Commentary:

The major indices managed to fight back after early losses on Friday. It was a typical “whippy” trading day as is often associated with options expiration. The market gapped down and sold off until 12:00 pm and rallied the remainder of the day. The Nasdaq Composite and Small-Cap Russell 2000 both finished flat on the day. The S&P Mid-Cap 400 was slightly down giving back .1%. The S&P 500 and the Down Jones Industrial Average exhibited more weakness closing down 0.4% and 0.6% respectively.

Total volume in the NYSE jumped by 7% while Nasdaq volume was 9% lighter than the previous day’s levels. Based on volume and price action we would consider this to be a mild accumulation day based on the afternoon reversal. Although NYSE declining volume surpassed advancing volume by 2.5 to 1 this was well below the worst levels of the day recorded at 9 to 1. The Nasdaq exhibited the same trend. Early in the day declining volume out paced advancing volume by 4.5 to 1 but ended the day at parity of 1 to 1.

As anticipated the semiconductor sector remains weak. Consequently and as expected the inversely correlated UltraShort Semiconductor ProShares (SSG) performed well. On light volume it tested the 200-day moving average and managed to close just 4 cents below Thursday’s closing price.

On a significant burst of volume the PowerShares DB US Dollar Index Bullish Fund (UUP) rallied strongly off of the 20-day EMA. This followed four days of light volume consolidation. Since the August 6th low UUP has broken its downtrend by setting a higher low and a higher high. Again, it is important to note that the current advance has been on very strong volume.

The iPath S&P 500 VIX Short-Term Futures (VXX) is setting up for a potential buy entry. The VXX recently set a higher low and looks to be a buy entry over the prior swing high of 24.10. The set up would be confirmed by a move above the “dirty” downtrend line and the 50-day moving average (see chart below). The anticipated target would be a rally into the 200-day MA.

---

Today’s Watchlist:

There are no new setups in the pre-market today. As always, we will promptly send an Intraday Trade Alert if/when we enter any new postions. Overall the current market is range bound and conditions are still not ideal for aggressively entering new trades.

---

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 DailySubscriber Guide for important, automatic rules on trigger and stop prices.

Having trouble seeing the position summary graphic above? Click here to view it directly on your Internet browser instead.

Notes:

• On August 2, TLT paid a dividend distribution of $0.324 per share. On July 1, TLT also paid a dividend of $0.31 per share. This additional profit from both dividend distributions has been added to both the “Points” and “Current P/L” columns (shaded in light blue to indicate dividend distribution included).

• 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 support@morpheustrading.com if not already set up for this value-added feature we provide to subscribers.

 

Edited by Deron Wagner,
MTG Founder and Head Trader