Commentary:
After shaking off early weakness yesterday morning, stocks recovered to close slightly higher. However, it was generally another day that lacked enthusiasm, commitment, and momentum. The Nasdaq Composite gained 0.3%. Both the S&P 500 and Dow Jones Industrial Average registered a whopping advance of 0.1%. The small-cap Russell 2000 and S&P Midcap 400 indices were higher by 0.3% and 0.4% respectively. The main stock market indexes finished near the upper quarter of their intraday ranges.
Perhaps the best thing about yesterday’s session was the higher volume across the board. Total volume in the NYSE increased 8%, while turnover in the Nasdaq ticked 23% higher. The higher volume (barely) enabled the Nasdaq Composite to register a bullish “accumulation day,” but the tiny gain of the S&P 500 was not really indicative of institutional buying. Volume in the Nasdaq also moved back above 50-day average levels, but was lighter than average in the NYSE.
Last week, we pointed out the potential breakout in ProShares Ultra Semiconductor (USD), and pointed out a similar setup in Semiconductor HOLDR (SMH) yesterday morning. Because Intel (INTC) is so heavily weighted in the semiconductor sector, we intentionally avoided buying USD ahead of their quarterly earnings report, which was released after yesterday’s close. In yesterday’s after-hours trade, the initial reaction to their earnings report was positive, as Intel was trading substantially higher. This could translate into confirmation of a breakout in the various semiconductor ETFs today, which we were initially hesitant to buy directly in front of Intel’s earnings. The daily chart of USD is shown below:
If USD gaps open above yesterday’s high, it could present a valid buy entry on the open. However, on this type of momentum play, traders should consider a tight protective stop, just below the low of the first thirty minutes of trading. Such a stop would keep risk minimal, as the trade would quickly be closed in the event of a failed breakout. Furthermore, we woul also would take reduced share size with this type of breakout trade, perhaps just 50% the normal position. Nevertheless, if USD gaps up and holds through the first hour of trading, odds are good it will continue higher as the day progresses.
In the April 6 issue of The Wagner Daily, we looked at charts of two popular precious metals ETFs: iShares Silver Trust (SLV) and SPDR Gold Trust (GLD) Between the two, it was apparent silver was starting to show clear relative strength to gold, and that continues to be the case right now. Upon first analyzing SLV, we said, “At its current price, SLV may be too extended to achieve a positive reward-risk ratio for new position entry. However, a pullback to new support of the prior downtrend line would provide an ideal, low-risk buy point into SLV.” Fast forwarding a week later, SLV has not retraced all the way to support of the prior downtrend line. However, it pulled back to short-term support of its 10-day moving average yesterday, and reversed to close near its intraday high. We’re still keeping this ETF on our radar screen for potential buy entry, and will send an Intraday Trade Alert if it meets our criteria and we decide to enter. The daily chart of SLV is shown below:
In yesterday’s commentary, we analyzed a bullish setup in the S&P Healthcare SPDR (XLV). It closed nearly flat, but remains on our watchlist going into today. With support of its 50-day MA just below, we like the buy entry on a breakout above the hourly downtrend line. Regular subscribers should note our detailed trigger, stop, and target prices for the XLV setup below.
Today’s Watchlist:
S&P Healthcare SPDR (XLV)
Long
Shares = 700
Trigger = $32.18 (above the hourly downtrend line)
Stop = $31.59 (below the 50-day MA)
Target = new 52-week high (will trail stop)
Dividend Date = unknown
Notes = We’re planning to buy XLV on a breakout above its hourly downtrend line, as it has pulled back in recent weeks. Such an entry should enable XLV to continue higher within its dominant uptrend.
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.
- No changes to our 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.
- 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