The Wagner Daily – Majority of breakouts struggling; $UPS potential setup

The Wagner Daily – February 8, 2022

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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:

• Stopped out of the $CF add.

Commentary:

Volatility dried up as the S&P 500 closed with an NR7 day, which is the most narrow trading range of the past 7 sessions. When price contracts it eventually has to expand, but to which direction we do not know.  

The S&P 500 hasn’t been able to reclaim the 20-day EMA since gapping below last Thursday.

$AAPL closed with an inside day at the 50-day MA and should be monitored for leadership (up or down).

The majority of new breakouts have struggled with little to no follow-through. Our $CF add triggered its stop for a small 3% loss on a 2.5% position. The model portfolio is down to two 5% longs in $MTDR and $CF.

$UPS is potentially in play over the high of Monday’s reversal candle.  This is not an official setup right now. 

On the short side, $ZI could be in play unofficially beneath Monday’s low looking for the price to roll over after stalling at the 20-day EMA. Earnings are 2/17.

Choppy market conditions right now…so be careful out there and try to avoid doing too much. If the market does push higher, we may take an official entry in $UPS if the setup triggers. The same goes for the short side. Either way, there aren’t a ton of great setups out there.

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

Depending on market conditions:

• Longs – $UPS buy at 227.83
• Shorts – $ZI short at 51.45, $SYF $CRM also in play below Monday’s low

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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