market timing model: BUY Signal generated on close of Sept. 21

On a buy signal. It is ok to begin establishing new positions.

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:

• Stopped of $LMAT for a 15% gain.

Commentary:

The Nasdaq Composite and Nasdaq 100 set new 52-week highs last week while the S&P 500 and Dow Jones remain range-bound. The small cap Russell 2000 is in pretty good shape as well, sitting less than -0.5% off the 52-week high. The relative weakness in the S&P 500 suggests the market may need a few more weeks of sideways action before heading higher.

$LMAT triggered its sell stop and was sold for a 15% gain on Friday. $PYPL is our only long position, but with the market timing model now in buy mode new setups should develop over the next few weeks (provided the market remains strong).

We have one new buy setup in $GDEN along with the $SIMO setup from last week. $GDEN has formed a tight trading range at the 50-day MA the past two weeks. Our entry is over last week’s high with a stop below the two-week low.

$GDEN carries a 91 RS rating along with several quarters in a row of powerful EPS and revenue growth. With the average trading volume around 80k, we are keeping the trade risk down to 1/4 of 1% (0.25%), which is little less than half of what we normally risk (0.4% )

$TPIC is an unofficial buy setup from our self-serve watchlist that is trading in a tight range over the past week. Note the strong volume on the move off the lows (9/16 and 9/19), followed by the tight sideways action. A move above last Friday’s high should attract some buying interest.

An entry at the highs (scenario A) should be accompanied by a pretty tight stop, as there isn’t a significant swing low within 10% of the entry point. Scenario B is an entry on slight weakness to allow for a wider stop, which would be ideal for an official trade in the model portfolio.

The chart of $RP below is a good example of volume not confirming a move out. Although volume did pick last week on the move up, it has been a few weeks since $RP rallied on heavier than average volume. Look for heavier than average volume to come in off the lows and at an obvious breakout point to confirm a stocks strength.

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.