--> Adding to position in Solar ETF ($TAN)

Adding to position in Solar ETF ($TAN)


market timing model: BUY

Current signal generated on close of July 11

Past signals:

    • Neutral signal generated on close of July 5
    • Sell signal generated on close of June 24

(click here for more details)

 

today’s watchlist (potential trade entries):

$todays watchlist

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open positions:

Below is an overview of all open positions, as well as a report on all positions that were closed only since the previous day’s newsletter. Net P/L figures are based a $100,000 model portfolio. Changes to open positions since the previous report are listed in pink shaded cells below. Be sure to read the Wagner Daily subscriber guide for important, automatic rules on trade entries and exits.

$todays watchlist

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closed positions:

open position summary

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ETF position notes:

  • No trades were made.

stock position notes:

  • No trades were made



ETF, stock, and broad market commentary:

Stocks printed mixed results last Friday, as investors digested several key earnings reports. The S&P 500 edged 0.2% higher, but the NASDAQ Composite lost 0.7%. The Dow Jones Industrial Average was unchanged. Total volume in the NASDAQ was 5% higher than the previous day’s level, causing the index to register a bearish “distribution day” that was indicative of institutional selling. Turnover in the NYSE eased slightly.

We have been holding Guggenheim Solar ETF ($TAN) as an intermediate-term swing trade since July 2, when we bought in anticipation of another breakout to new highs. This trade has been working out well so far, as the ETF is presently showing an unrealized share price gain of 13.8% (based on our July 2 entry price of $24.20).

Over the past four days, $TAN has been consolidating a tight, sideways range near its all-time high. This is healthy price action and has led to the formation of a “bull flag” type pattern on its daily chart. This is shown on the chart of $TAN below:

$TAN bull flag chart pattern

Because of the bullish pattern that has formed, odds now favor another breakout to new highs for $TAN in the coming days. Since we presently have only 50% of our maximum share size in this trade, we will be adding an additional 25% exposure if the ETF rallies above the July 19 high (see today’s watchlist for specific trade details).

Additionally, traders who missed our original entry point for any reason may now also consider establishing a new position in $TAN, based on our same entry and stop price criteria listed in today’s watchlist. However, in this case, no more than 25% to 50% of maximum position size would be recommended because the average entry price on this trade would be more than 13% above our original July 2 entry price.

Another ETF we are already holding is Market Vectors Semiconductor ETF ($SMH), which we bought one week ago when it broke out above resistance of its prior highs. Since then, the ETF has pulled back and is trading slightly below our entry price, but the current retracement from the highs now provides a low-risk buy entry point for traders who missed our initial entry point. The pullback is also an ideal level to add additional shares for traders who are looking to increase their position size:

$SMH chart pattern

Notice that $SMH gapped down last Friday (July 19), but found support at its 50-day moving average, which neatly coincided with the intraday low of the session. Furthermore, the ETF formed a bullish “hammer” candlestick after bouncing off key support of its 50-day MA.

Because of the hammer candlestick that coincided with a pullback to the 50-day MA, the actual entry point to establish a new position in $SMH, or to add to existing shares, is just above last Friday’s high of $38.58. We are already at 75% maximum position size with $SMH, so we are NOT looking to add additional shares at this time. Nevertheless, we wanted to give you a heads-up to this low-risk buying opportunity in case you missed our original entry or are too light in share size.

On the stock side, we are showing an 18% gain on a 40% sized position in $RVLT. The only position in trouble as of Friday’s close is $BEAT, which is down 4.9% on a reduced 33% position size.

Note the changes to the $DDD setup in the watchlist section above. Friday’s bullish reversal candle presents us with a low-risk pullback entry to add to an existing position with a tight stop.

$DDD PULLBACK ENTRY

 

Because $DDD reports earnings on 7/30, we are keeping our share size small. If the add triggers and is not in the money by at least 5% before it reports, then we will sell the add and keep the original 75 shares through earnings.

With earnings season heating up over the next few weeks, please make sure to check for earnings before you initiate new positions.

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