Waiting for a bounce to short Gold stocks ($GDX)

market timing model: BUY

Current signal generated on close of November 13.

Portfolio exposure can be anywhere from 25% to 50% long. If positions are holding up well, then one can add exposure beyond 50%.

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

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ETF position notes:

  • Bought $TBT on the open.

stock position notes:

  • No trades were made. Canceled the $RCON long setup.

ETF, stock, and broad market commentary:

This week’s holiday schedule:


  • Wednesday Nov. 27 – Wednesday’s Q&A webinar is canceled.
  • Thursday, Nov. 28 – Market is closed.
  • Friday, Nov. 29 – Market closes early at 1 pm est.
  • Due to Friday’s early close, we will publish an abbreviated version of the Wagner Daily on Thursday night. There will be no commentary, but we will update the watchlist, open, and closed position sections.

In what was a pretty non-eventful day of trading, the broad based averages closed in mixed territory with minimal gains and losses. After a slightly higher open, stocks sold off in the final 90-minutes of trading to close near the lows of the day.

We continue to see relative strength stocks underperform the broad market. $QIHU, $YELP, $YY, $SIRO, $NOAH, $P, $SCTY, $SPWR, $FB, and $TSLA are in pullback mode and have yet to stabilize.

As mentioned yesterday, money continues to flow ino financials, and this appears to be the only sector with ETFs and stocks breaking out to new highs in numbers (with the exception of the biotech sector).

We established a short position in long-term bonds yesterday with a pullback buy in the ProShares UltraShort 20 year ETF ($TBT). $TBT pulled back into support of the 20-day EMA yesterday, and there is plenty of support in the $76 to $77 area (the 50-day MA is at $75.72).

Monday’s gap down in Market Vectors Gold Miners ETF ($GDX), produced a new 52-week low for the year. Gold stocks and gold have been incredibly weak in 2013, and we expect the trend to confine with at least one more selloff to test prior lows of 2008, around $18.

GDX new 52-week lows

We don’t like to establish a short entry when the price action breaks an obvious support level. Over the years, we have found these type of entries to produce quick reversals that “run the shorts out of town”.

For us, it is much safer to go short after a bounce into resistance, especially when the bounce produces some sort of reversal candle. For $GDX, a short-term bounce into resistance of the declining 20-day or 50-day MA would be ideal.

The only drawback to a “short the bounce” entry occurs when the price action is extremely weak and does not bounce. This will happen on occasion and there isn’t much we can do except stick to our game plan and wait for our type of setup to develop.

After a strong breakout from a long-term base, PowerShares Dynamic Food & Beverage ETF ($PBJ) is once again in base mode on the chart below.


$PBJ has formed a tight range above the rising 10-week MA the past few weeks. If possible, a pullback to support of the rising 10-day MA would be an ideal entry on weakness. However, the longer this consolidation takes to break out, the more out of sync it may be with the current rally.


We reduced our size a bit more on our two remaining stock setups, as $TMKR should not be sized the same as $EVR, which is an A rated stock breaking out to new highs. We canceled the $RCON setup due to the big gap down.

$SSTK remains in pretty good shape, but has yet to get going. We have a few buy setups on our internal watchlist, but it seems that there is very little reward right now for the risk of being long, and that is usually not a good sign.

$SSTK breakout


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