The Wagner Daily – Nasdaq’s 20-day EMA break: Sell signal or minor pullback?

The Wagner Daily – September 15, 2021

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MTG Market Timing Model – SELL (all major indices below the 20-day EMA) (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 the remaining $ZIM with a 17% gain.
• Stopped out of $RBLK with a 5% loss.

Commentary:

As of Tuesday’s close, all major indices we track are trading below the 20-day EMA which is enough to force our timing model into sell mode. The model portfolio is almost 100% in cash with only a half position in $DDOG remaining (note the new stop that is just above breakeven).

The daily chart of the S&P 500 has failed to close above the open since 9/3.  Will this pullback lead to another quick recovery back above the 20-day EMA?

The Nasdaq Composite closed below the 20-day EMA, a sell signal. That said, the current pullback isn’t very deep and the Nasdaq could easily reclaim the 20-day EMA.    

With all major indices below the 20-day EMA, adding new long exposure is probably not a good idea until conditions improve.  Until then, we can just sit mostly in cash and build our watchlist.

$ZI is a must-own for us once market conditions improve.  $ZI averages 3.8 million shares traded per day with 117 million shares in float. It’s a liquid stick that can move.  The eps and sales growth is there, along with a solid +33% yearly eps estimate for 2022.  It just needs a decent market.    

There are no new setups for Wednesday.  

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

• No new setups – Just Watching – $ZI $AFRM $DOCN $LULU $DLO $FIGS $NTRA $AMEH $LC $DDOG $GLBE $MNDY $

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