Potential breakout entry in Energy ETF (ERX)


Stocks closed mixed yesterday on a modest increase in volume. The blue chip Dow Jones Industrial Average and the technology rich Nasdaq both rallied 0.3% for session. The S&P 500 finished higher by 0.2%, while the SYP MidCap 400 closed at par. The small-cap Russell 2000 was the only index to lose ground on the day, as it shed 0.2% yesterday. Stocks ended the day virtually unchanged but on heavier trade. The major indices moved higher in the morning but the 2:30 pm reversal period brought late day selling pressure that drove the market to the flatline. The S&P MidCap 400 and the small-cap Russell 2000 both tacked on 0.4% gains for the session. The Nasdaq closed fractionally higher, while the Dow Jones Industrial Average and the S&P 500 closed fractionally lower.

Market internals were positive for the session. Turnover rose modestly across the board on Wednesday. Volume closed the day up by 3.3% on the Nasdaq and 4.5% on the NYSE. Advancing Volume outpaced declining volume by a ratio of 1.6 to 1 on the Big Board and 2.0 to 1 on the Nasdaq. Although volume increased and advancing volume exceeded declining volume on both indices, we would not consider Wednesday to be an accumulation day in the market. In our opinion the mixed price action and the sharp sell-off of many market leaders nullifies the positive market internals.

The Guggenheim Timber ETF (CUT) has been consolidating in a tight trading range for the past five sessions. Further, volume has contracted significantly during this consolidation period. This type of volume action is often considered bullish. A volume fueled move above yesterday’s high of $23.43 may present a buying opportunity in this ETF. We are closely monitoring CUT as a possible long candidate.

The SPDR S&P Select Technology ETF (XLK) has been lagging the broad market for several weeks now. This is evidenced by the fact that XLK has been unable to close above resistance at its 50-day MA. Should the market reverse, XLK may provide a short entry below the three day low of $25.82. WE are watching XLK closely for a potential short entry.

Both long and short setups were noticeably absent from our technical scans. Further, market leaders struggled yesterday which could be a signal that a near term correction is at hand.

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

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  • Per intraday alert, sold SSG at break-even due to the weak close. The DIG long setup triggered after the first five-minutes of trading, but failed to follow through and stopped us out.

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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader