market timing model: BUY

Current signal generated on close of November 13.

Portfolio exposure can be anywhere from 75 to 100% long. If positions are holding up well, then one can add exposure beyond 100% (for experienced traders only).

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):

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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.

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closed positions:

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ETF position notes:

• $FAS stop triggered for a 15% gain. $GURU sell stops triggered for a small gain.

stock position notes:

• Sold: TKMR +56%, AWAY +10%, TOWR +8.7%, THRM -7.8%, and SLCA -15.3%.

ETF, stock, and broad market commentary:

Stocks were hit hard on Monday with all major averages down at least 1.0% on the day. Most averages dropped 1.4% on the session and closed near the lows of the day.

Turnover increased on both exchanges, registering bearish distribution days in the S&P 500 and NASDAQ Composite. Monday’s selling was ugly but our timing model remains in buy mode. For the model to shift into sell mode, market averages must break the 50-day MA along with leadership stocks breaking key support levels.

As always, the key to our analysis is not to predict what is going to happen, but simply react to what is happening.

With the market selling off, let’s take a look at a key support levels in broad market ETFs. While looking at the charts below, keep in mind:

• During corrections, key support levels generally get undercut
• It is better to think of support as an area or zone rather than just a line
• We love to see reversal candles that substantively undercut key support levels.

S&P 500 ETF ($SPY) has support from prior highs at $181 and the 50-day moving averages at $180 (support zone 1). The prior swing low of December is the second support area.

Dow Jones 30 ETF ($DIA) has support from a prior swing high and 50-day MA around $160. The second level of support is from highs in September and October, along with a prior swing low in December around $157.

NASDAQ 100 ETF ($QQQ) is nearing support of the 50-day MA and prior swing lows at $85. The next support level is from the basing action in October and November at support zone 2 around $83.

Russell 2000 ETT ($IWM) closed at support from a prior high and the rising 20-day EMA. The next major support level is the 50-day MA at $112 and the prior swing low just below $110.

Financial ETF ($XLF) closed at support from a prior high and the rising 20-day EMA. The next zone of support is the 50-day MA at $21.35. The $21 area is significant, as there is support from a prior swing low in December and several months of prior highs from the last base that was formed from last July to last November.

We stopped out of our long position in $FAS yesterday below the two-day low, locking in a 15% gain. We stopped out of $GURU with a small gain and have a tight stop in $PIZ to prevent the trade from turning into a loss.

$SEA, $PKB, and $SOCL are still in pretty good shape, but $TBT, $DZZ, and $FCG are not looking too good right now.

On the stock side, we sold $TKMR into strength on the open, locking in a +50% gain (lots of luck there), but also stopped out of $SLCA with a -15% loss. That trade was a disappointment. We also sold $TOWR into strength to lock in a quick gain. $THRM stopped us out on the same day the setup triggered, which happens from time to time.

Note that we are selling half of $WDAY on the open to lock in some gains. We are also selling $MONT and $IRBT on Tuesday’s open to lock in gains as well. We now have a break-even stop in $SSNI due to yesterday’s reversal. Normally we would be more patient with this trade but earnings are due on Jan. 23.

The plan, as always, is to take profits when we can on non-core positions and hold on to the core positions as long as the timing model remains in buy mode.

Note:

For those not already in $LNKD, the $212 – $214 area is a decent level to get long using the stop in the open positions section.