Commentary:

The major indices each closed higher on Wednesday’s pre-holiday session, but, as expected, volume dropped significantly. The Nasdaq Composite, which gained 0.9%, showed the most relative strength because the index gapped open above its high of the previous day, then trended higher throughout the day. But both the S&P 500 and Dow Jones Industrial Average lagged behind and only closed 0.4% and 0.3% higher respectively. Unlike the Nasdaq, both the S&P and Dow traded in a very choppy, sideways pattern throughout the entire day. As such, all the gains in both those indices were the result of opening gap ups. Not surprisingly, total market volume in both the NYSE and Nasdaq came in approximately 20% lighter than the previous day’s levels. Volume typically dries up on the day preceding a mid-week holiday, so we cannot read too much into the volume levels.

Like Wednesday, we expect volume to be light today, as many traders will be absent from their desks until Monday. Furthermore, both the NYSE and Nasdaq close at 1:00 pm EST today, so the shortened session will also result in lighter volume. As we said a few days ago, we recommend caution with regard to entering new positions until after the weekend. The real direction of the market’s next short-term move is probably not going to be known until Monday. Because of this, we are keeping today’s analysis brief and will re-assess the broad market’s charts in Monday’s newsletter.

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Today’s watch list:

There are no new plays for today, although we remain short SPY and DIA.

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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:

DIA short (from Nov. 23) –
shorted 104.65, stop 105.75, target 102.45, unrealized points = (0.38), unrealized P/L = ($76)

SPY short (from Nov. 23) –
shorted 117.87, new stop is 10 cents above the 20-minute high, target 116.10, unrealized points = (0.57), unrealized P/L = ($114)

Notes:

Because SPY is going to open within a few pennies of our stop price, we are using the MTG Opening Gap Rules to adjust the stop to 10 cents above the high of the first 20 minutes.

Edited by Deron Wagner,
MTG Founder and
President