The Wagner Daily – Nasdaq’s Recent Recovery

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The Wagner Daily – July 21, 2021

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MTG Market Timing Model – Sell (though if Nasdaq Comp. continues to hold 20ema will return to buy)

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:

• $NVDA and $ASAN were added to the model portfolio

Commentary:

The Nasdaq Composite reclaimed the 20-day EMA on the daily chart which was an impressive recovery given the recent selloff. A few days of tight-ranged chop would be ideal to digest the two-day bounce off the lows with the price holding up near the 20ema minus some shakeout action.

Anything can happen, so we must also be prepared for the Nasdaq to possibly chop around within the current 4% trading range, where there is support from the rising 10-week MA (on weekly) and resistance at 14,800.

Yesterday’s list of stocks with bullish reversal candles for the most part pushed higher which was a positive sign, but the price and volume action wasn’t explosive. $DOCU was the best of the bunch but it’s a bit too extended to enter without some sort of short-term pause.

Given that the Nasdaq just reclaimed the 20-day EMA, 1-3 positions with tight stops/small risk seems reasonable, but one should avoid loading up on exposure until there is more evidence that breakouts are working. 

Per intraday alert, $NVDA and $ASAN were added to the model portfolio.

$NVDA’s buy was based on the first touch of the 10-week MA in a leading stock, which is usually a low-risk spot to add or initiate a new position. The key to this setup for us is the bullish reversal candle which is the buy signal. One can enter on the day of the reversal or on slight weakness the following day, especially if the reversal candle is wide.   Our entry on weakness allows for a tight 3.5% stop.

The setup in $ASAN is known as a power play by Mark Minervini or a high tight flag by William O’ Neil. In our screens, we look for an explosive move of 70-100% or more in eight weeks or less. The consolidation that follows is anywhere from 10 days to 5-6 weeks in length and should correct no more than 25% off the highs.

Our entry was based on the price taking out the $67.50 area after six hours of tight-ranged trading in the $65.50 to $67.50 range.

We have a tight stop in place beneath Tuesday’s low which is also below the 10-day EMA

As mentioned earlier, it’s tough to buy $DOCU at highs without some sort of pause as the lower-risk entry was closer to the 20-day EMA on the pullback. We also don’t have much evidence that breakouts are working.

There are no new official setups for Wednesday.  

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

• $S – buy at 47.93 (quick swing)
• Stocks to watch: $SHOP $LSPD $CRWD $NET $SPT $DOCU $S $GLBE $GNRC $BNTX  $ASAN $INMD $ZS $PYPL $FRHC $SE $BILL $ROKU $BILL $DDOG

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