Commentary:
Following through on Wednesday’s strong closing action, the major averages gapped higher on the open and ran up about 1% before stalling around 10am. The opening strength failed to attract buyers, as stocks drifted sideways to lower the rest of the session. The Dow and S&P held on to the morning lows in the afternoon and closed up 0.7% and 0.6% respectively. The S&P Midcap 400 also gained 0.6%. The Nasdaq set new intraday lows in final hour of trading, but still closed up 0.3%. The Russell 2000 was hit the hardest in the afternoon, as it failed to hold the gap and closed in negative territory, down -0.4%.
Total volume was mixed and uninspiring. Nasdaq volume increased by 2%, while NYSE volume fell by 1%. Market internals failed to impress yet again with advancing volume equalling declining volume on the Nasdaq. NYSE advancing volume beat declining volume by a 1.7 to 1 margin. The market continues to chop on light volume and lazy internals, so traders should reduce share size and look to take profits quickly until market conditions improve.
The dollar continues to hold this market hostage:
If the PowerShares US Dollar (UUP) is able to hold the 50-day MA, then we’d expect the broad market averages to sell off and possibly test the lows of the current range. A deeper correction in UUP could send the broad market to new swing highs.
The Semiconductor HOLDR (SMH) failed to follow through yesterday, though we could see a tight-ranged bull flag pattern develop while the 10-day MA plays catch up. As usual, before this setup is ready to push higher we may see some sort of one or two bar undercut to wash out the tight stops.
Let’s take a look at a few charts that may offer a buy entry from a longer-term consolidation.
SPDR S&P Retail (XRT) is setting up for a potential downtrend line breakout above the 50-day moving average.
The iShares Turkey (TUR) has formed a bullish double bottom reversal and is buyable on a pullback to support around the $50.00 level, as long as the action holds above the 20-day EMA. Traders looking for an intermediate-term setup could establish partial size at support and add on a breakout above the recent swing high.
Energy stocks are potentially setting up for a double bottom reversal:
SPDR S&P Select Energy (XLE) has undercut the prior low, but we would need to see a sharp reversal to the upside before getting bullish on this pattern. There is the possibility of a slow drift up to the 50-day MA, which would present short sellers with a low-risk entry point.
Today’s Watchlist:
There are no new official setups this morning. We will promptly send an Intraday Buy Alert if any new trades are made.
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.
- Per Intraday Trade Alert, we made a judgement call to sell both IBB and SMH at near break-even levels due to weak internals and light volume.
- 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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Notes:
Edited by Deron Wagner,
MTG Founder and
Head Trader