--> Twitter Is A Momentum Trade On Breakout Above Downtrend Line ($TWTR)

Twitter Is A Momentum Trade On Breakout Above Downtrend Line ($TWTR)

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

(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.

$todays watchlist
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closed positions:

open position summary
Having trouble seeing the closed positions graphic above? Click here to view it directly on your web browser instead.
ETF position notes:

  • No trades were made.

stock position notes:

  • Sold 1/2 of $WDAY on the open. Sold all of $IRBT and $MONT on the open.

ETF, stock, and broad market commentary:Note to new subscribers:

If you have recently signed up for our newsletter, then you will notice that there are quite a few open positions, with many of them in the money. The best way to approach establishing long exposure is to simply start small and build on success.

For example, if you have room for a maximum of 8 stocks/ETFs in your portfolio, it is best to establish 2-3 new positions (20-40% of portfolio value). If these positions move in the money fairly quickly, then you can add a few more.

One should never dive right into the market by establishing full exposure in just a few days. This is more along the lines of operating out of fear of missing a move, and one should never operate out of fear in the market. Take it slow and build on success!

Stocks put in an impressive reversal yesterday, especially tech stocks, as the NASDAQ Composite and NASDAQ 100 closed above Monday’s high, gaining 1.7% and 1.9% respectively. The S&P 500 did not clear Monday’s high but still managed a solid 1.1% gain.

Although the price action was strong, turnover did not confirm the move as volume was off Monday’s pace on the NYSE and NASDAQ.

Traders in the bear camp may see Tuesday’s light volume reaction to Monday’s heavy distribution as a big negative. While we would have liked for volume to tick higher, our internal watchlist responded well, led by a monster reversal day in $TSLA, which closed up 15% on more than double its average volume.

Tuesday’s reversal should serve as a strong reminder for all traders to “plan the trade and trade the plan”. Having the courage to buy at the right time can solve many issues, as those who buy late are usually headed for the exit at the first sign of trouble. Traders who buy at the right time and follow a plan are usually in a much better position to deal with an ugly shakeout day or two in the market.

We added one new buy setup to tonight’s watchlist in SPDR S&P World ex-US ETF ($GWL). $GWL has been in consolidation mode since mid-October, but has recently set a higher low within the base with the past two weeks of tight action above the 50-day MA.

The tight price action in January, which is just below the highs of the base is very bullish and should lead to a breakout within the next week or two. Note that the 20-day EMA has crossed above the 50-day MA, which is also a sign that the consolidation is close to ending.

$GWL BREAKOUT ENTRY  

The price action continues to tighten up in PowerShares Dynamic Food & Beverage ETF ($PBJ), which has been on our official watchlist the past few days. The weekly chart below shows the tight action over the past three and a half weeks, with the closing action above the 10-week MA.

$PBJ BREAKOUT ENTRY Note how the weekly volume has died down since the summer when $PBJ was in trend mode. The dry up in volume indicates that traders have forgotten about $PBJ because it hasn’t gone anywhere in quite some time. The light volume and tight price action should eventually give way to a breakout with increased volatility and higher volume.

On the stock side, we sold the remaining half position of $MONT for a 25% gain, and also sold half of $WDAY for a 7% gain. $IRBT was also closed on the open with an 11% gain.

$TSLA’s monster move gives our stop some much needed breathing room. Although we would like to add to the position, there isn’t much to do right now but wait for the price action to settle down.

Two new setups on today’s watchlist. The first, $BSPM (no chart) has recently broke a long-term weekly downtrend line and has been consolidating in a tight range since a wild move to $3.50. The action has settled down nicely and looks poised to resume its uptrend in short order.

The next setup is in the recent IPO $TWTR. We like the price action on the hourly chart (bit of an inverted head and shoulders). We are looking for a move back above the 20-day EMA, which if attracts decent buying volume could lead to a break of the dirty downtrend line drawn on the chart below. This is an early entry, so we are only going with 25% size. If the pattern continues to develop then we will look to add to the position. We do not expect the price action to move to new highs right away….there should be a few more weeks of consolidation.

$TWTR DOWNTREND LINE BREAKOUT

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