Are market conditions deteriorating ($QQQ, $SPY, $DIA)

today’s watchlist (potential trade entries):

today's watchlist

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 on two separate $50,000 model portfolios (one for ETFs and one for stocks). Changes to open positions since the previous report are listed in red text below. Be sure to read theWagner Daily subscriber guide for important, automatic rules on trade entries and exits.

open position summary
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closed positions:

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ETF position notes:

  • Per intraday alert, sold 200 shares of IYR (remain long 100 shares).
  • Note the new stop price in UWM above.

stock position notes:

  • Per intraday alert:
    • Sold N to preserve a small gain.
    • Sold URI for a small loss.
    • Bought CRI breakout. Sold 75 shares of CRI (remain long 50 shares).
    • Sold STAA for a small loss.
    • TSLA stopped out beneath the prior day’s low. The price action may take a while to recover so it’s best to get out of the way with a small loss.
    • Sold SWI a few minutes after the open to minimize the loss. SWI may need a few more weeks of basing action before it is ready to launch a sustainable rally.

ETF and broad market commentary:

Stocks ended a turbulent week on a mixed note. As is typical, pre Holliday trade was light. The Nasdaq was the Thursday’s only winner as it closed higher by 0.4%. The S&P MidCap 400 shed 0.4%, while the small-cap Russell 2000 lost 0.3%. Both the DJIA and the S&P 500 ended the day lower by 0.1%.

Market internals also ended the day mixed. Volume dropped on the NYSE by 13.2% and on the Nasdaq by 10.0%. Declining volume topped advancing volume by 2.1 to 1 while advancing volume edged declining volume on the Nasdaq by 1.1 to 1. Nothing of importance can be gleaned from Thursday’s price and volume action.

A review of the major indices shows that we are at critical support levels across the board. Notice that we are not only at support of major moving averages but also testing support of important trend lines. Both the S&P 500 and the Dow Jones Industrial Average are toying with support of both their intermediate and long term trend lines (Long term trend bold black line. Intermediate trend line dashed). If the market is to head higher from here, it is likely that we will undercut these key support levels before the next move higher. However, the possibility now exists that we could set a lower low on each of the major indices, which could place us in the midst of at least a short term trend reversal. We are looking to exercise caution under the current conditions.

DJIA weekly
DJIA weekly
DJIA weekly
DJIA weekly
DJIA weekly

Leadership stocks have not shown much follow through over the past several weeks and that is cause for some concern. On Friday we lightened up on IYR as we sold 2/3 of the position for a scratch gain. We raised the stop on UWM due to its recent poor performance. We also entered a long position in ERY, as it formed an impressive reversal candle and closed near session highs. We are inclined to take a neutral stance with respect to the market given that we are at the low end of the recent range. For the moment, we are hesitant to take on new positions unless the market can post an accumulation day and provide some follow through.

stock commentary:

Due to the mounting distribution days and lack of powerful price action in many of our breakout buys, we nailed down a few winners and cut our long exposure from 150% to 40% by Thursday’s close. We have yet to see the “throw in the towel” type of selling we associate with a market that is in trouble and vulnerable to a 10% or more selloff, so the evidence (as of now) suggests selling should be limited to the 3% to 5% neighborhood on the major averages.

Our weekend scans produced a decent amount of buy setups, so we are prepared to re-enter the market if the broad based averages start to push higher. A few setups we are currently monitoring for an entry point are: MAKO FFIV XPO RAX N MGAM LEN CF CVH. We will promptly send an intraday alert if any new trades are made.


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