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.
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
- No trades were made.
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Edited by Deron Wagner,
MTG Founder and