Commentary:
Yesterday’s trading session was choppy, but the major indices each closed firmly higher. The S&P 500 Index gained 0.7%, while both the Dow Jones and Nasdaq Composite closed 0.8% higher yesterday. The gains of the Nasdaq, which often leads the S&P, were kept in check by continued weakness in the Semiconductor (SOX) Index, which lost another 1.1% after last Friday’s whacking. Volume in the NYSE increased by 31% to its highest level of the past two weeks, but still came in below average. Volume in the Nasdaq rose only 4% higher than the previous day. While we might have expected to see a bigger volume surge after the Labor Day holiday was concluded, many traders may have been waiting to hear Alan Greenspan’s testimony on Wednesday
As anticipated, the 200-day moving average acted as support on both the S&P 500 and Dow Jones yesterday. Both indices also closed at or just above last week’s highs, which means there is not much resistance going into today. The next primary resistance will be the upper channel of the downtrend line from the March 2004 highs, connected with June’s highs. However, this resistance is still quite a bit higher, so we will illustrate that trendline after the index gets a bit closer. For today, the bias remains to the positive side, especially since volume is beginning to increase a bit. However, any violation of yesterday’s lows will negate our current bias.
On the Nasdaq, continue to watch the 1,875 area as the next key resistance, as this marks convergence between last week’s highs and the 50-day moving average. Take a look:
Considering how weak the SOX has been over the past two days, the Nasdaq has actually held up quite well. As such, we feel it could easily push through that resistance IF we get a bounce in the semis. Nevertheless, we would not be long the semis here because there has not yet been any signs of bottoming or support being formed in that sector.
Today’s watch list:
There are no new trade setups for today, but we will send an intraday e-mail alert when/if we enter any new ETF swing trades today.
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 are now flat the ETFs.
Edited by Deron Wagner,
MTG Founder and
President