The Wagner Daily – SP500 Hits 50% Fibo Level

The Wagner Daily – December 2, 2021

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MTG Market Timing Model – SELL  (sell signal  November 26)

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:

• Closed all open positions due to deteriorating market conditions.

Commentary:

Wednesday’s heavy volume selling delivered a knock-out blow to the uptrend in the Nasdaq Composite which was hanging on by a thread after closing below the 20-day EMA on November 26. With the Nasdaq now at the 50-day MA there isn’t much to do on the long or short side… cash is king.

As far as support goes, the Nasdaq has the 50% fibo level and rising 20-period EMA around 15,200. The 61.8% fibo level and uptrend line converge around 15,000.

Nasdaq Composite – Weekly

The S&P 500 sliced through the 50-day MA and closed at the 50% fibo level. The next significant level is the 61.8% fibo at 4,456.

While the Nasdaq Composite and S&P 500 have given back half of the last rally, Midcap Growth ETF $IWP (our proxy for growth) has retraced 90% of the last wave up and is at the 40-week MA. Growth has taken a beating this week.

Up until Wednesday, we were trading and monitoring a very narrow list of growth stocks that were showing relative strength. As of Wednesday’s close, that list is down to a few stocks that are holding up really well but at best may go sideways while the market sells off.  The reward for going long is no longer worth the risk we take in holding.  

There are no new setups for Thursday. The model portfolio is 100% in cash after stopping out of $RBLX and $ENPH, as well as selling all of $NVDA and $PSTG. In the short-term, we are in S.O.H. mode (sit on hands), as there isn’t much to do on the long or short side. Let’s step aside for a day or two and see how the market reacts to Wednesday’s selloff.

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

• none

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