market timing model:
Buy – Signal generated on the close of July 27 (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:
- Cancelled EW and AFFY setups.
ETF and broad market commentary:
Stocks slid lower on Tuesday, as they traded in a tight range for a second consecutive day. Trade was strong, as all the major indices closed near session lows. The S&P MidCap 400 put in the worst performance on the day. By the closing bell, the mid-cap index had shed 0.7%. The small-cap Russell 2000 fell 0.6%, while the Dow Jones Industrial Average and the S&P 500 dropped 0.5% and 0.4% respectively. The Nasdaq showed relative strength by containing losses to a moderate 0.2% yesterday.
Market internals were bearish yesterday. Declining volume held the upper hand on the day, as it outpaced advancing volume by a ratio of 1.9 to 1 on the NYSE and 1.6 to 1 on the Nasdaq. Volume spiked by 20.3% on the Nasdaq and 18.7% on the NYSE. The NYSE posted a distribution day yesterday, as a result of its weak price action and higher volume. Despite the higher volume, the Nasdaq narrowly escaped a distribution as it contained losses to less than 0.3%.
Yesterday, the Direxion Daily Gold Miners 3x Bear ETF (DUST) formed a bullish reversal candle as it undercut its 50-day MA and the two day low, but rallied to close near session highs. Further, this inverse ETF touched and held support of its uptrend line. A volume assisted move above yesterday’s high of $51.04 could present a buy entry trigger for DUST.
After testing the three day high yesterday, the Market Vectors Oil Services ETF (OIH) reversed to close near session lows. A loss of support at the three day low of $38.89 could present a shorting opportunity in this ETF. We are placing OIH on the watchlist. Trade details are posted in the watchlist section of the newsletter.
Yesterday’s distribution on the NYSE and S&P 500 cast some shadow over the recent move higher. Although it was not a significant price move, we would prefer to see light volume on any moves lower. Despite the fact that Nasdaq held its ground yesterday, we wouldn’t be surprised to see a reasonable pullback from current levels, as there are a number of sectors running into key resistance.
We have seen a mixed reaction to earnings the past two weeks with some stocks ripping higher and others breaking down below support. There isn’t a whole lot to get excited about within our universe of stocks. Although we have valid basing patterns there are very few low risk entry points to be found (EW is an example of this). We may be just a week or two away from better setups IF the market avoids distribution. However, with yesterday’s heavy selling we are one distribution day away from shifting the model back to neutral.
We are monitoring ONXX for a buy entry off support of the rising 10-day MA. Ideally, we would like to see an undercut of the 10-day MA during the day with a strong afternoon close. This is not an official setup.
Note: We have replaced the Relative Strength watchlist with the Relative Strength Combo watchlist. This new list combines strong price action with top fundamentals to produce ideal candidates on the long side. Stocks that make this are NOT an automatic buy. Each pattern must be examined for a low risk entry point before any action is taken. The number of stocks on this watchlist will vary depending on market conditions. This list is not a recommendation to buy.
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 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.