Sell Mode
– Timing model generated sell signal on close of April 3 (click here for more details)
today’s watchlist (potential trade entries):
Having trouble seeing the open positions graphic above? Click here to view it directly on your web browser instead.
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. Net P/L figures are based on two separate $50,000 model portfolios (one for ETFs and one for stocks). 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.
Having trouble seeing the open positions graphic above? Click here to view it directly on your web browser instead.
closed positions:
Having trouble seeing the closed positions graphic above? Click here to view it directly on your web browser instead.
ETF position notes:
- We will be buying UNG at market, five minutes after the open.
- OIH is a buy entry above last Friday’s high
- XOP stopped out last Friday
stock position notes:
- Sharp opening gap down caused $PRLB to hit its stop on the open.
- No new stock trade setups for today
ETF, stock, and broad market commentary:
Stocks suffered another round of distribution last Friday, but intraday strength helped to minimize the losses. The NASDAQ Composite was trading 1.7% lower on the open, but grinded higher to finish only 0.7% lower by the closing bell. Similar intraday price action was found in the S&P 500 and Dow Jones Industrial Average, which slipped 0.4% and 0.3% respectively.
Even though the broad market trimmed its losses intraday, turnover still jumped across the board. Total volume in the NYSE was 5% higher than the previous day’s level, while turnover in the NASDAQ swelled 10%. Since our market timing model has already been in “sell” mode since April 3, last Friday’s higher volume losses (“distribution day”) was not surprising.
In the April 2 issue of The Wagner Daily (review technical commentary here), we explained how to trade the “cup and handle” chart pattern. Specifically, we used the example of the United States Natural Gas Fund ($UNG), which was forming the “handle” portion of the pattern.
In our initial analysis, we said of the “handle” portion of the chart, “While forming, price action will typically slope lower. In the case of $UNG, even an ‘undercut’ of the March 25 low and 20-day exponential moving average would be acceptable.” Last Thursday, an “undercut” of the March 25 low and 20-day EMA is exactly what happened. The following day, $UNG jumped 4.5% and broke out above the high of its 3-week range. This is shown on the daily chart below:
Since this ETF closed only slightly above the highs of its range, it is not too far to buy near the current price level. As such, you will notice we have listed this trade setup as an “official” buy entry at market on today’s open. While not the perfect trigger price for buy entry, we don’t want to risk missing a potentially explosive move higher with this pattern.
One of the things we like about the $UNG trade setup is that it is a commodity ETF. Since our market timing model is in “sell” mode, most new long positions should be in ETFs and stocks with a low correlation to the direction of the broad market.
Another trade setup on our watchlist going into today is Oil Service HOLDR ($OIH). Last Friday, this ETF gapped down to “undercut” horizontal price support of its recent consolidation, but rallied sharply higher on an intraday basis and closed within the previous trading range. This is shown on the daily chart pattern of $OIH below:
When we see the type the price action that $OIH has demonstrated, whereby an obvious level of support is undercut and then quickly recovers, it typically leads to a higher price the following day. An “undercut” of support is bullish because it shakes out the “weak hands” who sell the position on the first break of support, which diminishes the amount of overhead supply the stock or ETF must overcome in order to move back up. The chart of $UNG above is a good example of this, as the ETF undercut the lows of its consolidation and its 20-day exponential moving average last Thursday, but then gapped sharply higher in the following day’s session.
As for the individual stock side, there are no new setups going into today. Although there are a few bullish stock charts that are still looking decent, we know the odds of upside follow-through are minimal when our market timing model is under “sell” mode. Conversely, the bullish intraday price action of the broad market last Friday has caused potential short setups to provide less than ideal reward-risk ratios as well.
relative strength combo watchlist:
Our Relative Strength Combo Watchlist makes it easy for subscribers to import data into their own scanning software, such as Tradestation, Interactive Brokers, and TC2000. This list is comprised of the strongest stocks (technically and fundamentally) in the market over the past six to 12 months. The scan is updated every Sunday, and this week’s RS Combo Watchlist can be downloaded by logging in to the Members Area of our web site.