The Wagner Daily – Short Selling Setup in Financial Stock $DFS

The Wagner Daily – April 6, 2022

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MTG Market Timing Model –  BUY as of 3/16 close

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:

The S&P 500 and Nasdaq Composite sold off on higher volume and erased all on Monday’s advance and a bit more. The selling increases the odds of further chop and a possible test off the rising 20-day ema in both indexes (and 200-day MA in S&P).

The false breakouts and breakdowns below support/resistance the past few months has created a wide trading range.  

Prior to our timing model flashing a buy signal on 3/16, we posted the following:

Keys to market turning bullish:

• Buy signal in the timing model, such as a FTD (follow through day) or reclaim of 21-day EMA
• Stocks begin to breakout on volume and hold… indexes hold the 21-day EMA
• Number of stocks making new 52-week highs vs 52-week lows enters into positive territory
• After the first wave of breakouts, new setups emerge

Going through the list above, other than the indexes printing a follow-through day (3/16) and reclaiming the 21-day ema and holding, there is very little to get excited about.   The few breakouts we saw in semis on volume failed and rolled over on volume.   $TSLA, $PANW, and $PSTG have held up.  Not much power out there.   

$SMH sliced through the 50-day MA on heavy volume. Let’s see if support holds around $248

Major ETFs now below the 50-day MA: financials ($XLF), tranports ($IYT), semis ($SMH), and homebuilders ($XHB).

There is one new official short setup for Wednesday in $DFS.

$DFS is forming a ledge, which is what we call basing action in a downtrend when the moving averages are stacked to the downside (20<50<200). The highs of the ledge stalled just below the declining 50-day MA and is now in chop mode setting lowers highs. Our entry is beneath the low of Tuesday’s tight-ranged inside day, with a protective stop above the three-day high. 

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

• Longs – $PLAY over yest high
• Shorts – $TPX, $FBHS, $DELL, $RBLX (entries below prior day’s low)

Press HERE (link restricted to paid members) to view this week’s stock watchlist, an excellent starting point for monitoring the health of the market and finding the best stocks for swing trading.

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