Commentary:
Despite weakness the previous afternoon, each of the major indices promptly recovered and turned in a solid performance yesterday. