Shipping ETF ($SEA) setting up for a bullish breakout

market timing model: BUY

Current signal generated on close of November 13.Portfolio exposure can be anywhere from 25% to 50% long. If positions are holding up well, then one can add exposure beyond 50%.Past signals:

    • Neutral signal generated on close of November 6.
    • 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

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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. 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:

  • No trades were made.

stock position notes:

  • $SSTK sell stop triggered.

ETF, stock, and broad market commentary:

The S&P 500 and Dow Jones closed with modest gains but continued to extend above recent breakout levels after a few months of relative weakness. All major averages look pretty good on the daily chart and have a decent shot of trending higher the rest of the year (though we could continue to see a few leadership stocks trend sideways for a few weeks). The Russell 2000 was the only index not to establish a new swing high last week, but the chart remains in good shape as it is holding above the 20-day EMA.

The Guggenheim Shipping ETF ($SEA) has formed a bullish, 8-week consolidation above the rising 10-week MA. We also see the base forming above the “dirty” uptrend lime in red. We call it a dirty uptrend line because there are a few lows on the weekly candles that dip below our trendline. Drawing a trendline for us is more about finding a line that makes sense on the chart, rather than some rule in a trading book. The only solid rule we have with a trendline is that it must have three touches to be considered valid. Until then, it is simply just a line that may or may not provide support.

$PALL bullish reversal candle

Volume eclined considerably during the base, which is a bullish sign. On the breakout around $18, $SEA started to attract some heavy buying interest, but once the rally stalls the the momentum traders usually want out. As the ETF consolidates in a range and more traders head for the exit, we then see the dry up in volume that usually precedes a bullish breakout.

We are monitoring $SEA for a low risk buy entry on a pullback.

ETFS Physical Palladium Shares ($PALL) printed a bullish reversal candles last Friday, after undercutting the 200 and 50-day moving averages.

$PALL bullish reversal candle

Last week’s selloff was on light volume, which was a bullish sign. When volume is light during a pullback we can expect the correction to be short lived and eventually find traction at a logical support area. If volume was well above average during the selloff, then the price action could easily melt through support, or bounce at support for a days and eventually go lower.

For those who missed our initial pullback entry at the 200-day MA last week, Friday’s bullish reversal candle offers a low risk entry point above 71.80.

We still have a buy stop order in place for $PALL above the downtrend line and current range high to add to our existing position.

$SSTK is back on our watchlist today after Friday’s bullish shakeout.

$SSTK bullish hammer reversal

The 5-minute rule is in effect for $SSTK and all other entries unless we state otherwise. Our entry is over last Friday’s high. The stop is placed below Friday’s low and the 50-day MA. Since $SSTK is not an A rated stock we are dropping the share size down to 33%. In the future, we will let you know when a stock is A rated, as sizing should be increased for these stocks.

$EVR remains on our buy list as it trades in a tight range at the highs.

$EVR breakout

The price action has been pretty tight the past three weeks, along with a big dry up in volume last week. EVR is an A rated stock for us, so it is sound fundamentally and technically, with a 96 EPS ranking and 87 RS ranking according to IBD.

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