P 500 Testing Key Support Levels ($SPY)

market timing model:

– Signal generated on the close of April 18 (click here for more details)

today’s watchlist (potential trade entries):

$todays watchlist
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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. Net P/L figures are based a $100,000 model portfolio. 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.

$todays watchlistHaving trouble seeing the open positions graphic above? Click here to view it directly on your web browser instead.

closed positions:

open position summary
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ETF position notes:

  • No trades were made. $THD did not officially trigger due to the 5-minute rule (see user guide for explanation). Please see the updated buy entry price in the watchlist section above.

stock position notes:

  • $KKD hit our stop and we are out. $LNKD hit our break-even stop for partial size (20 shares). We still have 50 shares remaining with the original stop.

ETF, stock, and broad market commentary:

Stocks continued to sell off on Thursday with tech stocks getting hit the hardest. The Nasdaq Composite sold off -1.2% while most averages closed in the -0.6% to -0.7% range. The Nasdaq sliced through its 50-day moving average, joining the Russell 2000 and S&P Midcap 400.

The S&P 500 closed just below (but not a decisive break of) its 50-day moving average yesterday after undercutting prior swing lows at the 1538-1539 support level:


The 50-day moving average is a very important support level during a rally, as it is basically the line in the sand for the bulls. When the major averages all break the 50-day MA within a few days of each other it is usually a good time to raise cash and sit on the sidelines.

The evidence below suggests that the market is now in a corrective phase, which forces our timing model in to sell mode:

  • There are at least 5-6 distribution days in the market (strike 1)
  • Most major averages are trading below the 50-day MA (strike 2) – we do not count the Dow
  • Leading stocks are beginning to break down below key support levels (strike 3)

How long will a correction last? No one knows, but there are some clues to watch out for. Can leading stocks that have recently broken down find support and stabilize? There is a big difference between leading stocks pulling back 15-20% off a swing high vs. breaking down and selling off 40% or more. If most stocks hold above or around the 50-day MA and fall no more than 20-25% or so off the swing highs, then we would expect any correction in the S&P 500 to be limited to 4-6%.

As for current holdings in the model portfolio, we are down to 2 stock and 2 ETF positions. $SMH has held above the prior swing low but it was unable to reclaim the 50-day MA, so it is still vulnerable to further selling. $UNG is in pretty good shape after Thursday’s strong advance. The weekly chart below shows Natural Gas pulling away from the breakout pivot, which is always a bullish sign.


$UNG appears to be holding a steep uptrend line (black dotted line), while the 10-week MA (in teal) is beginning to pull away from the 40-week MA (in orange) after the bullish crossover a few weeks ago.

The bottom fell out of $KKD yesterday, as it triggered our stop just below the 50-day MA. The pattern itself was fine but the timing was off. $CLDX followed through on Wednesday’s solid move with a breakout and close at new highs on volume that was 100% greater than average. We now have the stop just below the low of 4/17 for the full position.

$LNKD stopped us out of partial size (20 shares) at break-even. We do not mind holding this A rated stock through a corrective phase in the market as long as our stop is not triggered. If the price action can remain above the 10-week MA, then we may be able to hold through earnings in early May and potentially catch the next big wave up.

$LNKD pullback to 10ma

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

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