The Wagner Daily – Big-cap Tech Leads: $QQQ Gains

The Wagner Daily – May 25, 2021

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MTG Market Timing Model – S&P 500 sell (just broke 20ema), Nasdaq Composite 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:

• No trades triggered.

Commentary:

Note – US markets will be closed on Monday, May 31. The Wagner Daily will not be published on Sunday night but will be back on Monday night for Tuesday’s session.

Money rotated into big-cap tech on Monday, with $QQQ gaining +1.7% vs +1% on the S&P 500. The Nasdaq Composite closed at +1.4% and reclaimed the 20 & 50-day MAs, though on lighter volume. The Nasdaq has yet to print a true accumulation day with a higher close on heavier volume since bouncing off the 5/12 low.

Although we’d prefer to see a follow-through day (FTD) print to generate a buy signal in the Nasdaq, we can still buy without a FTD if the price holds the 20-day EMA for a few days.

This report is usually focused on high-flying, liquid growth stocks trading near 52-week highs. That is our bread and butter. Unfortunately, growth has taken a back seat to commodity-based stocks the past few months while the Nasdaq is 14-weeks into a correction (base building). The good news is that corrections often reset the market and produce new leadership! This is why it is always important to stick around as we never know when the next big move will begin.

There were no new trades in the model portfolio which is only long $RBLX. Note the sell limit order at $91.50 for 1/3 of the position and the new stops.

As mentioned in last night’s report, software stocks are acting like leadership. Whether or not new breakouts stick, only time will tell.

Software stock $PATH broke out to new highs from an IPO base on Monday. Cup and handle bases are six or more weeks in length, but the IPO base can be 3-4 weeks in length. Although $PATH lacks consistent earnings growth, there are four quarters in a row of +70-80% sales growth.

Buying the obvious breakout may be tough in this market without a buy signal in the Nasdaq or much evidence that breakouts in growth are working. However, one could purchase a starter position in $PATH near Monday’s close looking for the low of the breakout day to hold on a closing basis. One could also use a close below the rising 8 or 10-day EMA as a stop.

Not an official setup:

$BGFV is consolidating in a tight range following an explosive breakout. A move through the two-day high could serve as a buy entry with a stop beneath the 5/24 low.

Not an official setup:

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

• $COUR – buy at 38.25 (break of downtrend line for pop off the low).
• $BGFV – buy at 29.94

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