market timing model:
SELL – Signal generated on the close of July 10 (click here for more details)
today’s watchlist (potential trade entries):
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 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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ETF position notes:
- No trades were made.
stock position notes:
- Sold CRAY and ONXX at market on the open.
ETF and broad market commentary:
Stocks rallied sharply in the last half hour of the session, to stave off what could have been a second consecutive day of distribution. The late day rally was strong enough for stocks to end the session mixed. The NYSE added 0.2%, while the S&P 500 closed flat on the day. The Nasdaq sustained the biggest loss, as it fell 0.5%. Both the Dow Jones Industrial Average and the small-cap Russell 2000 fell 0.4%, and the S&P MidCap 400 dropped 0.3%.
Market internals ended the day mixed. Volume was 4.0% lighter on the Nasdaq and 0.8% lighter on the NYSE. Advancing volume closed at par with declining volume on the NYSE. However, on the Nasdaq, declining volume topped advancing volume by a factor of 1.7 to 1.
As the S&P 500 has pulled back and undercut its 50-day MA over the past five days, the iShares Dow Jones US Real Estate Index ETF (IYR) has consolidated near its 52-week high and held support of its 10-day moving average. This demonstration of relative strength suggests that if the market reverses higher, IYR could be one of the first ETFs to set new highs. We will continue to monitor IYR for a possible long entry.
Since rebounding off support of its 50-day MA on July 3rd, the ProShares UltraShort Silver ETF (ZSL) has reclaimed support of the 20-day EMA and has been consolidating at this key mark for the past four sessions. A volume fueled move above the two day high of $70.90 could present a buy entry trigger for this ETF.
Our sole watchlist candidate, VWO, did not trigger yesterday but did consolidate at the two day lows. The setup remains intact. The intensity of the late session move suggests that institutions were in buy mode into the close. However, due of the lack of conviction in the market, we are inclined to remain cautious with respect to entering new positions.
We are now 100% in cash on the stock side, as we sold both CRAY and ONXX on the open. CRAY was closed for a $200 gain and ONXX for a $15 loss. We will continue to monitor both stocks for potential re-entry points.
VRSK has pulled back in orderly fashion and is an unofficial buy setup tomorrow above 50.14 with a stop of 49.05. The target is 5% above the entry point, which is just above a 2 to 1 reward to risk ratio. VRSK reports earnings on July 31 (that date is unconfirmed), so the setup has a few weeks to work out. Since it is an unoffical setup trade resultswill not be tracked.
Our scans did not turn up much in the way of clean setups, so we are content to sit in cash and wait for low risk entry points to develop.
If you are a new subscriber, please e-mail [email protected] with any questions regarding our trading strategy, money management, or how to make the most out of this report.
relative strength watchlist:
Our Relative Strength (or RS) Watchlist makes it easy for subscribers to import data into their own scanning software, such as Tradestation, Interactive Brokers, and TC2000. This list is comprised of the strongest 100 (or so) stocks in the market over the past six to 12 months. The scan is updated every Sunday, and this week’s RS Watchlist can be downloaded by logging in to the Members Area of our web site.