The Wagner Daily – S&P 500 Tests Trend with 20/50-day MAs

The Wagner Daily – July 05, 2022

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MTG Market Timing Model –  SELL (Nasdaq Composite below the 20-day EMA)

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:

• Per intraday alert, bought $XBI.

Commentary:

The Nasdaq Composite is once again trying to hold the 11,000 area but has quite a bit of resistance to work through in order to reverse the trend. For now, lower highs and lower lows remain in place, with the price below a declining 20-day EMA. Even if the price can reclaim the 20-day MA, then the swing high and 50-day MA are just above.

The S&P 500 held last Thursday’s low, but like the Nasdaq above will have to clear the 20 and 50-day MAs to reverse the current trend. For now, lower highs and lower lows remain in place on the daily chart.

Based on the charts above, we would expect any short-term strength to eventually give way to further selling.

In last Friday’s report, we mentioned the relative strength in Chinese and Biotech ETFs. We also mentioned $XBI as a potential buy above the two-day high, which we made an official trade per intraday alert on Friday.

There are very few industry or sector ETFs trading above the 20-day EMA on the daily chart. Even fewer above the 20 and 50-day MAs, with the 20-day EMA above the 50ma. Because of this, we bought $XBI as a pullback trade looking for a new uptrend to push higher.

$LI remains one of the top stocks on our watchlist. We avoid buying pullbacks to the 10-day MA after such as explosive move up ($LI doubled off the lows).  A few weeks of sideways to lower action would be ideal to allow the 20-day EMA to catch up.

With the market timing model still on a sell signal, there isn’t much to do on the long side (zero or very limited exposure is fine). We will continue to scan for short setups with an emphasis on bearish reversal candles at/near the 20 or 50-day MAs.

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

• Longs – watching $VIVO $CHEF $EDU above prior day’s high
• Shorts – none

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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