market timing model: BUY Signal generated on close of July 7
Building long exposure with a new rally potentially underway. Exposure can be in the 50 – 100% range or more, if one has held on to positions through the market pullback.
Note that the market timing model was not created to catch tops and bottoms in the S&P 500. The model was designed to keep our trades in line with the prevailing market trend. Buy signals (confirmed) are generated when the price and volume action of leading stocks and the major averages are in harmony. This means that we could potentially have a buy signal in a major market average, but if leading stocks are not forming bullish patterns, then we are forced to remain on the sidelines until patterns improve.
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.
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closed positions:
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position notes:
- No trades were made.
Small and mid-cap stocks followed through on Wednesday’s reversal candle with a solid +0.7% advance, which allowed the Russell 2000 and S&P 400 to join the Nasdaq and S&P 400 above the 10-day MA (on the daily chart).
We have two new setups on today’s watchlist in $LMAT and $LN, along with a few changes to the $OLLI and $RP setups.
Although we were looking to enter $RP on a pullback off the 50-day MA, Wednesday’s move off the 20-day EMA and break of the short-term downtrend line is a buy signal. The pick up in volume confirms the move.
$RP has a solid 91 EPS rating with five quarters in a row of +50% (quarter over quarter) EPS growth. We are placing a limit order above the prior day’s high which will simply act as a market order if Friday’s open is below our buy limit. We do this to guard against a bad fill from a morning gap up.
After clearing the prior swing high at $17 on heavy volume, $LMAT has chopped around in a tight range around the 10-day MA. We are looking for a break of the short-term downtrend line on a pick up in volume. The stop is placed below the 20-day EMA, minus some wiggle room.
$LMAT is solid fundamentally, with three quarters in a row of accelerating, quarter over quarter EPS growth, and a 44% 3-5 year growth rate.
The only knock on $LMAT is that it trades only 100k shares per day on average, so its volume is light. That being said, we are only taking a 5% position, so liquidity should not be an issue when going to execute the trade.
Note that the $OLLI buy limit has been raised following Thursday’s close above the prior day’s high on a pick up in volume. We are looking for an entry on a slight pullback from Thursday’s close. The add in $OLLI is small because we are just re-entering the 1.5% position we stopped out of earlier this month.
We will cover the $LN buy setup in Sunday night’s report.
This is an unofficial watchlist of potential setups for today’s session (trade results will not be monitored). This list is for experienced traders only who are looking for a few ideas. No targets will be listed. Please check for earnings before entering.
All stops are on a closing basis unless listed as a “hard” stop.
