Commentary:

Stocks posted solid gains for a second straight day but trade was light. The Nasdaq led the advance as it posted a 2.3% gain. The S&P 500 gained 1.8% while the S&P MidCap 400 improved by 1.6%. In a follow up to Tuesday’s impressive six percent advance, the small-cap Russell 2000 added another 1.4% yesterday. The Dow Jones Industrial Average was the day’s laggard as it added just over 1.2%.

Market internals ended the session mixed. Volume plummeted across the board. On the Nasdaq trade dropped by over 18.0% while on the NYSE it fell nearly 28.0%. However advancing volume topped declining volume by a factor of 5.1 to 1 on the NYSE and 7.7 to 1 on the Nasdaq. Yesterday’s rally was subdued by the absence of volume. The lack of volume suggests institutions were not committed to yesterday’s price action.

The Market Vectors Indonesia ETF (IDX) has shown relative weakness to the broad market over the past several weeks. On Tuesday when the market reversed dramatically on massive volume, IDX reversed on relatively light volume. Further, yesterday’s move higher occurred on very light volume. A move back into resistance near declining 20-day EMA ($27.00) could provide a short entry trigger for this ETF. We are monitoring IDX closely for a potential short entry.

Over the past six weeks the SPDR Series KBW Bank ETF (KBE) has been met with resistance every time it has attempted to reclaim its 20-day EMA. During this time KBE has been setting a sequence of lower highs each time it probes above this key mark. Further, the banking sector has been one of the weakest sectors in the market during the most recent two month selloff. An overcut of the 20-day EMA could provide a shorting opportunity in KBE.

Although we are wary to get aggressive on the short side of the market, the abrupt nature of the current two day rally could provide a quick shorting opportunity as many ETFs have found their way back near resistance. If we do decide to enter any short positions we will likely take smaller position size and look to cut losses and/or take profits quickly.

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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 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