Commentary:

Stocks reversed sharply on Friday as volume increased. Four of the five major indices opened at the highs and closed near session lows. The exception was the small-cap Russell 2000 which managed to find a bid into the close. However the Russell still closed well within the bottom half of the daily trading range. The tech rich Nasdaq led the decline as it shed nearly 1.3% on the day. The S&P 500 and the Dow Jones Industrial Average slid by 1.2% and 1.0% respectively. The S&P MidCap 400 dropped 0.8% while the small-cap Russell 2000 managed to outperform the other indices as it declined only 0.7%.

Market internals cast a bearish shadow on the market yesterday. Turnover spiked by 38% on the Nasdaq and 9% on the NYSE. Declining volume was higher across the board as it outpaced advancing volume by a factor of 4.8 to 1 on the NYSE and 2.5 to 1 on the Nasdaq. The spike in volume clearly points to institutional involvement in broad market on Friday. However, some of the increase in volume is likely attributable to the rebalancing of the Russell indices. Irrespective of the required rebalancing, we would still classify Friday as a distribution day on Wall Street.

The Direxion Energy Bear 3x Shares ETF (ERY) appears poised to break to four month high. Since early March, ERY has not only broken a two year downtrend line but has recently set a sequence of two higher lows. A move above resistance at the $17.80 mark could provide a buy trigger for this ETF.

After gapping up on Thursday, the ProShares UltraShort EURO ETF (EUO) consolidated in a tight range near the two day high on Friday. A move back above Thursday’s high of $17.66 may provide buying opportunity in EUO. We are carefully monitoring this ETF as a potential long candidate.

The market continued its inconsistent ways on Friday. There now appears to be a tug of war for support at the 200-day moving average. It is noteworthy that the Nasdaq 100 Index and the NYSE both closed below their 200-day moving average on Friday after moving above this key mark last Thursday. Further, the Nasdaq ($COMPX) undercut and closed just one point above the 200-day MA on Friday. If the broad market loses support of Thursday’s reversal low, this could bring another wave of selling on Wall Street.

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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 changes to open positions.
• 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