The Wagner Daily – Market Chop: Test of Support Likely

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)

See you in the chat room,

Rick 

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

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