The Wagner Daily – Nasdaq Composite Shows Buy Signal with 3% Rally, S&P 500 & Russell 2000 Close at Resistance

The Wagner Daily – May 27, 2022

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MTG Market Timing Model –  BUY as of 5/26 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:

Thursday’s 3% rally on higher volume produced a follow-through day buy signal on the Nasdaq Composite. The S&P 500 did not follow through due to lighter volume but did manage to close above the 21-day EMA.  A close 1% or more above the 21-day EMA would generate a buy signal  the S&P 500 (though the Nasdaq buy signal is enough to switch the timing model back to buy mode).

Russell 2000 reclaimed the 21-day EMA but did not close 1% above.

The daily charts of the S&P 500 and Russell 2000 closed at resistance, so let’s see how these indexes react during the next few days.

The next few days and weeks should tell us more about the quality of Thursday’s follow-through.

• Can the Nasdaq Composite hold the rising 8-day ema?  What about reclaiming the 21-day ema?
• A break of the follow-through day low within a day or two would be a bearish sign, as would any distribution.
• Do new breakouts extend from the pivot or fail?
• If breakouts stall and pull back in, do they hold up at support?
• Are new setups emerging after the first wave of breakouts?

There is one new official setup for Friday. We have a buy limit order to enter $LTHM near Thursday’s close. We are going with a buy limit to prevent us from chasing a higher open if there is one.

Below are a few charts we are monitoring:

For those 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. For most of 2022, conditions have not been ideal, so we have been playing the short side when setups are there while waiting for a new buy signal. 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 – $SBLK (over yest. high), $GFS (pullback near 50ma).
• Shorts –

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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