Commentary:

Like the previous day, the major indices closed flat to marginally higher last Friday, as the broad market continued to absorb its recent gains. The broad market spent all of Friday in a tight, sideways range, which was a correction by time that enabled the intraday moving averages to rise up and provide support to the major indices. When the market makes a big move in one direction too quickly, several days of sideways action is healthy because it enables the market to “catch its breath.” The Nasdaq closed flat on the day, while both the S&P 500 and Nasdaq Composite gained 0.2% on Friday. Volume declined by 8% in both the NYSE and Nasdaq, which is what you want to see on a consolidation day. Below is an hourly chart of the Nasdaq Composite that illustrates how the sideways action of the past two days has enabled the 20-period moving average to rise up to meet the price of the index:

The S&P and Nasdaq have not made much progress during the past two days, but they held onto their large gains from earlier last week. In last Friday’s newsletter, we illustrated how both the S&P 500 and Nasdaq were poised to break out above resistance of their primary downtrend lines. Based on last week’s closing prices, both indices actually did close above their downtrend lines, but we need another weekly close above the trendlines to confirm it. Tomorrow is Election Day, so we don’t expect a lot of action in the broad market ahead of the Presidential election. So, use caution until then and we will take a more thorough look at the technical picture after the passing of Election Day. For now, we remain long SMH (Semiconductor HOLDR), which has been consolidating at its highs for the past several days.

---

Today’s watch list:

There are no new plays for today, but we are now long SMH (Semiconductor HOLDR).

---

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 Oct. 28) –
bought 32.29, stop 31.30, target 35.90, unrealized points = + 0.06, unrealized P/L = + $18

Notes:

Still long SMH

Edited by Deron Wagner,
MTG Founder and
President