market timing model: Neutral

Current signal generated on close of August 15.

Portfolio long exposure can be anywhere from 30%-50% if you just joined the letter, or up to 100% (if your stocks are holding up).

Past signals:

• Buy signal generated on close of July 11
• Neutral signal generated on close of July 5
• Sell signal generated on close of June 24

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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. 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.

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closed positions:

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ETF position notes:

• $IEO did not officially trigger due to 5-minute buy rule. Please note the new entry price above. Note that $TAN is a buy limit order, so if the open is less than or equal to 30.34 we will be filled. If the open is above 30.34 we will pass on the entry for now.

stock position notes:

• Note that $TQNT is a buy limit order, so if the open is less than or equal to 8.05 we will be filled. $BITA and $ONVO long setups triggered.

ETF, stock, and broad market commentary:

Stocks closed higher across the board on Thursday, but gains were limited to the 0.2% to 0.3% range (on lighter volume) in the major averages. The small cap Russell 2000 stalled just shy of the 50-day MA, while the S&P 500 closed about 10 points below the 50-day MA. The only major index trading above the 50-day MA is the NASDAQ Composite, which is now closing in on the downtrend line of the current consolidation. If the NASDAQ can clear the downtrend line on a pick up in volume, then we could see a move to new 52-week highs in a few days.

Taking a look at the weekly chart below, we see the NASDAQ forming a bull flag pattern. The run up off the lows in July created the flag pole, and the current sideways action is forming the flag. The tight consolidation has retraced less than 1/3 of the last wave up, which is what we like to see on bull flag patterns (should not retrace more than 33% to 38% of last move up). The pole was created in six weeks, so the breakout from the flag should go in 5-7 weeks (we are currently on week 5).

The relative strength line (not to be confused with relative strength index) is a simple tool that allows us to see how a stock/ETF is performing against the S&P 500. It is usually a bullish sign when the relative strength line outperforms the price action. In the chart below, the relative strength line broke out to new highs twice, while the NASDAQ continued to trend slightly lower. This is a clear sign of money rotating out of the S&P 500 and into the NASDAQ.

On the stock side, we bought $ONVO and $BITA yesterday. $BITA put in a strong price and volume advance, gaining 14% on a 300% increase in volume. $ONVO failed to move out, but is still very much in play.

We have two new setups tonight, one in $TQNT and the other in $SGMO. With $TQNT, we are placing a limit order slightly above Thursday’s close which should act as a market order if the price opens at our below our trigger. After an explosive gap up to new highs on big volume in late July, $TQNT has basically traded in a tight range above the 10-week MA on lighter volume. We look for a move to new 52-week highs within the next week or two.

With $SGMO, we are looking at a breakout on multiple time frames if it can clear $11. Our entry is over the two-day high (an early entry we are not buying the dead high of the base). We have a split stop in place, with half the position stopping out beneath the this week’s low on the weekly chart. The second stop is pretty wide, just below the swing low and 10-week MA (about 12% away).