The Wagner Daily – Adding $MTDR to Portfolio for Energy Exposure

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The Wagner Daily – February 3, 2022

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MTG Market Timing Model –  BUY (from 2/1 buy signal) 

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 $MTDR.
• Note the higher stop in $CF, which is below the big up day on 2/1

Commentary:

Major indexes climbed higher on Wednesday, but the damage was done after the closing bell as $FB closed -22% lower in after-hours trading.  

As of this writing, S&P 500 and Nasdaq 100 futures are trading -1% and -2% lower respectively. If futures remain weak, that would lead to a significant gap down on Thursday’s open, which would not be an ideal spot to initiate new shorts.

Prior to the $FB plunge, $MTDR was added to the model portfolio to gain some exposure to the energy.

We entered prior to the base breakout on a break of the hourly downtrend line off the 20-period EMA. This entry was closer to the buy point on 2/1 which was over the high of a tight two-day range.

Let’s see how our open positions which have shown relative strength respond to broad market weakness. Given the potential for a significant gap down on Thursday there are no new official setups.

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

Depending on market conditions:

• Longs – $HAL $SM $SLB over Wednesday’s high – several other oil stocks also look good.
• Shorts – Waiting for a bounce due to potential gap down

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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