The Wagner Daily – October 13, 2022
Below is the full, archived issue of The Wagner Daily swing trading report (sent to members the night before the publication date).
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MTG Market Timing Model – SELL
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:
- No trades triggered.
Wednesday’s trading session was among the tightest in recent months after Tuesday’s turbulence, with most major market averages forming an NR7 and inside day (see chart below for an explanation of these terms).
The tight trading range is ahead of Thursday morning’s CPI report on inflation at 8:30 am, which has the potential to create some pre-market volatility (could see a gap in either direction).
One of the fundamental principles of price action is that a price contraction eventually leads to price expansion, typically in the direction of the following move. A break of Wednesday’s low could lead to a resumption of the current downtrend. A move through Wednesday’s high could spark a short-term bounce as the S&P 500 is a bit stretched from its 20-day EMA.
A short-term bounce into resistance would be ideal for producing classic swing trade setups on the short side. Without a bounce, the only setups we see that may be in play are in leading stocks that breach the 50-day MA.
$FSLR is a potential leader that could see a sharp selloff if it loses the 50-day MA. This sort of setup is ideal in a weak market when a leading stock that has shown relative strength finally cracks. $ALB is a good example of this, which we discussed as a short setup earlier this week.
This market remains one that is best played with a heavy cash position. There isn’t much to do on the long side as the reward-to-risk ratios are terrible right now. s mentioned above, a short term bounce would be ideal for classic swing trade entries on the short side.
We never know when the market will bottom, which is why it’s important to keep an updated watchlist of leadership so that we are ready to move if/when conditions turn bullish.
Unofficial Setups –
- Longs – none (waiting for a clear buy signal)
- Shorts – $FSLR (not official)
See you in the chat room,
Rick
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