Due to the recent “distribution” (higher volume selling) in the broad market, our market timing model is now on a sell signal. When operating on a sell signal, we cut back on trading activity (stay primarily in cash) and wait a few days for the dust to settle before getting back in to the market (provided there are still quality setups to trade). If any new stocks are bought under current conditions, it will be with reduced share size (1/3 of our normal share size) in order to firmly control risk.
While waiting for market conditions to settle down, we have been extensively scanning the markets for potential buy candidates on our radar screen (assuming near-term market stabilization). Just one potential setup shown below is Rackspace Holdings ($RAX). Note this setup is not official, so its result will not be tracked in the model portfolio (applicable to subscribers of The Wagner Daily only):
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