market timing model: (Confirmed) Buy
Current signal generated on close of September 9.We are now in confirmed buy mode, so portfolio exposure can be more than 100% if you have a marginable account. However, please make sure that current long positions in your portfolio are working before adding new ones. Portfolio exposure should be at least 75% to 100% (or more) right now.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
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.
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closed positions:
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ETF position notes:
- Canceled the $XLK buy setup in favor of $FXO.
stock position notes:
- $BLOX buy setup triggered.
ETF, stock, and broad market commentary:
The relative weakness in the S&P 500 and Dow Jones continued, as both averages failed to find traction last week and closed with a new swing low on Friday. The NASDAQ Composite and Russell 2000 closed out the week in positive fashion, still trading in a tight range near the swing high.
Volume picked up on the NYSE, producing a distribution day for the S&P 500. However, the selling was limited to the morning session, so the distribution was not severe.
Investor fears over a potential government shutdown has the S&P 500 futures trading about -0.8% lower as of this writing. So how will we handle the news? The answer is pretty simple, we ignore it. Yes, ignore it. During a bull market, there is usually a wall of worry to climb, and those who focus on headlines from popular financial sites are more likely to be shaken out of long positions, especially if they lack conviction in their trading system.
That isn’t to say we ignore all news, as we certainly pay close attention to earnings. But aside from earnings, we distance ourselves from Wall Street chatter by focusing on the price and volume action. Holding through a market pullback is never easy, but it isn’t our job to decide when the market rally is over. The market will tell us what to do through our stocks. If our positions hold up, then great. If not, then our stops will trigger, and we will eventually be forced into cash.
Our best performing long position on the ETF side is $TAN. The weekly chart below shows our first entry on a pullback to the rising 10-week MA, followed by an add on a breakout above the highs of a six-week long consolidation.
We are canceling the $XLK trade from Friday in favor of a bullish setup in the First Trust Financials AlphaDEX Fund ($FXO). $FXO has recently pulled back to the rising 50-day MA after stalling at the prior high. The 20-day EMA has just crossed above the 50-day MA, which is a positive sign, signaling that the current consolidation may be close to breaking out. This isn’t a guarantee, but the moving averages point to a positive shift in momentum over the past few weeks. The 200-day MA remains in a clear uptrend. We look for $FXO to chop around for a few more days or weeks above the 50-day MA, minus a few shakeout bars. As long as the price action holds above the 50-day MA, then it should eventually break the downtrend line and a move to new highs.
On the stock side, $BITA, $SLCA, $BDBD, and $XOOM may be headed for a big week IF these stocks can clear last week’s high. $BLOX triggered on Friday and moved out on strong price and volume action. We will look to add to the position in $BLOX over the next few weeks if a low risk entry point develops.
As mentioned above, $BITA could breakout this week, as it looks to be in great shape, consolidating in a tight range at the highs. Note the big pick up in volume. This stock should have enough energy to run to the $20 level or higher in a few weeks. Note the price action holding above the rising 10-week MA.
We have one new buy setup in $LNKD today, on a potential pullback to the 10-week MA. It may not happen, but it’s definitely worth a shot to keep a limit order out there just in case there is an unexpected pullback.
If you are new to trading or have had little success in the past, it is a great idea to get in the habit of planning the trade and trading the plan. Attempt to identify all potential outcomes before taking on a trade, because once the trade in on, there should be no surprises, as anything is possible. The idea is to worry before the trade and simply focus on executing the plan when you are in. Focus on the price and volume action rather than the money. This is key. If you do the right thing, the money will eventually follow.