Which Way From Here? – (VNQ) (IWF)

Commentary:

After a poor start, stocks closed well off session lows but trade was light. Four of the five major indices ended the day modestly lower but the S&P MidCap 400 managed to eke out a 0.1% gain. The small-cap Russell 2000 closed down by 0.7% while the S&P 500 dropped 0.6%. The Dow Jones Industrial Average and the Nasdaq fell 0.5% and 0.4% respectively. The market closed slightly down for the week.

Internals were mixed on Friday. Volume finished lower on the Nasdaq by 8.3% and on the NYSE by 18.7%. However, declining volume outpaced advancing volume by 1.8 to 1 on the NYSE and 1.2 to 1 on the Nasdaq. The light volume suggests that institutions were not actively participating in the day’s action.

For the past four sessions the Vanguard REIT ETF (VNQ) has been consolidating in a two point trading range just below its 200-day MA. A volume fueled rally above the two day high of $58.29 could offer a buying opportunity in VNQ.

Since a failed breakout attempt above the 200-day MA on October 27th, the iShares Russell 1000 Growth Index ETF (IWF) has been consolidating between its 20-day EMA and 200-day moving average. A thrust above the two day high of $58.94 could provide a buy entry trigger for IWF. We are monitoring this ETF closely for a possible buy entry.

The market closed slightly lower on the week but this type of price action could be expected given the big run up that has occurred since the August 4th reversal. More and more stocks seem to be emerging as potential breakout candidates. The more the market consolidates at the current levels, the more likely the next significant move will be higher.

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Today’s Watchlist:

There are no 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:

• We have a new rule in place for entries that trigger within the first five minutes of trading on the open:
  All long or short entries that trigger within the first five minutes of trading are automatically ignored. If an ETF trades through its trigger price within the first five minutes of trading, a new entry is automatically placed ten cents above the high of the first five minutes. This rule is used to avoid having a position triggered by a few wild opening prints and allows the price action to settle down.

• 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.

Edited by Deron Wagner,
MTG Founder and
Head Trader