today’s watchlist (potential trade entries):
Below is an overview of all open positions, as well as a report on all positions that were closed only since the previous day’s newsletter. Net P/L figures are based on two separate $50,000 model portfolios (one for ETFs and one for stocks). Changes to open positions since the previous report are listed in red shaded cells below. Be sure to read the Wagner Daily subscriber guide for important, automatic rules on trade entries and exits.
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ETF position notes:
- IYT was added to the watchlist.
stock position notes:
- No trades were made.
ETF and broad market commentary:
Stocks closed modestly lower in the pre-Holliday session on light volume. The small-cap Russell 2000 demonstrated the most relative strength as it managed to close flat on the session. The Nasdaq dropped 0.1% on the day, while both the S&P 500 and the S&P MidCap 400 slid 0.2%. The Dow Jones Industrial average was the weakest index on the day. By the closing bell, the Blue Chip index shed 0.6%.
For the second time in as many days, market internals were mixed. Volume plunged on the NYSE by 24.2% and on the Nasdaq by 26.6%. Advancing volume managed to slightly outpace declining volume on the NYSE by a factor of 1.2 to 1, while on the Nasdaq Advancing volume closed just marginally higher than declining volume. Internals were nothing short of uneventful prior to the three day weekend.
Yesterday, on an uptick in volume, the iShares Dow Jones Transportation Average Index Fund (IYT) failed to reclaim support of its 20-day EMA and closed near session lows. A drop below the two day low of $90.45 could present a shorting opportunity in this ETF. We are placing IYT on the watchlist. Trade details are posted for our clients in the watchlist section of the newsletter. We recommend calling your broker prior to the open to ensure that shares are available for shorting. There is no inverse transportation ETF available as an alternative to shorting IYT.
Over the past seven trading days, the ProShares UltraShort Dow Jones 30 ETF (DXD) has been holding support above its 10-day EMA, as volume has expanded. This high volume consolidation follows DXD’s recent breakout above key resistance at $55.50. A volume fueled move above the three day high of $58.00 could present a buying opportunity in this ETF.
The market has struggled in its attempt to move to higher ground over the past two weeks. Although we still could see further buying action, the longer we continue to consolidate near the two-week lows, the more likely the next move will be lower. Ideally we would like to see the market bounce for a few days, as this would provide better reward to risk for potential short entries but the market could just head lower from the current levels without bouncing.
There isn’t much to do right now, as we are patiently waiting for low risk short setups to develop. The ideal scenario was mentioned above in the ETF commentary, where the market bounces higher for the next few days before stalling out.
Although we are not adding any new short positions at current levels, here are a few unofficial setups on the short side. Again, these setups are not official and their results will not be tracked:
- AAPL unofficial short entry beneath Friday’s low at 558.00 with a stop of 578.00.
- KSS unofficial short entry beneath Friday’s low at 49.86 with a stop of 51.20.
- For those who do not mind an aggressive short entry with a tight stop, GOOG is a potential short entry at 588.00 with a stop of 602.00.
If you are a new subscriber, please e-mail [email protected] with any questions regarding our trading strategy, money management, or how to make the most out of this report.
relative strength watchlist:
Our Relative Strength (or RS) Watchlist makes it easy for subscribers to import data into their own scanning software, such as Tradestation, Interactive Brokers, and TC2000. This list is comprised of the strongest 100 (or so) stocks in the market over the past six to 12 months. The scan is updated every Sunday, and this week’s RS Watchlist can be downloaded by logging in to the Members Area of our web site.