Too Far Too Fast – Day Two? (EFZ) (EEV)

Commentary:

Stocks rallied for a third straight day but for the second session in a row the move came on dwindling trade. Higher beta issues led the advance as the small-cap Russell 2000 and the S&P MidCap 400 both posted solid gains of 2.4%. The Nasdaq, S&P 500 and Dow Jones Industrial Average added 1.9%, 1.8% and 1.7% respectively.

For the second time in as many days the session ended with mixed market internals. Turnover slipped by 9.3% on the Nasdaq and 7.8% on the Big Board. Advancing volume topped declining volume across the board. By the closing bell the spread ratio was at 13.5 to 1 on the NYSE and 7.4 to 1 on the Nasdaq. For a second consecutive day positive price action was muted by a lack of volume. For two days now institutions have not participated in the advance.

Since setting its third “higher-high” in just over two months, the ProShares UltraShort MSCI Emerging Markets ETF (EEV) has once again pulled back into support of the 20-day EMA. The formation of a reversal candle would provide an ideal setup for a possible long entry in this inverse ETF. We like the price action in EEV and are monitoring it closely as a potential long candidate.

Since breaking out of its long term downtrend in early August, the ProShares Short MSCI EAFE ETF (EFZ) has been one of the strongest inverse ETFs in the market. Yesterday EFZ pulled back into support of its uptrend line and 20-day EMA. An undercut of the trend-line could provide a buying opportunity in EFZ.

The market rallied on poor volume again yesterday. This suggests that a turn may be close at hand. However, given Tuesday’s massive reversal day we are inclined to take profits quickly should we decide to enter any short positions.

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Today’s Watchlist:

There are no new official setups for today. As always, we will send an Intraday Alert if any new trades are made.

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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

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Notes:

• No trades were made.
• 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.

Edited by Deron Wagner,
MTG Founder and
Head Trader