The Wagner Daily – Timing Model Alert: S&P, Nasdaq Below Declining 20-EMA

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The Wagner Daily – May 23, 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:

• $AFRM stop triggered and we are out.

Commentary:

Last Friday afternoon’s bullish reversal action put the S&P 500 and Nasdaq Composite back above the swing low and left the door open for an “undercut and rally” scenario this week.  The undercut and rally setup occurs when an obvious low/high is taken out but fails to follow through and quickly leads to a reversal in the other direction.

A +2% rally in the last 45 minutes of trading allowed the S&P 500 to close flat on the day with a bullish reversal candle. Ideally, if the reversal is strong, then the following session should open above the prior day’s high (show some sort of gap) and hold.

The Nasdaq 100 and Nasdaq Composite have the same type of chart with a slightly lower close in the day’s range.

Growth ETFs $ARKK and $IWP held up better than $SPY / $QQQ by putting in a higher low on the daily chart. Let’s see if growth can lead the market higher. Can $IWP reclaim the 8-day EMA and hold?

While Friday’s reversal action puts us on alert for a short-term bounce, the timing model remains on a sell signal with the S&P 500 and Nasdaq Composite trading below a declining 20-ema on the daily chart.

Energy stocks remain near highs but this sector is tough to trade on strength, so entries should be as close as possible to the 20 or 50-day MAs.

Still monitoring $LNTH for a power-play setup due to the explosive +100% move in a short period of time with only a 21% correction.

There are no new official setups for Monday.

For those who are new to the service, our system is based on trading growth stocks that can explode higher in a short period of time…when conditions are ideal.   Below are a few things we are looking for in a buy signal.

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 first wave of breakouts, new setups emerge

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

• Longs – $SWN $LNTH (watching), off lows – $PTON $INMD $AFRM $DWAC
• Shorts – none, index near lows

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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