The Wagner Daily – 5 Key Points for Stock Analysis

The Wagner Daily – February 2, 2022

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MTG Market Timing Model –  BUY (buy signal Jan 31, 2022) 

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:

• Per intraday alert, bought $CF.

Commentary:

The S&P 500 and Nasdaq 100 pushed higher for the third session in a row but are now coming into resistance from the declining 20-day EMA (and 200-day MA on the Nasdaq 100).

S&P 500 ETF $SPY touched the 61.8% fibo level measured from the last swing high (B) to the recent swing low (C). If measured from the 52-week high to the recent low, then the 61.8% fibo is roughly 1% higher, which is just below the declining 50-day MA.

Even if the S&P can punch through the 20-day EMA and hold it will be difficult to take out that higher 61.8% fibo level and the 50-day MA after such a big bounce off the lows without some sideways action.

The sharp bounce off the lows and the market running into resistance make for a tricky environment. Maybe a bit too soon for shorts and a little too late to put on longs unless conditions begin to improve.

Per intraday alert, we added $CF to the model portfolio just after the open on Tuesday.

The weekly chart below shows the basing action and relative strength line breakout prior to our entry. Also, note the heavy volume accumulation week off the highs and two support weeks at the 10-week MA.

Let’s walk through the daily chart covering most key points:

• A) Price held the 50-day MA
• B) Held the 50-day MA once again with a bullish reversal candle on heavy volume
• C) Price closed above the downtrend line and followed through the next day on heavy volume
• D) Price tightened up on top of the 20-day EMA while volume dried up
• E) Entry above the prior day’s high due to the tight action…was confirmed by volume.

Our short-term game plan is to keep an open mind with new setups, long or short.  Let’s see what setups develop during the next few days. 

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

• $SLB – buy at 39.87 or $HAL at 31.55

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%). 

This list is a good starting point for monitoring the health of the market for those who have limited time.

https://morpheustrading.com/services/swing-trade-alerts

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