, indecisive range. Much better trade setups, with more positive reward-risk ratios, can be found within select industry sectors, and even a few international ETFs. We have already detailed a few ETFs primed for a move in the near-term, and will continue scanning the broad realm of ETFs for additional trading opportunities as they present themselves.
Today’s Watchlist:
There are no new setups in the pre-market today, although there are a handful of ETFs we’re monitoring for potential buy entry if they meet our criteria. As always, we’ll promptly send an Intraday Trade Alert if we enter anything new. Also, note that we plan to add the remaining HALF position (90 shares) of IBB if it trades through a trigger price of $78.42 today.
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.
- Most of our positions are hanging out near their entry prices right now, but the chart patterns are still looking good overall.
- Note that we will buy an additional 90 shares of IBB if it trades through an adjusted trigger price of $78.42 (same stop on the additional shares).
- 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.
- 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.
Notes:
Edited by Deron Wagner,
MTG Founder and
Head Trader