Strength in the energy sector ($TAN) ($IEO) ($USO)

market timing model: Neutral

Current signal generated on close of August 15.

Portfolio long exposure can be anywhere from 30%-50% if you just joined the letter, or up to 100% (if your stocks are holding up).

Past signals:

    • 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:

For the first time in a few weeks, the market finally showed some signs of life, led by the solid price and volume action in the NASDAQ Composite, which closed up 1.0% on a 12% increase in volume. The NASDAQ has has been the leading index during the current correction, holding strong above the 50-day MA, so it is no surprise that it is the first index to show true signs of accumulation. Although the S&P 500 climbed 0.8%, volume fell off the prior day’s pace by 11%.

We were disappointed by the light volume in the S&P 500, and felt that the NASDAQ could have followed through to the upside in the afternoon to produce a full trend day. But overall, Wednesday’s action was a step in the right direction for the market.

The energy sector has held up well during the market correction. With crude oil, solar, oil and gas exploration, and oil services all showing tight price action on the weekly chart. iShares U.S. Oil & Gas Exploration & Production ETF ($IEO) has been trading in a tight range for several weeks, just below the highs of the current base. On the weekly chart below, we see the price action tightening up while holding above the rising 10-week moving average. We placed $IEO on today’s watchlist, looking for a potential breakout to new 52-week highs within the next few days.


On the monthly chart, we see that $IEO is poised to clear the highs of 2011. If so, the next stop would be the highs of 2008, around $85. A target price of $85 gives us a solid reward to risk ratio of about 3 to 1.

$IEO breakout

On the stock side, we have two new setups added to the watchlist in $ONVO and $BITA. Both of these setups are not A rated, so we are looking at a 1-3 week holding period. We reduced the position sizing in $BITA due to the light volume.

After a big volume breakout above $5 in July, $ONVO has pulled back to the rising 10-week MA and has tightened up quite a bit the past few weeks.

$ONVO 10-week MA pullback

$ONVO successfully tested support at the 50-day MA last Friday, and has moved above the high of that candle the past two sessions. We would have liked to get in $ONVO on Tuesday over Friday’s high, but we missed the setup in our scans. Because the setup has basically triggered without us, we are placing a buy stop above Wednesday’s high and we are waiving the 5-minute rule. The gap rule will still apply, so if the open is higher than 1.3% above our trigger we will cancel the setup. Just to be clear, the 5-minute rule will not apply to the $ONVO entry.

$ONVO breakout

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