The Wagner Daily – $XLE ETF: A Bright Spot in Bear Market

The Wagner Daily – October 14, 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:

 

position notes:

• No trades triggered.

Commentary:

Stock market averages staged an impressive reversal, closing with gains of more than 2% after overcoming a big gap down on the open in response to higher-than-expected inflation data. 

The daily range of the Nasdaq Composite from low to high was nearly 6%, which can be attributed to a weak market that undercut a major swing low and was due for a bounce at some point. 

Just a reminder that some of the most spectacular one-day market swings occur during a bear market. 

While Thursday’s action is the first day of a fresh rally attempt, we still need to see additional proof of a bull, as well as a follow-through day on day four or later of a new rally attempt, to create a buy signal.

A follow-through day is defined as a 1.5% or more gain in the S&P 500 or Nasdaq Composite on increased volume. If Thursday’s low holds, we might see a buy signal as early as next Tuesday.

The oil and banking sectors led Thursday’s charge. 

Energy ETF $XLE is one of the few areas that has avoided this bear market and is in decent shape technically,  so we may consider adding some exposure as setups emerge.

On the other hand, financial ETF $XLF while basing out, remains in a downtrend and is currently rebounding after hitting a new 52-week low.

Tech remains weak with both $XLK (technology sector ETF) and $SMH (semis) in an ugly downtrend

Due to the fact that we are still in a longer-term bear market, our short-term strategy is to remain in cash until a reliable buy signal is in place (as early as Tuesday).

Unofficial Setups –

• Longs – none (waiting for a clear buy signal)
• Shorts – none

See you in the chat room,

Rick 

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