Technically Speaking…News Sometimes Matters – The Wagner Daily

MTG logo


The Wagner Daily – July 14, 2011
Concise technical analysis and picks of the leading global ETFs


Commentary: Commentary:

Stocks gained traction on Wednesday but closed well off session highs on light trade. The major indices all closed higher. The technology rich Nasdaq posted a 0.5% gain while the Dow Jones Industrial Average and the small-cap Russell 2000 both added 0.4%. The S&P 500 and the S&P MidCap 400 lagged as both posted only modest advances of 0.3%.

Wednesday’s internals were mixed. Volume declined on both exchanges. Turnover fell by almost 7.0% on the Nasdaq and just over 4.0% on the NYSE. However, advancing volume got the best of declining volume by a factor of 2.3 to 1 on the NYSE and 2.1 to 1 on the Nasdaq. Yesterday’s lighter volume indicates that there was an absence of institutional participation in the market. Consequently, we would not consider Wednesday to be an accumulation day on Wall Street.

Yesterday we covered our position in SLV for just under a two point gain. The big gap up allowed us to realize a very quick but solid profit in a volatile market and from a risk/reward standpoint was a prudent decision.

Via an intraday alert we opened a long position in the PowerShares DB US Dollar Bull ETF (UUP). We liked the trade because it has been forming a nice basing pattern for nearly three months after breaking out of a long term downtrend in mid May. Further, UUP pulled back into support at its 20-day EMA and 50-day MA yesterday. We anticipate that UUP will consolidate for several days prior to seeking higher ground. Trade details are available for our subscribing members in the open positions section of the newsletter.

110714UUP.gif

Several days ago we discussed the CurrencyShares Australian Dollar ETF (FXA) as a possible long candidate. FXA has been consolidating along its 20 and 50-day moving averages since early May. Yesterday FXA reversed sharply as it gapped up following an undercut the 20 and 50 day moving averages. This move has likely served to trap bears and should result in further upside for FXA. A volume fueled move above yesterday’s high of $107.94 may offer a buy trigger for this ETF.

110714FXA.gif

As technical traders we rarely pay attention to the news. However, as the US Debt Ceiling debate unfolds we would consider it foolish not to take the outcome of this discussion into consideration. We have no idea what agreement Congress may arrive at but we do know that uncertainty often leads to surprise which often leads to volatility. As such we believe that limited, or at a minimum, hedged exposure to the market is warranted until a resolution is at hand. Ignoring the potential outcome of this event would be similar to ignoring a surprise two percent rate hike from the Fed.


The commentary above is an abbreviated version of our daily ETF trading newsletter, The Wagner Daily. Subscribers to the full version receive specific ETF trade setups with detailed trigger, stop, and target prices, as well as daily updates on all open positions. Intraday Trade Alerts are also sent via e-mail and/or text message, on as-needed basis. For your free 1-month trial to the full version of The Wagner Daily, or to learn about our other services, please visit morpheustrading.com.

Deron Wagner is the Founder and Head Portfolio Manager of Morpheus Trading Group, a capital management and trader education firm launched in 2001. Wagner is the author of the best-selling book, Trading ETFs: Gaining An Edge With Technical Analysis (Bloomberg Press, August 2008), and also appears in the popular DVD video, Sector Trading Strategies (Marketplace Books, June 2002). He is also co-author of both The Long-Term Day Trader (Career Press, April 2000) and The After-Hours Trader (McGraw Hill, August 2000). Past television appearances include CNBC, ABC, and Yahoo! FinanceVision. Wagner is a frequent guest speaker at various trading and financial conferences around the world, and can be reached by sending e-mail to: deron@morpheustrading.com.


DISCLAIMER: There is a risk for substantial losses trading securities and commodities. This material is for information purposes only and should not be construed as an offer or solicitation of an offer to buy or sell any securities. Morpheus Trading, LLC (hereinafter “The Company”) is not a licensed broker, broker-dealer, market maker, investment banker, investment advisor, analyst or underwriter. This discussion contains forward-looking statements that involve risks and uncertainties. A stock’s actual results could differ materially from descriptions given. The companies discussed in this report have not approved any statements made by The Company. Please consult a broker or financial planner before purchasing or selling any securities discussed in The Wagner Daily (hereinafter “The Newsletter”). The Company has not been compensated by any of the companies listed herein, or by their affiliates, agents, officers or employees for the preparation and distribution of any materials in The Newsletter. The Company and/or its affiliates, officers, directors and employees may or may not buy, sell or have positions in the securities discussed in The Newsletter and may profit in the event the shares of the companies discussed in The Newsletter rise or fall in value. Past performance never guarantees future results.

Charts created by TradeStation (tradestation.com).

© 2002-2010 Morpheus Trading, LLC
Reproduction without permission is strictly prohibited.