The real estate sector is in trouble ($IYR)

market timing model: Buy

Current signal generated on close of September 9.Portfolio exposure can be anywhere from 70% to 100% long or more, meaning that conditions are strong enough to be on margin.

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):

$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. 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.
$todays watchlist

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closed positions:

open position summary

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ETF position notes:

  • No trades were made.

stock position notes:

  • No trades were made.

ETF, stock, and broad market commentary:

The broad market averages chopped around in a tight range all session and basically closed flat on the day. Turnover was light on both exchanges, so not much to write about, but not every day is important on Wall Street.

Our scans have not turned up much in the way of actionable buy setups the past few days, which makes sense, as most averages are overbought in the short-term and could use a week or two of consolidation. However, as we have seen all year, overbought averages can continue to push higher longer than anyone expects. Our focus remains on the price and volume patterns of individual stocks and ETFs, not on the major averages (once the market is in trend mode). So the short-term plan is to remain patient and wait for new buy setups to emerge.

SPDR S&P Pharmaceuticals ($XPH) has led the market higher all year, and so far little has changed, as it continues to trend higher above the 50-day MA. The price has lost a bit of momentum the past few weeks, as $XPH looks to be forming a late stage base at the highs. A late stage base is one that can easily move higher because there is so much momentum on the weekly and daily charts, but this sort of base is better suited for the agile swing trader rather than intermediate-term position trader, as the trend might not have much left in the tank.

$XPH may need a another week or two of consolidation around $78 after last Friday’s false breakout attempt. We typically see false breakouts pull back in for three to five days before reversing higher, but if the market pulls back in off the highs, then we could see a deeper pullback to the 50-day MA at $77.


We continue to monitor a potential short setup that is developing in iShares Dow Jones US Real Estate ($IYR). The nasty breakdown on big volume in May and June was the first major sign that the real estate sector was in big trouble. The bounce off the lows in July that stalled at the declining 10-week MA produced a lower high, which was another clue. The following selloff in August broke the prior swing low, signaling that a potential trend reversal was under way. A rally or over-cut of the 40-week MA (in orange) should provide an excellent shorting opportunity, as the price action should not climb back above the lower highs established in July. The setup is not actionable right now.


With the market extended in the short-term, it is important for traders to maintain discipline and avoid chasing buy entries. Chasing entries all over the place can lead to ugly losses in a hurry if one is too aggressive at the wrong time. As always, focus on individual setups and not the market.

For those who missed our first buy entry in $TSLA, yesterday’s selloff offers a low risk entry at the rising 50-day MA. This is especially true if the price action opens slightly lower on Tuesday, but immediately reverses higher within the first 30-minutes of trading. For those initiating a position tomorrow, our current protective stop in $TSLA can be found in the open positions section above.

$TSLA pullback to 50mad

Please note that we will be sending an abbreviated version of the Wagner Daily on the night of October 24 for the Friday, October 25 session. In this version, we will only update the open positions section. The chat room will be closed on Friday as well.

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