market timing model:

Buy
– Signal generated on the close of April 30

We are now in confirmed buy mode, which means that we can go on margin if needed.

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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. Net P/L figures are based a $100,000 model portfolio. 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:

• Stops for partial share size in $SMH and $TAN triggered on the open. Please note the new share size in the open positions section. We plan to sell $EIDO on the open.

stock position notes:

• No trades were made.

ETF, stock, and broad market commentary:

Market volatility has picked up the past two days, with Tuesday’s gap up followed by Wednesday’s gap down. Despite the weak start, stocks rallied in the afternoon to close in the upper half of the day’s range. Volume increased on both exchanges, producing a distribution day for both the S&P 500 and Nasdaq, which were down 0.7% and 0.6% respectively. Although volume did pick up, the averages did not close at the lows of the day, indicating that buyers were stepping in on weakness (and that is a positive).

Our ETF scans have not produced much in the way of actionable setups as of late, with most markets still extended in the short-term and in need of a few more weeks of consolidation. Market Vectors Vietnam ETF ($VNM) is a good example of this, as it needs another week or two of sideways action (above $20) to produce a low risk buy setup.

After an ugly selloff in 2011, $VNM is beginning to build momentum to the upside with the 50-day MA crossing above the 200-day MA in January. Since finding support at the the rising 200-day MA in late April, $VNM has broken the downtrend line of the consolidation and reclaimed the 50-day MA. Note that the 20-day EMA is now back above the 50-day MA. The 50-day MA should eventually begin to trend higher as long as the price action holds above $20. There is no actionable setup right now, but we will continue to monitor the price action.

After breaking out to new highs in May, iShares Dow Jones Transportation Average ($IYT) has pulled back to the 20-day EMA. We view the 20-day EMA as a line in the sand on new breakouts. If the 20-day EMA holds, then the uptrend should resume shortly. If the 20-day EMA does not hold, then the odds begin to favor a longer consolidation.

If $IYT breaks the 20-day EMA, then we could see a touch of the 10-week MA (on weekly chart) around $111. It is way to soon to say it is a buy at the 10-week MA, but if the price action dips to that level and holds we may be able to grab a low risk entry point.

We are selling $EIDO at market on the open for a scratch loss or gain (depending on the open). We do not like the false breakout action, so we are simply raising some cash and will look to move the money into a setup that has more potential.

With $PFPT pushing higher, we are trailing a tight stop beneath the two-day low, which is also below the 20-period EMA on the hourly chart. We also have a split stop in $SNSS in case it fails to hold yesterday’s low.

On the stock side, our scans are holding up quite well. There may not be a ton of actionable setups right now, but stocks are building bullish bases. For example, Angie’s List – $ANGI is holding in a tight range and may only need another week of consolidation before it is ready to run higher.

Other names to watch are: $PRLB $URI $DDD $CHUY $KORS $Z $NOW $LNKD $AMGN $WDAY. Some smaller cap issues are: $EPAM $RPXC $ECTY $LGND $SCMP $AMRI $CLDX

It is crucial to watch leading stocks and try to ignore the financial media sites, as they tend to start calling tops every time a market rally takes a short-term break.