The Wagner Daily – Energy ETF $XLE Under Pressure: Potential Short Ahead

The Wagner Daily – September 23, 2022

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MTG Market Timing Model –  SELL (markets back below 20 & 50-day MAs   

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 along with open and closed positions:

Add

position notes:

• Stopped out of $ENPH for a small gain.

Commentary:

The post-Fed selling resumed on Thursday, with money rotating heavily out of leading growth stock names that had been showing relative strength over the past month or two.   Many of these names were down -4% to -9% on volume.  

Our decision to raise the stop in $ENPH worked out well, as we are able to exit with a small gain early Thursday morning. The early exit in $WOLF also paid off. As discussed in yesterday’s report, cutting $WOLF was more about playing defense when the odds were not in our favor. In a strong market, we likely would have held to our stop or cut partial size.

During the first half of 2022, the energy sector was one of the few bright spots on the long side, but that is no longer the case as crude oil continues to set lower highs and lower lows below its 200-day ma or 40-week ma on the weekly chart below. 

Energy ETF $XLE is still above its 200-day MA but should be monitored for potential short entries down the road on a break of this average. 

S&P 500 futures are now only 2.5% above the June low. At this point, the odds probably favor a test/undercut of the low before there is a decent bounce, but anything can happen.

Our game plan is to sit in cash and wait for new setups to emerge.  The short side isn’t in play until there is some sort of bounce. 

For those going through a significant bear market for the first time, keep your losses small to avoid a major drawdown.  Avoid taking on bigger positions to make your money back in a hurry, as that usually doesn’t end well. 

Unofficial Setups –

• Longs – none
• Shorts – none

See you in the chat room,

Rick 

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