Stocks oscillated in a sideways to slightly higher range through another
lackadaisical session yesterday, causing the major indices to finish with mixed
results. The S&P 500 advanced 0.3% and the Dow Jones Industrial Average eked
out a gain of 0.1%, but the Nasdaq Composite fell 0.4%. Even small and mid-cap
stocks showed divergence. The Russell 2000 lost 0.9%, as the S&P Midcap 400
ticked 0.1% higher. With the exception of the Russell 2000, all the main stock
market indexes finished in the upper third of their intraday trading ranges.
Seasonal summertime "blahs" caused turnover to fall to its lowest levels in
months. Total volume in the NYSE eased 14% below the previous day's level, while
volume in the Nasdaq declined 11%. It's been more than two weeks since volume in
the NYSE even exceeded its 50-day average level, but that's not unusual for this
time of year. After the Labor Day holiday, expect trading to start picking up
again.
In the August 19 issue of The Wagner
Daily, we illustrated how the SPDR Gold Trust (GLD) had pulled back to
support of its long-term, multi-year uptrend line. Specifically, we said, "If
you've been looking for a low-risk place to buy some gold for your long-term
account, such as an IRA or 401k, an entry into GLD at current levels makes
sense." We did, however, caution that the atrocious sell-off over the past month
meant that GLD was not ideal for a short-term play. Let's take a look at
how GLD has performed since our heads-up for a potential buy entry. The first
chart below is of the long-term monthly time frame, while the second
chart presents a more detailed look of the weekly time frame.
On the weekly chart (the second one), notice how GLD perfectly bounced off
support of its multi-year uptrend line this week. GLD actually probed a few
cents below support of its primary uptrend line last week, but it's normal for
stocks and ETFs to briefly dip below obvious levels of support before
stabilizing (known as an "undercut"). That's the same manner in which we
recently grabbed a low-risk entry point into UltraShort Financials ProShares
(SKF) when it "undercut" its 200-day moving average (we sold a few days later
for a gain of approx.
