Will The Market Move Higher? (VXX, VGK, QQQ, IWM, SPY, DIA)

For a third consecutive day equities moved higher. Yesterday’s move also came on higher trade. All five major indices posted modest gains. The Nasdaq (NASDAQ:QQQ)¬†improved by 0.6% while the small-cap Russell 2000 (NYSE:IWM) and the S&P MidCap 400 tacked on 0.5% and 0.4%¬†respectively. Both the S&P 500 (NYSE:SPY) and the Dow Jones Industrial Average (NYSE:DIA)added 0.2%.

Market internals ended the day on a bullish note. Volume rose by 14.9% on the Nasdaq and 12.8% on the Big Board. For a second day in a row advancing volume topped declining volume across the board. The advancing volume to declining volume ratio ended the day at 1.3 to 1 on the NYSE and 1.2 to 1 on the Nasdaq. Yesterday’s price action and internals suggest that institutions were actively accumulating stocks. We would therefore classify Tuesday as both a follow through day and an accumulation day for the broad market.

Since the market began rallying six days ago the iPath S&P 500 VIX Short-Term ETF (NYSE:VXX) has been consolidating well above its 20-day EMA. During this timeframe the S&P 500 has rallied well above the 20-day EMA. This price action in VXX suggests that bears are still in control of the longer term market trend.

Over the past week as the S&P 500 has rallied to reclaim its 20-day EMA the Vanguard MSCI Europe ETF (NYSE:VGK) has demonstrated relative weakness to the broad market. During this most recent rally in the market VGK has been unable to move back above its 20-day EMA. Should this weakness persist in VGK, a market reversal may present a shorting opportunity in this ETF.

It was not surprising that the market only saw modest gains on Tuesday in the wake of Monday’s impressive price move. However it is noteworthy that institutional investors appeared to be accumulating stocks yesterday. Based on yesterday’s market action it looks as if there is more upside potential for the market.

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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  • No trades were made.
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Edited by Deron Wagner,
MTG Founder and Head Trader

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.

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