Commentary:
Yesterday’s market action was typical of the type of trading we usually see each year during the Summer doldrums. The S&P 500 Index traded in a very narrow four-point range throughout the day and closed unchanged. The Dow Jones Industrial Average was equally boring and closed with a loss of 0.1%. The Nasdaq Composite Index showed a bit of relative weakness and closed 0.4% lower, but that’s not bad considering its 1.3% gain the previous day. As we often see on narrow-range days, volume declined by 14% in the NYSE, while volume in the Nasdaq was 10% lower than the previous day. Curiously, yesterday was the lightest volume day of the year for both the NYSE and Nasdaq. Because the market has been rallying on such light volume during the past several weeks, it will be be quite interesting to see what happens when the institutional money returns to the markets and volume picks up after Labor Day.
Since the broad market was so dull yesterday, nothing really changes from a technical point of view as we enter today. Rather than being redundant and discussing support and resistance levels to watch going into today, we recommend you simply review yesterday’s newsletter instead. The same support and resistance levels we have discussed over the past two days are in effect for today. In summary, just keep in mind that the S&P 500 has resistance of its 50-day MA and its prior high from July, while the 200-day MA is just a few points overhead. With volume remaining so light, it is unlikely the index will push through that resistance, but there are no clear signals that indicate it is time to short either. Concentrate your efforts on individual sectors that are showing relative strength or weakness to the broad market, as you will have a better risk/reward than trading the broad-based ETFs like SPY, DIA, or QQQ. We’ll look at the longer-term weekly charts in the beginning of next week, after we see how this week closes.
Today’s watch list:
There are no new trades for today, as volume is too light to give us any clear, confirmed signals.
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:
-
SMH long (from Aug. 25) –
bought 30.16, stop 29.49, unrealized points = (0.26), unrealized P/L = ($78)
Notes:
We remain long SMH from the Aug. 25 entry.
Edited by Deron Wagner,
MTG Founder and
President