Pullback entries in Solar and Semis ($TAN) ($SMH)

market timing model:

– Signal generated on the close of April 30

We are now in confirmed buy mode, which means that we can go on margin if needed.

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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 watchlist

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closed positions:

open position summary

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ETF position notes:

  • Cancelled the $TAO buy setup for now. We will continue to monitor the action for a low risk point to add.

stock position notes:

  • Stopped out of $NOW for a $600 loss. Stopped out of $UA for a $750 gain.

ETF, stock, and broad market commentary:

The market will be closed on Monday, May 27. As such, the Wagner Daily will not be published on that day, but normal publication will resume on Tuesday, May 28. Enjoy the long weekend!

After an ugly gap down on the open, stocks battled back all session and closed slightly negative on the day. The small-cap Russell 2000 was the only average to close in positive territory at +0.2%, but overall, the bounce off the morning low was a good sign for the bulls.

Rather than predicting when a trend will end or how much the market will pull back during a correction, we try to keep it simple by focusing on the price action of leading stocks and ETFs. The idea is not to predict market action, but to react to it. So if leading stocks bounce back next week and/or hold key support levels, then we have to assume the market is still healthy and will eventually head higher after a short break. If those same leading stocks begin to break down below the 50-day MA with wide candles and big volume, then the market could potentially be headed for a deeper correction.

Our pullback buy limit orders in $TAN and $SMH triggered on the open and reversed higher to close in the money. The plan is to keep the stops on both positions loose for one more day and adjust them over the long weekend.

$TAN held support of the 10-day MA, which is where stocks or ETFs will often find support in a very strong uptrend.

$TAN pullback entry

Along with the 10-day MA, there is support from the rising 20-day EMA and short-term uptrend line around $22.

After stalling out near the prior swing high on Wednesday, Guggenheim China Real Estate ($TAO) opened below the 20-day EMA, right at our previous entry point on 5/1. For the setup to remain bullish in the short-term, $TAO should hold above the rising 50-day MA and uptrend line. A break of these levels would indicate that the setup needs more time to consolidate. Note that we raised the stop in $TAO yesterday.

$TAO pullback

On the stock side, we stopped out of $NOW, but took profits in $UA on the open. $AMBA and $SLCA recovered off the lows of the day and are in decent shape.

We have one new setup added to today’s watchlist in Proofpoint, Inc. – $PFPT. $PFPT is a recent IPO from last April that has broken out to new highs on a big spike in volume. After breaking out, the price action has been consolidating in a tight range the past few weeks. The steep uptrend line is just below our entry and should provide support on any pullback.

$PFPT Breakout

On the daily chart below, we see that $PFPT has broken the downtrend line of the consolidation and is testing the highs of the range. Our buy entry is over yesterday’s high with a stop beneath the low of 5/16.

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