Wagner Daily Lite – February 10, 2012 ($VXX)
Stocks muddled their way through another directionless day of trading to close mixed. Powered by AAPL, the Nasdaq tacked on 0.4% to lead all indices. The S&P MidCap 400 and the S&P 500 both gained 0.2% while the Dow Jones Industrial Average eked out a 0.1% advance. The small-cap Russell 2000 was the session’s underperformer, as it shed 0.4% yesterday. The strongest performing stocks came from the Internet, software, solar energy, oil services and emerging market sectors. Under-performing sectors included utilities, healthcare, pharmaceuticals, natural gas, precious metals and real estate.
Since March or 2011, the iShares MSCI Japan Index Fund (EWJ) has been in a major downtrend. On Wednesday, this ETF rallied above its down-trending 200-day MA for the first time since July of last year. However, yesterday, EWJ struggled to hold support of this key mark. EWJ could provide a shorting opportunity on a rally into resistance of its downtrend line or if it loses support of the 200-day MA on a spike in volume. Although we’re still bullish on the market, EWJ could provide a shorting opportunity should the market correct for a few sessions. Regardless, when the market does see it’s next reversal, ETFs that are rallying into resistance of long term downtrend lines and down-sloping 200-day MAs will generally provide the best shorting opportunities.
(chart available in today’s Wagner Daily newsletter)
Our open positions continue to perform well. DVY claimed a new 52-week high yesterday, while IYT remained in consolidation mode. For the third time in as many days, IYT tested its 20-day EMA and held support at this key mark. We may consider adding to this position above the 3-day high. VXX spiked more than 5% yesterday and we must be mindful that an increase in volatility may be upon us.
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