market timing model:
Neutral – Signal generated on the close of August 2 (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:
- Stopped out of OIH.
stock position notes:
- No trades were made.
ETF and broad market commentary:
Equities posted small to modest gains yesterday on light trade. The DJIA, S&P 500 and Nasdaq all set three month highs however. All five major indices closed up on the day. The Nasdaq and the small-cap Russell 2000 showed the most strength yesterday, as both tacked on 0.7%. The S&P MidCap 400 posted a 0.5% gain, while both the Dow Jones Industrial Average and the S&P 500 struggled to close 0.2% higher.
Market internals closed mixed for a second consecutive day. Turnover slid across the board. The NYSE saw trade drop by 15.2% and the Nasdaq by 11.8%. Advancing volume once again held the upper hand on Monday. The spread ratio ended the session at a plus 2.0 to 1 on the NYSE and a plus 3.5 to 1 on the Nasdaq. However, institutional players appeared to have little interest in buying stocks, as evidenced by yesterday’s light volume.
The iShares MSCI Mexico Investable Market ETF (EWW) has shown excellent relative strength since gapping up in June of this year. During this time it has been consolidating along its 20-day EMA, as it has set a sequence of higher-lows. EWW offers a potential buy entry on a pullback and undercut of its 10-day or 20-day moving average. As always, we will be watching for the formation of a reversal candle as the pivot for a potential buy entry.
We were stopped out of our short position in OIH yesterday. This ETF could still provide a shorting opportunity as it has formed two hesitation candles and volume has been declining in the past two trading sessions. The S&P MidCap 400 and the small-cap Russell 2000 continue to lag the other indices. Neither index has been able to crack their most recent swing highs and still remain well below their three month highs. This lack of price confirmation, combined with weak volume in the broad market over the past two sessions, suggests that we should remain cautious with respect to entering new positions. For this reason, we have been quite particular with respect to the trades that we enter. There are times when it pays to be cautious and when your focus should be on preserving capital. Trading is fun, but we don’t trade for enjoyment. We trade to make money. This market has had a penchant for retracing its steps significantly since early June of this year.
ONXX has pulled back to the 20-day EMA after breaking out from a tight ranged consolidation on July 20. It is an unofficial buy entry over Monday’s reversal candle high with a stop beneath the reversal candle low. ONXX is a bit out of sync with the market…. as the S&P broke out to new swing highs (this week) ONXX pulled back to support. This could mean that ONXX is simply marching to the beat of its own drum and could possibly rally even if the market comes in a bit over the next few days.
We haven’t seen many high quality buy setups in our scans as of late. Setups govern our trading, so when there are plenty of setups to be found our confidence is high and we want to be on margin. When we are unable to locate solid setups we become extremely cautious and wait for conditions to improve.
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relative strength combo watchlist:
Our Relative Strength Combo 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 stocks (technically and fundamentally) in the market over the past six to 12 months. The scan is updated every Sunday, and this week’s RS Combo Watchlist can be downloaded by logging in to the Members Area of our web site.