The Wagner Daily


Yesterday’s market action was nearly a repeat of the previous day, as the S&P 500 and Nasdaq Composite again closed flat, but the Dow Jones Industrial Average lost 0.3%. For the second consecutive day, the S&P 500 also spent the entire day in an extremely narrow trading range of less than four points. Total market volume further declined in both exchanges, coming in 10% lighter in the NYSE and 7% below the previous day’s level in the Nasdaq. Volume in the NYSE was nearly 50% lower than its average level and was on par with the turnover typically associated with a holiday-shortened day of trading.

The stock markets are open for a full day of trading today, but we expect volume to come in even lower than yesterday’s levels. Many traders will likely leave their desks at mid-day, in preparation for New Year’s Eve celebrations. Therefore, there is no reason to aggressively look for new trade entries today. Likewise, nothing has really changed on a technical basis since our last analysis of the broad market. The volatility contraction of the past two days will probably lead to a strong move in either direction, but odds are good it won’t happen until next week. We’ll take a thorough look at support and resistance levels of the major indices on Monday, but consider sitting on the sidelines today. As always, make sure you keep protective stops on all open positions, even though not much action is expected.

Morpheus Trading Group offers a sincere thanks to all of you for your support and enthusiasm throughout 2004, and wishes you all the best of success in 2005!

Today’s watch list:

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

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:

    BBH long (HALF position, from Dec. 9) –
    bought 146.60, sold 153.70, points = + 7.10, net P/L = + $354

Open Positions:

    SMH long (from Dec. 29) –
    bought 33.17, stop 32.75, target 35.30, unrealized points = + 0.06, unrealized P/L = + $12


BBH hit our trailing stop yesterday, locking in a 7-point gain, but we remain long SMH.

Edited by Deron Wagner,
MTG Founder and