Watch Out Below? – (SMN) (GDXJ)


Stocks finished modestly higher yesterday, but well off session highs. The day started off well with the Nasdaq, S&P 500 and Dow Jones Industrial Average trading as high as 1.7%, 1.3% and 0.8% respectively. However by session’s end, the Nasdaq closed just .6% higher, while the S&P 500 posted only a modest gain of 0.3%. The Dow Jones Industrial Average closed out the session fractionally lower. The S&P MidCap 400 added 1.0%, while the small-cap Russell 2000 improved by 0.9%. Both of these indices also closed well off the day’s highs.

Market internals were positive. However, Friday was quadruple options expiration, which makes the internals difficult to accurately gauge. Further, although stocks ended higher, the intraday price action was bearish. Volume spiked by 43.7% on the Nasdaq and 48.4% on the NYSE. Again, this massive surge in volume is in large part attributable to options expiration. Advancing volume was higher than declining volume on both exchanges. By the closing bell, the spread ratio stood at +1.8 to 1 on the NYSE and at +1.3 to 1 on the Nasdaq. We are neutral with regard to Friday’s internals due to the divergence between intraday price action, and higher volume brought on by options expiration.

Recently, we made a quick profit shorting the Market Vectors Junior Gold Miners ETF (GDXJ). Over the past three sessions GDXJ has been forming a base and it appears that it may be ready for a bounce. GDXJ may provide a shorting opportunity on a rally into the 20-day EMA. We will be monitoring this ETF closely for a possible re-entry.

Yesterday, the ProShares UltraShort Basic Materials ETF (SMN) formed a reversal candle as it severely undercut its 50-day MA, but reversed to close back above this key mark. A volume fueled rally above $20.20 could provide a long opportunity in this ETF. We are adding SMN to the watchlist. Trade details are available in the watchlist section of the newsletter.

Our open position in AGA continues to consolidate just above $20.00. As a reminder, we raised the stop in this ETF to breakeven. Quadruple options expiration generally brings whippy price action to the market, and Friday was no exception. Stocks closed at session lows and also near the lows for the week. The longer the market consolidates at the lows of this most recent selloff, the more likely the next move will be lower.

Today’s Watchlist:


Shares = 350
Trigger = 20.26
Stop = 19.25
Target = 22.35
Dividend Date = n/a

Notes = see commentary above


Shares = 150
Trigger = 22.38
Stop = 19.78
Target = new swing high
Dividend Date = n/a

Notes = see commentary from Dec. 16

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.


  • 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.

    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