Commentary:
Stocks were under consistent selling pressure on Wednesday on higher volume. By the end of the session, all five major indices were well in the red, and near the day’s lows. Smaller cap issues felt the brunt of the selling pressure. The small-cap Russell 2000 and the S&P MidCap 400 lost 2.1% and 1.8% respectively. The Nasdaq and the S&P 500 both slid 1.3% yesterday. As has been common lately, the Dow Jones Industrial Average exhibited relative strength to the broad market. At the closing bell the big cap index lost 1.1%.
Market internals were bearish yesterday. Total volume ended higher on the Nasdaq by 12.8% and on the NYSE by 8.3%. Declining volume significantly outpaced advancing volume on both exchanges. On the NYSE the Spread Ratio finished at -22.3 to 1 and on the Nasdaq it ended at -8.6 to 1. Although volume was higher across the board on Wednesday, and we would consider it a distribution day, it is noteworthy that it was well below its 50-day moving average.
Yesterday, for the fourth time since late October, the S&P 500 was unable to reclaim its 200-day MA. If the broad market is to move to higher ground, the S&P must clear this key mark. Yesterday’s action in this index provides an excellent demonstration of the importance of the 200-day MA. The S&P now appears to have drawn two important “lines in the sand”. The next big move in this index will likely be determined by whether it breaks through resistance at 1,270 first or loses support at 1,202 first.
Yesterday, on a burst of above average volume, the iShares Russell 1000 Growth Index ETF (IWF) opened at the high of the day and closed almost at the low of the day. A move below yesterday’s low of $57.42 could present a shorting opportunity in this ETF. We will be monitoring IWF closely for a possible short entry.
On an uptick in volume, the ProShares UltraShort FTSE China 25 ETF (FXP) gapped up and closed near session highs yesterday. Further, this ETF cleared all three of its moving averages and is now poised for a move higher. A volume fueled rally above yesterday’s high of $31.25 could provide a buy entry trigger for FXP. We are placing FXP on the watchlist. Trade details are provided in the watchlist section of the newsletter for our subscribing members.
Yesterday, via an intraday alert we exited our position in ZSL as it hit our target. We posted over a 1% gain on the trade. Also yesterday, IWM hit its stop and we sold the position for a small loss. Our watchlist candidate, EUO, hit its trigger and we entered the trade. EUO performed well and closed near the day’s high. Our YCS trade gapped lower at the open but rallied back to reclaim support of its 20-day EMA. It also managed to close in the upper third of the day’s range. In the absence of serious volume, we don’t expect much follow through in the market in either direction. Under current market conditions we are inclined to cut losses and take profits quickly.
Today’s Watchlist:
FXP
Long
Shares = 200
Trigger = 31.31
Stop = 29.35
Target = nsh (new swing high)
Dividend Date = n/a
Notes = see commentary above
IYT
Long
Shares = 70
Trigger = 90.66
Stop = 85.80
Target = 99.70
Dividend Date = n/a
Notes = see commentary from 12/23
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 alert, bought EUO over the five-minute high. Sold ZSL as it hit our target for a 1% gain in the model portfolio. IWM hit the protective stop and we are out with a smaller than average loss.
- 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