The Wagner Daily


Meandering through another confused and non-committal session, the major indices finished with mixed results yesterday. After hours of range-bound choppiness, the Nasdaq Composite gained 0.4% and the S&P 500 edged 0.2% higher, but the Dow Jones Industrial Average slipped 0.2%. Small and mid-caps outperformed for a change. The Russell 2000 and S&P Midcap 400 indices rallied 1.5% and 1.2% respectively. Showing a bit of resilience, all the major indices closed near their best levels of the day, but a clear intraday trend was lacking.

Total volume in both the NYSE and Nasdaq was 11% lighter than the previous day’s levels. The lighter turnover across the board made yesterday’s modest gains even less impressive. However, as is typically the case, the slower trade can probably be attributed to investors and traders waiting on the sidelines, ahead of today’s scheduled Fed announcement on interest rates. In the NYSE, advancing volume exceeded declining volume by a margin of 2 to 1, a slight improvement over the previous day’s session. The Nasdaq adv/dec volume ratio was positive just under 3 to 2.

Although commodities frequently have an inverse relationship to the price of the U.S. dollar, spot gold surged to a new record high yesterday, as the U.S. Dollar Bull Index (UUP) ticked modestly higher as well. Below, the breakout is shown on the daily chart of SPDR Gold Trust (GLD), a popular ETF proxy for the price of spot gold futures:

Though we’ve traded precious metals ETFs several times this year, most recently with a large winning trade in Gold Double Long (DGP), we did not buy yesterday’s gold breakout. Over the years, we’ve learned that breakouts in gold and silver ETFs have a habit of subsequently pulling back to re-test the breakout levels. As such, we now prefer buying precious metals ETFs on pullbacks to support (such as a 20-day moving average), rather than buying breakouts above a range. While GLD indeed provided a pullback entry point last week, we made a judgment call to pass on a re-entry into gold because the retracement coincided with a strengthening dollar, evidenced by UUP breaking out above its six-month downtrend line and 20-day EMA. Nevertheless, our sister publication, The MTG Stalk Sheet, bought an individual gold stock (IAG) on yesterday’s open, and daytraded it for a quick intraday gain of more than 12% on the trade.

Today’s newsletter is intentionally more brief than usual because about the only thing traders and investors are likely to focus on today is the Federal Reserve Board’s statement on interest rates and economic policy, which will be released at 2:15 pm ET. Though most economists expect the Fed to leave rates unchanged, there is a lot of speculation over whether or not verbiage will be used that implies upcoming changes to policy in the near future. Recently, Australia has raised interest rates twice, while the Fed has, up to this point, made no implication of the need to increase rates. Will that laid-back bias need to change this time around? Many traders and investors, myself included, could find the outcome of today’s meeting to be rather interesting. While whippy, volatile trading action typically follows Fed announcements, be prepared for the possibility of an even stronger than usual reaction, regardless of what is actually said. As usual, we recommend avoiding new positions ahead of the Fed.

Today’s Watchlist:

There are no new setups in the pre-market today. Not only are we in “SOH mode” on the long side of the market, but we also avoid new trade entries ahead of highly anticipated Fed meetings. Discipline and patience kept us out of harm’s way last week, as we preserved recent gains, and more importantly protected capital.

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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  • No changes to open positions at this time.

  • 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.
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Edited by Deron Wagner,
MTG Founder and
Head Trader