The Wagner Daily

market timing model:

– Timing model back to buy mode as of the close of April 10, with S&P 500 and Nasdaq breaking out on big volume. (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. 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.

$todays watchlistHaving trouble seeing the open positions graphic above? Click here to view it directly on your web browser instead.

closed positions:

open position summary
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ETF position notes:

  • $SMH buy limit triggered.

stock position notes:

  • $ATHN buy setup cancelled. Please note that the $SLCA setup is a buy limit order.

ETF, stock, and broad market commentary:

Stocks capped an impressive week of gains with a relatively quiet session last Friday. The major indices opened near unchanged levels, dipped lower in the morning, then recovered to close the session flat to modestly lower. Turnover eased across the board, which was a positive indication that the bulls were merely taking a rest. For the week, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all jumped sharply higher and finished at fresh multi-year highs. The small-cap Russell 2000 and S&P Midcap 400 indices remain just below their mid-March highs.

As we frequently remind subscribers, we are always much more focused on the performance of leading stocks and ETFs than the price action of the major indices. In a healthy market, equities with relative strength will continue higher, even when the broad market takes a rest. Last Friday, five of our seven open positions moved higher, even though not a single one of the main stock market indexes closed in positive territory. Furthermore, we are finally starting to see follow-through in our ETF and stock picks. Presently, all seven of our open positions (3 ETFs and 4 stocks) are showing unrealized gains and are technically well positioned to climb higher in the coming days.

In the March 18 issue of The Wagner Daily (see recap of commentary on this blog post), we said, “The impressive, long-term uptrend in gold (from 2005 to 2011) appears to be reaching an end. Since forming an all-time high in September 2011, SPDR Gold Trust ($GLD), a popular ETF proxy for the spot gold commodity, has merely been oscillating in a sideways range. However, it appears that a definitive move lower may be on the horizon in the coming weeks.”

That “definitive move lower” occurred last Friday, as $GLD plunged 4.7% and sliced through a major level of horizontal price support.

For the past year and a half, $GLD had merely been oscillating in a range, near its all-time highs. However, the ETF formed several “lower highs” during this time, while firmly holding pivotal horizontal price support at the $150 level. This led to the creation of a descending triangle chart pattern during that time, which may have started to follow-through to the downside.

On the annotated weekly chart of $GLD below, notice the descending triangle pattern that preceded last Friday’s breakdown below key horizontal price support:

$GLD descending triangle chart pattern

In our original analysis of this pattern nearly a month ago, we said we were stalking $GLD to enter a new short position (or buy a “short ETF”). Ideally, we were prepared to enter a short position if $GLD bounced into key resistance of its 50-day moving average, which would have provided us with a low-risk entry point with a very positive reward-risk ratio. But $GLD remained so weak that it never happened.

Our second scenario was to sell short $GLD if/when it simply broke down below the obvious and very important level of support at the $150 area. Now that this second scenario has occurred, $GLD definitely has our attention as a possible short entry in the coming days. Since it is a commodity ETF with low correlation to the direction of the broad market, it is of minimal concern that our market timing model is presently in “buy” mode.

Nevertheless, it is CRUCIAL to understand that we rarely enter stocks or ETFs on the short side as they break down below obvious levels of support. Instead, we prefer to wait for the first subsequent bounce into new resistance of the prior support level (prior support always becomes new resistance after the support is broken). Then, we wait for the first bearish bar that forms after the bounce (big gap down or significant intraday decline). As such, our anticipated short entry in $GLD is now a bounce to near the $150 level that is followed by the first bearish price action that follows. For a more detailed overview of our short selling strategy for stocks and ETFs that are breaking down, check out this educational article on our blog. As always, we will notify subscribers if/when $GLD provides us with the ideal, low-risk entry point for a new position.

We have a few new setups on today’s watchlist. $SLCA and $AMBA are both A rated stocks like $LNKD. How do we rate a stock? If a stock has a solid base, top relative strength ranking, and big earnings, then it is A rated. For example, $SCTY is a B+ because is lacks earnings, but has great relative strength and a very bullish pattern. It is a very solid setup, but not top notch. Our goal is to stuff the portfolio with as many A rated setups as we can find with a few B setups sprinkled in.

Hopefully $SLCA can pull back to the 50-day one more time before taking off. $SLCA is volatile, which makes buying a potential breakout above 24.50 tough to do because our stop would be around 15% to the swing low.


$SLCA has formed a bullish 5-week base above the 50-day moving average. The quick shakeout below the 50-day MA from 4/3 to 4/5 was bullish, as the price action returned above the 50-MA after undercutting the prior swing low on 3/15. $SLCA reports earnings on 4/30. If the price action breaks out ahead of earnings and we have a decent profit buffer of 10% or more, then we may decide to hold through the report.

$ATHN was removed from the watchlist for now. We are adding to an existing position in $KKD over the high of 4/11, with a tight stop on the shares we are adding only.

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.

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