Ugly selloff in the market looks to be just a shakeout ($LNKD) ($KORS) ($TSLA) ($IYZ)

market timing model: Buy

Current signal generated on close of September 9.We are no longer in confirmed buy mode, but remain in buy mode (which is holding on by a thread). Portfolio exposure depends on how well positions have held up, but anywhere from 50% to 100% (if positions are in good shape) is okay.

Past signals:

    • 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. Click here to learn the best way to calculate your share size.
$todays watchlist

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closed positions:

open position summary

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ETF position notes:

  • Bought $HAO at the open.

stock position notes:

  • No trades were made.

ETF, stock, and broad market commentary:

After a nasty, two-day washout in stocks, the broad market averages gapped up significantly higher and closed the session with big gains of more than 2.0% across the board. Thursday’s big gap up and bullish close immediately puts all those who stopped out of positions this week in regret mode. However, now is not the time to be focused on what happened in the past, as we must focus on what is happening now. For traders struggling to make the right decision, it is okay to be wrong; however, it is never okay to stay wrong. So if you find yourself stopped out of a position that has made a u-turn and looks to be in good shape, go ahead and get back in if you can, even if you have to reduce your share size a bit to make it happen.

Thursday’s strong gap up was a bullish sign, and we could see a strong rally develop if the recent lows in the major averages hold up. Yesterday’s volume was lighter on both exchanges, preventing the day from being an accumulation day. However, with so many stocks changing hands the past few days, we clearly see that buyers were stepping in to accumulate leading stocks off the lows, and that is easy to see in $LNKD, $KORS, and $TSLA. Our market timing model remains in buy mode.

The monthly chart of iShares Dow Jones US Telecom ($IYZ) below shows a recent breakout above a significant resistance level at $26 earlier this year. Since then, the price action has chopped around in a tight range above the prior highs of the last base. A breakout above the recent range could spark a rally to or near the pior highs of 2007, around the $32-33 area.


The weekly chart shows a strong uptrend with several higher highs and higher lows in place, along with a rising 10-week and 40-week MA. We also see a bullish 3-month consolidation that has held above the rising 10-week MA, with the past few weeks really tightening up. That tightening action over a few weeks is typically what we look for in all basing patterns that we want to buy. We are placing $IYZ on today’s watchlist.


On the stock side, our remaining long positions are in pretty good shape. $SLCA has shown great relative strength the past few days. Because of this, we are canceling the tight stop that was in place and going with a wide stop for now. When a stock breaks out with strong price and volume action, it is a very bullish sign. We all may have the urge to lock in profits, but to make money in trading the focus must be on doing the right thing, and the money will eventually follow.

We feel that $LNKD, $KORS, $YELP, and $TSLA are the top dogs in this market right now and are must owns for institutions. We view this week’s shakeout action as a buying opportunity, with stops placed beneath this week’s low. Either these lows hold up, or the market will end up going much lower over the next few months.

$LNKD shakeout
$TSLA shakeout
$KORS shakeout

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