market timing model: SELL

 Current signal generated on close of Feb. 3.

Portfolio exposure can be anywhere from 0% to 60% long (or more), depending on how open positions have held up.

Past signals:

Neutral signal generated on close of January 24.

• Buy signal generated on close of November 13
• Buy signal generated on close of September 9
• Neutral signal generated on close of August 15
• Buy signal generated on close of July 11
• Neutral signal generated on close of July 5
• Sell signal generated on close of June 24

 (click here for more details) 

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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ETF position notes:

• No trades were made. Canceled buy stop in $DZZ for now.

stock position notes:

• $FB buy entry triggered. Lowered stop in $WDAY back down to the swing low.

ETF, stock, and broad market commentary:

Stocks ripped higher to close out the week, highlighted by the Nasdaq Composite and Nasdaq 100 reclaiming the 50-day moving average.

All major averages were up at least 1.0% on the day, with the Nasdaq Composite posting a 1.7% gain on higher volume, producing the first bullish accumulation day in several weeks. The S&P 500 failed once again to print an accumulation day as volume ticked lower on the NYSE.

Friday’s accumulation and close above the 50-day MA was a step in the right direction for the Nasdaq. However, the Nasdaq must now hold above the 50-day MA this week and avoid printing more distribution days.

We continue to monitor $TAN for a buy point, but the current pattern could use another week or two of consolidation to provide a reliable entry. We are also looking to add to $UNG if the action can tighten up above the 20-day EMA.

On the short side we are watching Brazil ETF ($EWZ) for a potential short entry on a bounce into resistance of the declining 50-day MA and trendline, which could be around $42 (if it gets there).

With $EWZ breaking down below the critical $42 support level a few weeks ago, a test of this level could be an ideal spot for a short. We are monitoring the action for a wide ranged, bearish reversal candle to form at resistance.

Rather than short $EWZ, if a quality entry point develops, then we will look to establish a long position in the inverted UltraShort Brazil ETF ($BZQ). For those who are not familiar with inverted ETFs, they allow us to short the market by going long.

Tech stocks continue to hold this market up, as the S&P 500 and Dow remain clear laggards. The big question is can the current bounce lead to a new highs in the Nasdaq? This question can’t be answered until we see more evidence in the form of improved volume patterns with a swing low in place. Until then, the odds suggest that the market will remain range-bound.

On the stock side, we added to our position in $FB on Friday’s continuation breakout, which closed near the highs on higher volume.

After selling off on the open from earnings, $LNKD managed to hold the $200 level and close near the highs of the session. It is now do or die mode for $LNKD, as a close below the current base low could send the action down to the $170 – $180 area in short order.

There isn’t much to do right now other than to hold on to core positions and wait for more evidence to come in. For those who have been trading actively on the long side for a year or more, this might be a good time to trade less or focus on higher quality stocks.

Note: The combo watchlist was updated as of 2/10/14.