The Wagner Daily – False breakout in $RH: potential setup

The Wagner Daily – August 17, 2021

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MTG Market Timing Model – buy mode (but cautious) 

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:

• Stopped out of 3% of $AA and all of $FRHC.

Commentary:

The S&P 500 sold off early but reversed higher the rest of the session and closed in positive territory. The Nasdaq also recovered off the lows and closed back above the 20-day EMA (same for $IWP). If these indices retrace more than 60-70% of Monday’s range, then we could see a pick-up in selling.

Given the time of year (August and September are generally not good months to trade) and lack of buying interest in growth stocks, conditions are far from ideal for our style of trading. That said, there is enough leadership out there to take on a few positions, but this market is extremely difficult to navigate.  

The model portfolio stopped out of $FRHC and 1/3 of $AA. The $FRHC trade was put on with a tight stop and minimal risk. $AA and $URI gapped lower on Monday and will have to hold Monday’s low to avoid further weakness.

There are no new official setups for Tuesday but the $BLDR buy order remains live. Note that we removed the buy stop order for the add.

Below are a few unofficial trade setups that could be in play this week.

$DOCS is a recent IPO that broke out to new highs and formed a bull flag-like pattern above the rising 5-day MA.  A move through the two-day high could spark the next wave up.

This is not an official trade setup.

$CVNA reversed off the 10-day EMA and could be in play for a quick swing over the two-day high.

This is not an official trade setup.

A false breakout in $RH led to a two-day pullback and a decent reversal off $700. A day of chop would be welcomed here but a move through Monday’s high is the trigger.

This is not an official trade setup.

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

• $CVNA – buy at 364.50
• $DOCS – buy at 81.40 or pullback to 76.00
• Watching $GXO and waiting for an inside day or nr7 type day to print.

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