In the April 18th issue of The Wagner Daily swing trading newsletter, we stated that SPDR S&P Metals and Mining ETF (NYSEARCA:XME) was a potential short sale candidate. Yesterday, XME repeated the prior day's price action, as it formed a reversal candle and closed near session lows. Now, a move below yesterday's low of $48.22 could present a short selling opportunity in this ETF. As such, we are placing XME on the watchlist for potential trade entry. For our subscribers, our exact entry, target, and stop prices are provided in the watchlist segment of the newsletter: (see ETF notes section above for an inverse ETF alternative to shorting XME).
Overall, the market attempted to gain its footing yesterday, but came up short and ultimately posted a modest distribution day. Although the market is not falling apart, the more "distribution days" (sessions of higher volume selling) that accumulate, the more likely it becomes that we will at least test the recent swing low support levels. For now, all new positions should be entered with reduced share size. Simultaneously being positioned long in a stock or ETF with relative strength to the broad market and short a position wth relative weakness is a low-risk way to play the market while it remains in "no man's land." At the least, consider keeping your powder dry with a mostly cash position.
The commentary above is a short excerpt from The Wagner Daily, our nightly stock and ETF swing trading newsletter. Subscribers to the full version also receive specific entry and exit prices for all swing trade setups, an additional section dedicated to individual stock trades, and access to our Live Trading Room. To learn more about our trading strategy, please visit our swing trading blog.
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