Volume Speaks Volumes


Stocks surged higher on Tuesday as volume increased. All five major indices closed in the black as the tech rich Nasdaq led the advance by posting a 2.2% gain. The small-cap Russell 2000 and the S&P MidCap 400 improved by 2.0% and 1.9% respectively. The S&P 500 tacked on 1.3% while the Dow Jones Industrial Average was the day’s laggard. Still, the Blue chip index posted a gain of nearly 1.0%.

Tuesday’s internals were decidedly bullish. Volume rose across the board. Turnover on the Nasdaq improved by 14.0% and by 7.6% on the Big Board. Advancing volume overpowered declining volume on both major exchanges. The spread ratio ended the session at ended the day at positive 8 to 1 on the NYSE and 9.3 to 1 on the Nasdaq. The combination of strong price action with increasing volume suggests that institutions were actively involved in the day’s rally. Consequently we would categorize Tuesday as a clear accumulation day for the broad market.

The iPath Dow Jones AIG Grains ETF (JJG) provides an excellent example of a fund that is exhibiting relative weakness to the broad market. In the chart below we have overlaid a line graph of the JJG with a line graph of the S&P 500. Starting from point “A” notice how the S&P 500 has formed a clear uptrend as it has set a sequence of higher highs and higher lows over the past five sessions. On the other hand, notice that JJG has been clearly range bound as it has been unable to develop upward momentum. What this comparative price action suggests is that JJG is trading with relative weakness to the broad market and that in the event of a market pull back, it is likely to sell off more quickly. By scanning for relative weakness (or strength) we are often able to identify the best short (or long) candidates in the event of a market reversal.

The SPDR S&P Emerging Asia Pacific ETF (GMF) has performed poorly as compared to the broad market over the past several weeks. Recently, the S&P 500 only tested its 200-day MA as GMF completely lost support of this key mark. Even though the market has been rallying for several days, GMF is still well below its 200-day MA. We are monitoring GMF as a potential short candidate near the convergence of resistance of the former uptrend line, 200-day MA and the declining 20-day EMA.

Yesterday’s price action and internals were impressive. However volume was a bit light on a relative basis. Neither the Nasdaq nor the NYSE was able to reach its 50-day volume moving average. Ideally we would like to see volume return to above average levels on “positive” days in the market as this would provide further substantiation that we may have found a bottom following the recent selling.

Today’s Watchlist:

There are no new official setups this morning. We will send an Intraday Alert if any new trades are made.

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

    position summary

    Having trouble seeing the position summary graphic above?
    Click here to view it directly on your Internet browser instead.


  • ERY triggered its stop and we are out.
  • 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.

    Have you had your free 1-month trial to Morpheus Trading Group’s additional ETF and stock trading newsletters?

      Edited by Deron Wagner,
      MTG Founder and
      Head Trader