The Wagner Daily – Bullish Reversal Sparks Rally

The Wagner Daily -January 25, 2022

Below is the full, archived issue of The Wagner Daily swing trading report (sent to members the night before the publication date).

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MTG Market Timing Model – Sell 

Our timing model was designed to keep our trades in line with the prevailing market trend, not to call tops or catch bottoms in S&P 500 or Nasdaq Composite.

today’s watchlist (potential trade entries):

open positions:

closed positions:

position notes:

• No trades triggered

Commentary:

Stocks recovered from an early morning selloff and ripped higher during the afternoon session. Although the S&P 500 and Nasdaq Composite only gained +0.3% and +0.6% respectively, both indexes closed more than 4% off the day’s low.  The bullish reversal action counts as day 1 of a new rally attempt.

Strong close.. and likely headed higher in the short-term.

Same for the Nasdaq Composite.

Given that this is the first day of a potential new rally from a very oversold market, there isn’t much out there in terms of actionable buy setups in bullish chart patterns (not much of a surprise there).

Energy stocks have held up fairly well, but most need another week or two of chop to produce reliable buy points.

For the CANSLIM breakout type trader, this is still very much a “sit on hands” type environment where cash should be a 100% position.

For swing traders who follow the trend, any stocks sold short recently should have been covered into weakness and there isn’t much to do on the long side.

For the very aggressive short-term trader who can watch the market all day, there could be some counter-trend setups out there to take advantage of a potential 2-5 day bounce in the market.

Look for a potential gap down Tueday morning in some of Monday’s more explosive movers off the lows, such as $MARA. If $MARA opens 2-3% lower and takes out the 5-minute thigh, then it could be in play with a tight stop beneath the morning low. Again, this is very for aggressive short-term traders that can watch the market all day.

$MARA potentially in play on a gap down. Look for the low of the first 30-minutes to hold.

There are no new setups for Tuesday which is day 2 of a new rally attempt. Note that Wednesday (Jan. 26) is a Fed day.

Unofficial Setups – For experienced traders only, no guidance is given for these setups.

• none

See you in the chat room,

Rick

For those new to this report, our share size is pretty conservative with max. size around 10% of equity per trade. We do this because we prefer to trade 10-12 names to keep the report active.  However, if your goal is to maximize returns, taking 18-25% positions is the way to go.   If trading in a non-margin account, this will limit the portfolio to 4-5 positions.  If on margin, then 8-10 positions. Our risk per trade on average is just over 1/2 of 1%. Experienced traders may want to risk 1% to 2% per trade.   For example, a 20% position in a 100k account with a 6% stop loss would result in a $1,200 loss (1.2%). 

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