The Wagner Daily | September 3, 2004

Commentary:

Let me begin today’s newsletter by informing you that I am now the happy recipient of a successful LASIK eye surgery that has corrected my vision and eliminated the need for corrective lenses. However, it normally takes at least 24 – 48 hours in order for the recipient to be able to see anything in clear focus, regardless of distance. Therefore, today’s newsletter will be very brief because I cannot view any charts with clarity, nor the text I am typing. Fortunately, I can at least type very efficiently without looking at the keyboard. After the weekend, my vision should be fine and we will resume the usual format. Thank you for your understanding. Now, let’s talk about the markets a bit.

The major indices spent the first half of yesterday consolidating near their respective highs of the previous day, but a solid wave of buyers stepped in during the last afternoon and pushed the broad market above key resistance levels. The strength in the market was broad-based, as the S&P, Dow, and Nasdaq each closed approximately 1.25% higher. Unfortunately, the gains came without an increase over the previous day’s levels, although the buying volume in the afternoon was once again higher than the volume of the morning consolidation.

As you probably noticed, both the S&P 500 and Dow Jones Industrials rallied to close above their prior highs from August 27. Both indices also closed above their all-important 200-day moving averages. This means that both indices have now technically shifted from an intermediate-term downtrend to an uptrend because both a “higher low” and “higher high” have been established. Curiously, the broad market keeps crawling higher, even through pivotal resistance levels, without a strong increase in volume.

THe Nasdaq Composite also closed above its prior high from August 27. The index is now within striking distance of its 50-day moving average, but it still well below its 200-day MA. The Semiconductor (SOX) Index rallied nicely into yesterday’s close and was poised to break its multi-month downtrend. However, Intel came out after yesterday’s close and reported some rather negative figures in their mid-quarter report. It is my belief that the Semis rallied ahead of the Intel report in anticipation that Intel’s news would already be bad, but the Street did not expect things to be as bad as Intel says they are. Anyway, the report caused a 7% drop in INTC after the close, which will also negatively affect QQQ and SMH. The good news, however, is that we will know a lot about the current sentiment of the market based on how well the market accepts the news today. If we close below yesterday’s lows and give back the gains of the breakouts in the S&{ and Dow, this will be negative. But it will be equally bullish if the market brushes off the news and quickly recovers from the opening gap down.

Note that the U.S. equity markets are closed on Monday, September 6, in observance of the Labor Day holiday. As such, the Wagner Daily will not be published on that day. However, regular publication will resume on Tuesday, complete with an updated look at the new support and resistance levels in the broad market.

Today’s watch list:

There are no new trade setups for today, although we remain long QQQ.

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:

unrealized P/L = + $284

Notes:

We are long QQQ, but with tighter stop.

Edited by Deron Wagner,
MTG Founder and
President