Categories: The Wagner Daily

Potential breakout in Retail ETF ($XRT)

 
market timing model: Buy

Current signal generated on close of September 9.We are no longer in confirmed buy mode, but remain in buy mode. Portfolio exposure depends on how well positions have held up, but anywhere from 50% to 100% (if positions are in good shape) is okay. Anything less than 50% long exposure right now is too light.

Past signals:

    • 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. Click here to learn the best way to calculate your share size.

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


closed positions:

Having trouble seeing the closed positions graphic above? Click here to view it directly on your web browser instead.

ETF position notes:

  • Note that the 5-minute rule and 1.3% gap rule will not apply to $XRT entry because the price action already triggered an entry over the two-day high yesterday.

stock position notes:

  • No trades were made.



ETF, stock, and broad market commentary:

Stocks rallied on higher volume with strong gains across the board, lifting the small cap Russell 2000, NASDAQ Composite, and S&P Midcap 400 to new highs. Although the S&P 500 did not set a new high, it is firmly back above the 50-day MA, and with yesterday’s 1.4% advance on higher volume, we now have confirmation that the market is following through to the upside.

Our buy entry in $IYZ last week followed through yesterday, with a close above the prior swing high of 9/19. Existing long entries in $PHO and $PPA are also in good shape, as they are consolidating in a tight range above the 20-day EMA.

SPDR S&P Retail ETF ($XRT) has formed a bullish, 11-week consolidation, with most of the action holding above the rising 10-week MA. Last week’s bullish reversal candle on a pick up in volume is a clear sign of support. We look for $XRT to breakout to new highs within the next few weeks.

On the daily chart of $XRT below, we see that the 20-day EMA has crossed above the 50-day MA and the 200-day MA is in a strong uptrend. There is a higher swing low within the base which was created by last week’s undercut of the 50-day MA. Yesterday, the price action cleared the two-day high on a pick up in volume. We are placing $XRT on today’s watchlist. Trade details can be found above.

On the stock side, our buy limit order in $HIMX remains live (note the slight change to the entry price and position size). We have two new buy setups on today’s watchlist. The first is in $SFUN, as we are looking for a breakout from a tight-ranged consolidation over the past few days.

Although we would prefer the action to pull back in for a day or two to the 20-day EMA, we can’t pass on the trade if it does move out from here without further weakness, so….

We are placing a buy stop above the hourly range, with a very tight protective stop about 3.5% from the entry. If the setup fails, then the odds favor a deeper pullback, so we would rather exit the position and look to re-enter at a slightly lower price if/when the action settles down. The tight stop in $SFUN basically makes it a GONG (go-or-no-go) setup, so we shouldn’t have to wait very long to find out if we are wrong (which is why our share size is reduced).

$URI was also added to the watchlist. We are looking for a move to new highs tomorrow. We would actually prefer a slight gap up in price, and that is why we are waiving the 5-minute and 1.3% gap rules. Our stop is just below this week’s low, which is about 8% away.

Deron Wagner

Deron Wagner is a professional trader, author of several ETF trading books, and the Founder of Morpheus Trading Group. Since 2002, he has been sharing his proven swing trading strategy with thousands of traders around the world. He has appeared on CNBC, ABC, and Yahoo! Finance Vision television networks, and is a frequent guest speaker at various global investing conferences.

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Deron Wagner

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