GLD and TTH are moving up nicely

Total volume increased by 25%, while volume in the Nasdaq was 30% higher than
the previous day’s level. Normally, it would be considered a bearish
“distribution day” if the major indices lost on higher volume. However, much of
the volume increase can be attributed to the annual rebalancing of the Russell
indexes. Once a year, underperforming small-cap stocks in the Russell indexes
are removed, while new ones are added to replace them. This typically results in
volume spikes in many small cap stocks, and hence the overall market. Further,
such small percentage declines in the S&P and Nasdaq were positive considering
that the indices surged 2.2% and 3.0% respectively in the previous session. Over
the past two months, stocks have had a pattern of giving back a majority of
their gains the following day. Market internals were negative, but not by a wide
margin. In the Nasdaq, declining volume fractionally exceeded advancing volume
by only 1.1 to 1. The NYSE was negative by only 3 to 2, which is not bad for a
down day.

Our two open positions made solid advances last Friday, so we will continue to
maximize the profits and protect the gains by trailing stops along the way. The
Telecom HOLDR
(
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PowerRating) advanced 0.8% and the StreetTRACKS Gold Trust
(
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zoomed another 2.9% higher. TTH closed at nearly a three-month high and is now
only 1.5% away from its 52-week high. We expect a test of that high over the
next week, although we will be on guard for a potential failed breakout at
resistance of that prior high. Last Thursday’s interest rate hike had a positive
impact on the price of spot gold and GLD, which gapped up above a three-week
trading range. GLD still has a long way to go before recovering back to its
all-time high, but that’s okay. We bought GLD with the expectation of it simply
bouncing back up to its 50-day moving average. The 50-day MA also happens to be
equal to a 50% Fibonacci retracement from its May high down to its June low, so
it is not unreasonable to expect such a recovery after the downtrend line has
been broken:

Going into today’s shortened session, keep an eye on how the S&P, Nasdaq, and
Dow all react near their 50-day moving averages. Both the S&P 500 and Dow Jones
Industrial Average ran into resistance of their 50-day MAs last Friday. The
Nasdaq Composite is still just below its 50-day MA. As mentioned in the June 30
issue of The Wagner
Daily, resistance of the prior highs from June 2 is also a pivotal
level. On the daily charts of the S&P 500 and Dow Jones Industrials, we have
circled resistance of their 50-day moving averages. The dashed horizontal line
marks resistance of the prior highs:

Support on both the S&P and Dow should be found at their 200-day moving
averages, along with the prior highs of the trading range that began in June 15.
The Nasdaq still remains below its 200-day MA, but it has support of its prior
trading range that began in mid-June as well. None of the major indices will
technically be in an uptrend until they break out above their June 2 highs and
set a subsequent “higher low.” However, upside momentum from the break of the
seven-week downtrend lines should help to prop up stocks at least in the
short-term.

NOTE REGARDING HOLIDAY HOURS: In celebration of Independence Day on July 4,
the U.S. equities markets will close at 1:00 pm EDT today and will be closed all
day tomorrow, July 4. The Wagner Daily will not be published
tomorrow, but regular publication will resume on Wednesday, July 5. Enjoy the
holiday!

Long
(
GLD |
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PowerRating),
(
TTH |
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PowerRating), and
(
IYR |
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News |
PowerRating) (regular subscribers to

The Wagner Daily receive detailed stop and target prices on open
positions and detailed setup information on new ETF trade entry prices. Intraday
e-mail alerts are also sent as needed.)