market timing model:

Buy – Signal generated on the close of December 31 (click here for more details)

 

today’s watchlist (potential trade entries):

Having trouble seeing the open positions graphic above? Click here to view it directly on your web browser instead.

 

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 on two separate $50,000 model portfolios (one for ETFs and one for stocks). 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:

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:

• $RYL back on the watchlist.

 

Commentary and charts:

Stocks sold off late in the day, erasing all morning gains and closing in negative territory. The good news is that the losses were contained to the -0.3 to -0.5% range and volume was lighter on both the NYSE and Nasdaq. If the averages would have closed down 1% or more on higher volume and near the bottom of the day’s range, then that would have been a clear sign of stalling action and cause for concern. But Thursday’s light volume retreat is normal action after such an explosive two-day advance in the market.

With the market avoiding distribution on Thursday, we continue to receive solid feedback from the price and volume action and see no reason to expect the current move out to fail. That being said, we try to keep it simple and shy away from predictions. Anything can happen in trading. Our goal has always been to react to price action rather than to predict.

Please note the changes to the $XHB buy setup in the watchlist section above, as our entry price is now just above the high of January 1. We have one new setup added to today’s watchlist in $EWS.

iShares MSCI Singapore Index ($EWS) has been in consolidation mode since mid-September. After finding support at the 200-day MA and rallying to but stalling at the prior high, the price action has pulled back to the rising 20-day EMA. We look always look for price action to tighten up within the base (this a bullish sign) and $EWS has done that over the past few weeks. $EWS may need another week or two of sideways action before it is ready to breakout, but if broad market conditions continue to improve this setup may be ready to trigger within the next few days. Please see the watchlist section above for trade details.

$RYL is back on our watchlist as a buy stop. $LULU is our only position that has not held up well, but Thursday’s recovery off the lows was an improvement. We’d like to see the price action clear Thursday’s high and head back to the $78.00 level. $CRM sold off on lighter volume and should be fine as long as it holds above $166.00. Our stop remains the same. $RAX also sold off on slightly lighter volume, but we look for the rising 20-period EMA on the hourly chart to provide support. When we mention a certain moving average providing support, we do not mean that the stock will sell off to and not break below the moving average. That is an unrealistic expectation. We usually see some sort of undercut or quick shakeout below the moving average which is then followed by a sharp recovery back above.

If you are a new subscriber, please e-mail rick@morpheustrading.com with any questions regarding our trading strategy, money management, or how to make the most out of this report.

 

relative strength combo watchlist:

Our Relative Strength Combo Watchlist makes it easy for subscribers to import data into their own scanning software, such as Tradestation, Interactive Brokers, and TC2000. This list is comprised of the strongest stocks (technically and fundamentally) in the market over the past six to 12 months. The scan is updated every Sunday, and this week’s RS Combo Watchlist can be downloaded by logging in to the Members Area of our web site.