First, apologies for the late delivery of last week's issue of The Wagner Weekly. We were testing and implementing a new mail server over the weekend, and wanted to be sure the bugs were worked out before sending the newsletter. And now, back to our regularly scheduled program. . .
What a wild end to a volatile week! Last Friday, news of a major liquidity problem at brokerage giant Bear Stearns caused the S&P 500 to reverse from a pre-market gap up of more than 1% to a swift loss of 2% within the first thirty minutes of trading. Stocks chopped around after the opening slide, then built on their losses in the afternoon. By day's end, the Nasdaq Composite had plunged 2.3%, the S&P 500 2.1%, and the Dow Jones Industrial Average 1.6%. The small-cap Russell 2000 and S&P Midcap 400 indices slid 2.5% and 1.9% respectively. The main stock market indexes settled in the bottom third of their intraday ranges. For last week, the major indices were nearly unchanged.
Technical analysis never provides a guarantee as to which direction the broad market, stocks, or ETFs will go. What it does provide, however, is a logical, educated way to anticipate direction a majority of the time. Technical analysis, along with sound risk management, has enabled us to achieve consistent profitability of our ETF trades in the six years since inception of this newsletter. Nevertheless, there are times when the power of major news events causes the stock market to virtually ignore technical analysis, including support and resistance levels.
Last Friday morning's opening gap up in the Nasdaq 100 was very significant because the index was poised to rip above its 20-day EMA. Instead, dramatic news of emergency liquidity measures at Bear Stearns immediately triggered a swift reversal. Other than adhering firmly to all pre-determined stop prices, there's obviously not much one can do when situations like that occur. The most important take-away from last Friday's session is it's become apparent we have entered a primarily news-driven environment.
Because brokerage firms like Bear Stearns are among the very backbone of the U.S. financial system, we view last Friday's developments as extremely alarming. Even more concerning is that the Feds emergency quarter-point rate cut over the weekend has not had a positive effect on the S&P and Nasdaq futures in the pre-market. The instant buyout of Bear Stearns by JP Morgan is also being ignored. Now that we're in a news-driven environment, the most dangerous thing is we don't know what was really happening behind the scenes in this whole mess. News could easily have a cascading effect and get much worse, though we certainly hope not.
We are reluctant to discuss technical support and resistance levels in today's commentary. We'll take an updated technical look at the market tomorrow, but let's first see how today plays out. Remember that news-driven markets are unpredictable and can reverse on the dime, so even selling short can be risky at these levels. Let us just remind you once again that capital preservation needs to be your first and foremost priority right now! Above all else, honor your stop losses and don't fall into "hope" mode!
If you wish to learn about Morpheus Trading Group's ETF trade entries on the same day they occur, sign up for a free trial to The Wagner Daily or other MTG services by clicking here (limit one per household). Also, remember that all previously published issues of both The Wagner Daily and The Wagner Weekly are available in the MTG archives. If you are new to our services or wish to broaden your knowledge of ETF trading or our general trading style, we recommend you browse the archives because it is educational and free! Click here to visit the Wagner Daily archives or here to visit the Wagner Weekly archives.
By popular demand, Morpheus Trading Group is pleased to announce that all subscribers of The Wagner Daily, MTG Stalk Sheet, or ETF Trend Tracker can now receive all intraday e-mail alerts as SMS text messages directly to their mobile phones. This service is available to U.S. subscribers, as well as our clients around the globe. The best part is. . .this value-added service is being provided to all regular subscribers free-of-charge!
If you're not currently a subscriber, you may interested to know the performance of our ETF trades in The Wagner Daily has been quite strong during this bear market. After having compiled our February stats last week, we noticed the model account is on track for its most profitable quarter ever. The Wagner Daily is already showing a net gain of 21.7% in the first two months of the year! Conversely, the S&P 500 has already shed 13% year-to-date.
If you have never had a free trial to our services, or it's been at least one year since your last free trial received our services, you are again eligible to receive a free trial to any of our services. To sign up for a 30-day free trial, simply click on the URL below and select the free trial subscription option of your choice:
https://morpheustrading.com/index.aspx?page=services_signup_freetrialIf you've recently had a free trial and would like to become a monthly subscriber, click on the URL below and select the subscription and payment option of your choice:
https://morpheustrading.com/index.aspx?page=services_signupAfter you sign up for either a paid or trial subscription, please send an e-mail to support@morpheustrading.com, giving your complete phone number, including the country code if you are outside of the United States. We will confirm receipt of your request, and you should then begin receiving all intraday e-mail alerts via your mobile phone beginning Monday, March 10.
