The Wagner Daily – S&P Back in Trend Mode

The Wagner Daily – August 23, 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:

• Per intraday alert, bought $DDOG.

Commentary:

Late last week, we discussed the potential for a change in character in the S&P 500 if it did not reclaim the 20-day EMA within a few days of Wednesday’s break. Right on cue, Friday’s recovery put the S&P 500 back above the 20 and 10-day EMAs, and the S&P back in trend mode.

SP-500 weekly closed with a bearish hanging man candle that must be confirmed by further weakness.  A hanging man candle suggests the uptrend may be losing steam as the price sold off intraday/week to create a long wick. Though the price did recover by the close, bears may soon gain control.  Again, must be confirmed by weakness, and is best used is trends that are extended.   

The Nasdaq Composite reclaimed its 20-day EMA, but unlike the S&P 500 which has set higher highs for several weeks in a row, the Nasdaq has been range-bound since mid-July.

Still holding the 10-week MA on the weekly chart. 

With the Nasdaq in chop mode for several weeks, the index may be setting up for a move higher down the road. Most charts are acting well but lack explosive price action after clearing resistance. That could change once the Nasdaq gets going.

The model portfolio added one new position in $DDOG last Friday per intraday alert. $DDOG was purchased based on the price recovering back above the 10ema after undercutting lows and the moving average on the open.

Our entry was over Friday morning’s high which didn’t see much follow-through. A break of Friday’s low minus some wiggle room is our stop.

Overall, market conditions remain difficult for our style of trading as only a handful of stocks are leading the market higher while most have been range-bound. 

There is one new official setup for Monday. $AMD is in play over last Thursday’s high following Friday’s tight ranged inside day below the 10-day EMA. We feel a bit more comfortable buying after a pullback in this environment as breakouts have struggled.

Other stocks in play (these setups are not official):

A touch of the 10-day EMA is often a low-risk spot to enter in a strong uptrend.  

$DOCS may be tricky to play if Monday is a higher open. As always, try to avoid being triggered on a buy stop during the first few minutes of trading.

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

• $GLBE –  buy at 72.89 (pullback in a strong uptrend)
• $MELI – buy at 1,805.00 (pullback)
• $DOCS – buy over Friday’s high
• $UPST – buy at 185.00 (partial size on a test of 10ema)

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