Crude oil forming bullish consolidation ($USO)

market timing model: BUY

Current signal generated on close of July 11.

Portfolio exposure should at least be 75% to 100% long or more (if you can go on margin).

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

Having trouble seeing the open positions graphic above? Click here to view it directly on your web browser instead.

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. Click here to learn the best way to calculate your share size.
$todays watchlist

Having trouble seeing the open positions graphic above? Click here to view it directly on your web browser instead.

closed positions:

open position summary

Having trouble seeing the closed positions graphic above? Click here to view it directly on your web browser instead.

ETF position notes:

  • No trades were made.

stock position notes:

  • $MELI, $LOCK, and $SLM buy stops triggered.

ETF, stock, and broad market commentary:

One sign of a strong market is when the major averages sell off in the morning session, bottom out through lunch, and rally higher in the final 90 minutes of trading. Yesterday, the S&P 500 and NASDAQ Composite followed this script, fighting off early weakness to close in positive territory and in the top 20% of the day’s range. Volume increased on both exchanges, signaling that institutions were actively buying up stock.

In an extended bull market, early morning selloffs put pressure on the weak longs, as they do not have much conviction in the rally (maybe their buy entry was late as a result of this), so at the first sign of weakness they exit a position to avoid taking a full loss. If this process is repeated over and over during a rally, a trader is left with a ton of small losses that add up to one big loss.

Our existing long position in United States Oil Fund ($USO) continues to act well as it is forming a bullish consolidation pattern after a three week rally from the last breakout at $35. The consolidation has held above the downtrend line and the rising 10-week MA, which is exactly what we want to see on the weekly chart below.

$USO downtrend line breakout

On the daily chart, the price action has bounced into a short-term downtrend line, so $USO could just consolidate for a few days at or around its current level before moving higher. We are waiting for a low risk buy entry to add to the position which could develop within the next few days.

On the stock side we added three new positions yesterday. $MELI is an A rated setup, and one we will look to hold for a few months as long as the price action remains strong. $LOCK and $SML are not A rated, but we are looking for a 10-20% move over the next few weeks. With earnings around the corner in $CCUR (8/27), we are tightening up the stops, as we are not willing to hold through the report (fundamentals are improving but not great). If $CCUR can’t hold on to its recent swing low, then we will definitely want out.

We have two new setups on today’s watchlist. The first setup is an add to an existing position in $SLCA. We have been waiting patiently for a secondary buy point (post earnings) to add some size and yesterday’s stalling action provides us with a clear buy entry above the two-day high. Note the higher swing lows in $SCLA in July and August, as this is what we look for in a strong basing pattern. The stop is just below the recent swing low and the 50-day MA (on the shares we add only).

We are not playing $SLCA for a quick pop, so this is something we are looking to hold for a few months, as long as the price action and volume action remains bullish.

$SLCA buy entry

The next setup is in $YELP, which printed a big volume continuation gap at the beginning of the month. Since the, is has pulled back on lighter volume to support of the rising 10-day MA. Yesterday’s undercut and close back above the 10-day MA gives us an entry over the prior day’s high. The stop is just beneath the low of the gap up candle, but the action should not dip much below Tuesday’s low if it is ready to go. We are looking for a quick 20% or more gain in $YELP as long as it holds above the 10-day MA (we are not building a position here, too late in the move for that).

$YELP pullback buy

Please leave your comment below!

Your email address will not be published. Required fields are marked *