market timing model: BUY Signal generated on close of July 7

Building long exposure with a new rally potentially underway. Exposure can be in the 50 – 100% range or more, if one has held on to positions through the market pullback.

Note that the market timing model was not created to catch tops and bottoms in the S&P 500. The model was designed to keep our trades in line with the prevailing market trend. Buy signals (confirmed) are generated when the price and volume action of leading stocks and the major averages are in harmony. This means that we could potentially have a buy signal in a major market average, but if leading stocks are not forming bullish patterns, then we are forced to remain on the sidelines until patterns improve.

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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position notes:

• $MTCH buy entry triggered.

Commentary:

Broad market indices sold off across the board on a pick up in volume, producing a bearish distribution day. The distribution signaled a change of character in the price action, with all major indices closing at the lows of the day for the first time since the rally began.

Tuesday’s selling suggests further weakness in the short-term (next 1-2 days). A potential pullback in the market would be welcomed, provided that new buy setups develop.

$XLV broke support of the 20-day EMA and is now vulnerable to the 50-day MA. $IBB failed to reclaim the 10-day MA and may be headed to the 200-day MA. A pullback is some of the better known Nasdaq ETFs would put pressure on the Nasdaq Composite.

We are selling $CDK on Wednesday’s open to limit our losses due to the lack of follow through from our entry. When buying on strength over a clear resistance level (like we did in $CDK), we prefer the price action to move out right away.

$MTCH buy limit order triggered off the 50-day MA and we are long. The price could slide lower for a day or two but should eventually reclaim the 50-day MA.

We have one new setup on today’s watchlist in $GDDY, which is a fairly recent IPO from 2015. The powerful move out on 8/4 & 8/5 in reaction to earnings is the catalyst for the entry.

Since stalling at the highs of last June, the price has pulled back in orderly fashion and on lighter volume, which is a bullish sign.

Our entry is over the high of Tuesday’s candle which rallied off support of the rising 10-day MA on a pick up in volume. The stop is placed beneath the low of the first gap up day on 8/4. The wide stop forced us to dial down the position size to keep risk in line. If $GDDY fails to hold the 10-day MA right away, then we may cut the position size by a 1/3 or 1/2.

Note the changes to the $RP setup in today’s buy watchlist.
Self-Serve Watchlist:

This is an unofficial watchlist of potential setups for today’s session (trade results will not be monitored). This list is for experienced traders only who are looking for a few ideas. No targets will be listed. Please check for earnings before entering.

All stops are on a closing basis unless listed as a “hard” stop.