market timing model: SELL
Current signal generated on close of Feb. 3.
Portfolio exposure can be anywhere from 0% to 60% long (or more), depending on how open positions have held up.
Past signals:
Neutral signal generated on close of January 24.
- Buy signal generated on close of November 13
- Buy signal generated on close of September 9
- Neutral signal generated on close of August 15
- Buy signal generated on close of July 11
- Neutral signal generated on close of July 5
- Sell signal generated on close of June 24
today’s watchlist (potential trade entries):
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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. 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.
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closed positions:
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ETF position notes:
- $JO buy setup triggered.
stock position notes:
- $LNKD sell stop triggered.
ETF, stock, and broad market commentary:
The broad market averages showed some signs of stalling on Wednesday, with the S&P 500 and Dow closing in the bottom third of the day’s range and in negative territory after failing to push higher in the early morning. The Nasdaq Composite closed slightly higher but well off the highs of the session, signaling that stocks were being sold into strength.
The small-cap Russell 2000 continues to lag, as it closed well off the highs of the session, stalling just shy of the 50-day MA.
As mentioned in yesterday’s report, the Nasdaq is running into resistance and could be due for a short-term pullback. In terms of how far it could come in we do not know for sure, but a pullback to the 50-day MA is possible and so is a test of the prior swing low. However, with so many leadership stocks holding up, we would not expect the Nasdaq to breakdown below the recent low.
Last night’s buy setup in coffee ETF ($JO) triggered and closed up 3.5% on a healthy pick up in volume. The price action should continue to move higher as long as it holds the 10-day MA.
Over the past few years, Brazil ETF ($EWZ) has been relatively weak, heading in the opposite direction of the market since topping out in 2011. After breaking a key support level at $50, $EWZ has spent most of its time trending lower (see monthly chart below).
Rather than shorting $EWZ, we are stalking the inverted UltraShort Brazil ETF ($BZQ) for a buy entry on weakness on the daily chart (Inverted ETFs allow us to short a market by going long).
After a false breakout above the current range high in early February, $BZQ has pulled back to and found support at the rising 20-day EMA.
There is also support from the short-term daily uptrend line just below the three-day low.
We are placing $BZQ on today’s watchlist with a pretty tight stop, as we want to be right or right out in case the action fails to follow through once our setup is triggered. See trade details above.
On the stock side, we finally stopped out of $LNKD. The stock is far from dead, but it has a lot of work to do to to get back on track.
We have one new setup on the watchlist and that is in $CMG, which recently gapped to new highs from earnings and held. Volume was big on the gap up and the price action has basically gone sideways in a tight range, allowing the 10-day MA to catch up.
The first pullback to the 10-day MA after a strong post earnings gap up is usually a low risk entry point. As such, we like $CMG over the three-day high with a stop below the swing low.
For those of you with smaller accounts, you could increase share size a bit by going with a tighter stop in $CMG below the 10-day MA and Wednesday’s low at 536.99. Even if you have to buy 25 shares, a 20% move would produce a 110 point advance.