Commentary:
From an over sold condition from Monday’s close, the major averages
opened flat yesterday and quickly regained some ground. The advance was barely
tradeable, however, as there was little leadership and overall sectors were
mixed. The early session was characterized by some mild strength in
semiconductors and biotech issues, tempered with some serious weakness in the
retail sector. Whenever there is enormous divergence between different sectors
it can often cause the broad market to be choppy and difficult to trade on an
intraday basis.
As we have been alluding to over the last few days in
this report, traders are anxiously anticipating the FOMC decision on interest
rates which will happen today at 2:15pm. Generally when important news is
forthcoming, volatility tends to decrease and the markets tend to become range
bound as different factions decide which side they favor. The hourly chart below
of the $SPX shows the tightening of the range over the last few trading
sessions.
The blue trendlines which bookend the price action of the last
few sessions are creating a symmetrical triangle. The triangle pattern will
eventually narrow to a point and “snap” prices in either direction. Which
direction that is remains to be seen as the market is offering very little in
the way of clues as of late. One of the reasons for the erratic price action is
the clear lack of leadership in this market. You often hear the talking heads on
CNBC use this term “leadership” when discussing different sectors. It simply
means that when a market is trending, there should be one or two sectors that
lead the charge and show relative strength to all others, hence leading
the market. As of late we are seeing no clear breakouts on sector charts. The
banking and brokerage sectors (financials) are mired in a trading range, as is
the all important Philadelphia Semiconductor Index, or $SOX. If the
aforementioned sectors are not hitting on all cylinders, you cannot expect much
from the broad market as a whole. Financials are often used to check the “pulse”
of the broader market and the semiconductors are usually a leading sector for
the entire Nasdaq Composite. Without leadership from these key sectors, the
market will not get into gear. I have posted some charts of the aforementioned
sectors to illustrate the lack of direction.
Going forward, we expect overall market volume today to be
light as traders await the FOMC decision at 2:15pm. Most professional traders
will use this time to analyze strategies, catch up on their accounting, or just
rest before the new quarter begins on July 1st. Both the Wagner Daily and the
Intraday Real Time Room are flat going into today’s session and will not be
entering any new positions until Thursday.
Today’s watch list:
There are no
plays for today as we expect market action to be erratic ahead of the FOMC
decision today at 2:15pm.
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:
- (none)
Open Positions:
- (none)
Notes:
We shall remain in cash until July
1st.
Edited by Deron Wagner,
MTG Founder and
President