today’s watchlist (potential trade entries):
Below is an overview of all open positions, as well as a report on all positions that were closed only since the previous day’s newsletter. Net P/L figures are based on two separate $50,000 model portfolios (one for ETFs and one for stocks). Changes to open positions since the previous report are listed in red shaded cells below. Be sure to read the Wagner Daily subscriber guide for important, automatic rules on trade entries and exits.
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ETF position notes:
- No trades were made.
stock position notes:
- No trades were made.
ETF and broad market commentary:
Despite posting early session gains, stocks reversed to close near intraday lows. By the closing bell, only the Dow Jones Industrial Average closed in higher territory. The blue chip index ended the day up 0.4%. The S&P 500 closed fractionally lower, while both the Nasdaq and the S&P MidCap 400 shed 0.5%. The small-cap Russell 2000 put in the day’s worst performance, as it slid 0.6%.
Internals ended the session mixed. Volume fell on the Nasdaq by 7.0% and on the NYSE by 2.6%. Declining volume topped advancing volume on the NYSE by a factor of 1.3 to 1 and on the Nasdaq by a factor of 2.4 to 1. Although the day ended on a bearish note, total volume was not strong enough to place the market under institutional distribution.
Over the past four days, we have been tracking the ProShares UltraShort Oil and Gas ETF (DUG) for a possible long entry on pullback into the 20-day and 200-day moving averages. Yesterday, DUG formed the reversal candle we were looking for, as a possible pivot for a buy entry. As a result, we are placing DUG on the watchlist. Trade details are available to our subscribers in the watchlist segment of the newsletter.
Yesterday, on a spike in volume, the Direxion Financial Bear 3x ETF (FAZ) formed a bullish reversal candle. After undercutting support of its 20-day EMA, FAZ rallied sharply to and closed at session highs. FAZ now offers a potential long entry just above yesterday’s high of $26.99. We are also placing FAZ on the watchlist.
Several days ago we exited our short positions because the market had finally undercut the 200-day MA (as we anticipated) and formed a reversal candle. With an undercut and a reversal candle in place, the odds favored that we would see a bounce in the market. Consequently, we recommended patience as the market rallied and to wait for new setups to develop. Yesterday, all of the major indices put in reversal candles and there are now a plethora of potential short entry setups in the market. As we’ve often discussed, it’s important to wait for setups to develop, otherwise there is a risk of over trading and churning your account.
We are taking a shot on the short side with a few setups today in TKR and FFIV (see details on watchlist above). TKR formed a bearish reversal candle yesterday on heavier volume as it overcut the 20-day EMA before closing at the lows of the day.
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relative strength watchlist:
Our Relative Strength (or RS) Watchlist makes it easy for subscribers to import data into their own scanning software, such as Tradestation, Interactive Brokers, and TC2000. This list is comprised of the strongest 100 (or so) stocks in the market over the past six to 12 months. The scan is updated every Sunday, and this week’s RS Watchlist can be downloaded by logging in to the Members Area of our web site.