The Wagner Daily – ROKU: Handle Formation & Entry Point?

The Wagner Daily – July 12, 2021

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MTG Market Timing Model – buy mode due to strength in Nasdaq Composite (still above 20ema)

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:

• Bought $CRWD on a pullback. Per intraday alert, bought $NTRA and $SHOP.

Commentary:

 The S&P 500 and Nasdaq Composite closed out the week on strength after recovering from last Thursday morning’s shakeout. Big cap tech is driving both the S&P 500 and Nasdaq 100 higher due to the top-heavy weighting of $AMZN, $AAPL, $MSFT, $GOOGL, and $FB. The S&P 500 has set new highs while several sector ETFs have yet to recover from recent selling such as energy $XLE, transports $IYT, and financials $XLF.

$QQQ has rallied into resistance of the top trendline where it struggled last week.

The focus of this report has always been on growth stocks that can move. Unfortunately, it has been a rough year for growth when compared to the S&P 500 or Nasdaq. $IWP is an ETF focused on midcap growth and is a decent gauge of what our stocks are doing. Although $IWP is at highs, its relative strength line vs QQQ is near lows. The current rally hasn’t produced the explosive action in growth that we are used to. Some stocks have moved out such as $NVDA, $ASAN, and $SPT, but many more have struggled.

We are still in buy mode, and with several new buys last Friday the model portfolio is up to six open positions. The $CRWD buy limit order triggered last Friday along with intraday alerts in $NTRA and $SHOP.

There are no new official setups for Monday but we are monitoring a few cup with handle patterns for an entry.

$UPWK appears to be forming the handle portion of a cup with handle pattern. The handle is finding support at the rising 20-day EMA after a pullback on lighter than average volume. The standard buy point for this pattern is over the handle high but one can look for earlier entries such as a pullback to the rising 10 or 20-day EMA within the cup to put on a starter position. This is not an official buy setup.

The IBD ratings on the chart below come from our MarketSmith platform. The lower eps of 69 is offset by the quarterly sales growth. The accumulation/distribution rating (labeled as a/d rating) is a B- which is fine (we prefer B or higher). The up/down volume ratio (labeled as u/d vol) is 1.0, which is the minimum we look for.

$ROKU is also forming a handle above the rising 20-day EMA. A slight pullback could serve as a lower-risk entry point to put on a starter position with the handle high serving as the standard buy point.

The lower eps rating of 69 is  offset by the huge quarterly sales growth. The B+ a/d rating is solid and the u/d volume ratio is very good at 1.4.

This is not an official setup.

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

• $RBLX – buy at 87.40 or over 2-day high in anticipation of a downtrend line break
• $NTLA – buy at 154.65, pullback to rising 10ema after big volume gap up
• Others to watch –  $FRHC $PGNY $UPST $AMD $XPEL $BILL $NTLA $PCOR

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