The Wagner Daily – Financials Struggle: XLF Closes Below 20-day EMA

The Wagner Daily -June 9, 2022

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MTG Market Timing Model –  BUY (SP-500 and Nasdaq above 20ema on daily) 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:

• $GNK stop triggered.
• Note the new stops above.

Commentary:

The S&P 500 and Nasdaq 100 failed to follow through on Tuesday’s bullish gap-down reversal action, which was the second bullish reversal candle in the last few days that did not lead to higher prices. The daily charts are still in chop mode above the 20-day ema and waiting for a catalyst.  

The small-cap Russell 2000 is into resistance and should have trouble pushing higher from here without some sideways action.

There isn’t much action outside of energy, as many recent breakouts are failing to push higher after the initial move-out. The model portfolio stopped out of $GNK with the entire shipping industry group getting hit on volume.

The charts below are a few examples of ugly action after the breakout.  

$XLF closed below the 20-day EMA and created a lower high (LH) on the daily chart with the break of the prior low. May be tough for financials to push higher with resistance from the declining 10-week moving average on the weekly chart at $35.

There are no new official setups for Thursday.  

Please note the new stops in all open positions.  

Given the lack of strength outside of oil, its tough to have much faith in the market moving significantly higher from here.  As always, this is not a prediction, as we prefer to take it one day at a time.

Below is quick guide of what we will be looking for this week:

• Can the Nasdaq Composite and S&P 500 hold the rising 20-day ema? A quick break below the 20-day EMA this week would be a negative sign.
• Avoid distribution days in the Nasdaq or S&P 500 (one may be ok, but two in one week would be a negative sign).
• How are recent breakouts working? Are they extending from the pivot or struggling?
• If recent breakouts pull back in, is the action constructive? Lower volume and not giving up much ground?

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

• Longs – watching $OLN $STZ $ASH $RFP
• Shorts – watching $XLF and $SMH for break of 20ema and $MSFT $ISRG $PANW

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.

https://morpheustrading.com/services/swing-trade-alerts

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