As always, we would like to thank our subscribers for their ongoing suggestions and enthusiasm. Providing free SMS text messaging is just one way to let subscribers know we do listen and care! Your business is appreciated, so please let us know if you ever have any questions or there is anything we can do for you. At MTG, client service is of utmost importance!
In this column, MTG presents you with a FREE, actual trade setup that we are stalking for entry at some point during the week. Note that, unlike the daily guidance that regular Stalk Sheet subscribers receive, this free Stalk of the Week does not take into account overall broad market conditions that can easily affect the trade over the next several days. This week's setup is:
There is no new Stalk of the Week trade setup in this week's issue, as we prefer to first see the market's reaction to the March 18 FOMC meeting on economic policy.
Click to receive your free 1-month trial to The MTG Stalk Sheet so that you can receive an average of one to three trade ideas such as this one on a daily basis (limit one free trial per household). Subscribers are always provided with detailed entry, stop, and target prices for each trade, and intraday e-mail alerts are sent as needed.
Below is the weekly commentary that accompanied the most recent ETF Trend Tracker, e-mailed to subscribers last weekend. The Morpheus ETF Trend Tracker, a perfect supplement to the ETF Roundup guide, is a comprehensive table of Exchange Traded Funds (ETFs) designed for informed investors and longer-term traders who prefer to hold their ETF positions for a few weeks to several months at a time. Based exclusively on a weekly analysis of trendlines on the daily and weekly charts, the ETF Trend Tracker provides subscribers with a thorough snapshot of the primary trend direction of ETFs in every category from broad-based to industry sector to international. This information is e-mailed to subscribers weekly, in a user-friendly format that groups ETFs based on the direction of their primary trends.
Commentary:The indices began the week poorly, rallied, then ended the week near the middle of the range. During this time, a swing low was formed just above the January lows. The only exception to this pattern was the Nasdaq 100 (QQQQ). QQQQ hit new lows, but rallied well and broke above the descending trend channel. The stops are placed to lock in over 13% gain since the November 2007 entry into the “descending trend” list. The volatility indicates indecision and uncertainty. Unfortunately, an initiation of a trade or investment at this stage requires higher risks, which translate into wider stops to allow the range expansion of price.
We tightened several MTG Stops (S1) last week to address the volatility. Subscribers should review the updated ETF Trend Tracker report. Many industries have realized gains in the descending trend of over 10% and we are looking to tighten in the weeks ahead. The sectors are looking to digest and absorb the multitude of influences. Acting particularly weak are the Telecoms (IYZ), Pharmaceuticals (PPH), Financials (XLF), and Healthcare (XLV). Conversely, Commodities (DBC), Euro (FXE), Gold (GLD), Silver (SLV), Oil (USO), and Natural Gas (UNG) rallied with enthusiasm.
The Bond market rallied well with the Bellwether mid-term bonds (IEF) ending the week with another higher close. The Corporate bonds (LQD) remain lower and is near its 52-week low posted in August 2007. New on the horizon are managed bond ETFs. We will be looking into these and other fixed income bond related issues and may add new tickers to follow in the near future.
The Asian markets fell significantly to the developments last week. Hong Kong (EWH), Japan (EWJ), Korea (EWY), India (INP), and China (FXI) posted new lows. EWY has been in the descending trend since November 2007, and has gained over 22%. Japan (EWJ) is the newest to the descending trend.
Regular subscribers to the ETF Trend Tracker should contact us with additional questions and for a free phone consultation session. We can discuss with you about how to use the ETF Trend Tracker report and even work on successful trade strategies you can implement today; find out one proven strategy that we hold closely as professional traders in the ETF community. Whatever you like to talk about is up to you! It’s free for the asking if you are registered in the free 30-day trial or already a current subscriber to any of the MTG services. Just call or e-mail us and setup an appointment, and we will call you back. This is a limited time offer and we must limit the session to 30-minutes (other restrictions and limitations apply). Make gains in this difficult market now and secure a valuable one on one private consultation session with a professional at the Morpheus Trading Group, so don’t wait!
Click to receive your free 1-month trial to the ETF Trend Tracker (limit one free trial per household), which will be e-mailed to you every week, along with intra-week updates on an as-needed basis.