Commentary:
The broad market closed higher yesterday, led by strength in the Nasdaq, building on the gains of the rally that began on March 25. It was yet another choppy and non-trending day that made it challenging for intraday trading, but each of the major indices closed in the green. The Nasdaq closed with a gain of 1.0% yesterday, the S&P closed 0.5% higher, while the Dow lagged behind and only closed 0.2% higher. Although it began the day strong, total market volume in the NYSE tailed off throughout the day and closed near the same level as the previous day. Volume in the Nasdaq closed with a marginal 2% increase over the previous day. While the gains were encouraging for the bulls, volume was less encouraging and remained below average levels.
The Nasdaq Composite closed at 2,015 yesterday, which means it cleared the “psychologically important” resistance level of 2,000, which acted as resistance the previous day. The break of the 2,000 level also means the index broke out and closed above the upper channel of its primary downtrend line, which had been in place since January 26. The daily chart of the Nasdaq below illustrates this break of trendline resistance:
The break of trendline resistance is bullish, assuming it holds, but we need to see the return of institutional buying in order for the break out to be sustained. Based on recent volume numbers, this has not been the case. So, the break of the primary downtrend line causes us to be less bearish, but it is difficult to get excited about the long side of the market here until we begin to see increases in volume that would confirm the return of institutional interest. Since prior resistance becomes the new support level once the resistance is broken, expect the 2,000 price level to now act as support. On the upside, resistance will be found at the 2,020 to 2,025 levels, which represents resistance of the 10 and 200-week moving averages respectively.
Have you seen the strength in the gold and silver mining stocks lately? Since we brought that sector to your attention at the beginning of the week, the sector has moved steadily higher. Spot gold and silver futures set new 52-week highs yesterday, and the mining stocks followed along. Hopefully some of you took advantage of the breakout in the Gold Sector ($GOX) when we pointed it out to you a few days ago. The daily chart below illustrates the breakout in the index:
The S&P 500 Index broke resistance of its prior highs from mid-March yesterday, but has now run into resistance of its 50-day moving average. Since the 50-day MA is such a closely watched level, it is unlikely the index will blast through its 50-day MA on the first attempt, but keep an eye on this level regardless. The chart below illustrates the 50-day MA resistance level:
Some highly anticipated employment data will be released at 8:30 am EST today and is likely to have a big effect on the direction of the market today. If the futures make a big move that causes a large opening gap, remember to use the MTG Opening Gap Rules before jumping in new positions because the rules will reduce the risk of you buying a failed gap that instantly reverses.
Today’s watch list:
Due to the expected volatility of today’s employment data, there are no new trade setups for today. As always, we will send an e-mail alert if we enter any new ETF swing positions.
Daily Reality Report:
Below is Morpheus Trading Group’s daily
performance report of closed trades and an update on all open positions from The
Wagner Daily (Intraday Real-Time Room trades are reported separately in The
Wagner Weekly). Net P/L figures are based on the quantity of shares represented
in the MTG
Position Sizing Model.
Closed Positions:
-
DIA short (from April 1) –
shorted 103.66, covered 104.34, points = (0.68), net P/L = ($142)
Open Positions:
-
(none)
Notes:
Per intraday e-mail alert, we short DIA yesterday morning when it showed relative weakness, but were stopped out (by only 2 cents) later in the day. The SPY short setup was cancelled. Intraday trading conditions have been choppy lately, which caused our second consecutive day of getting stopped out by only pennies. Use caution with new trade entries until market begins to trend a little smoother.
Edited by
Deron Wagner,
MTG
Founder and President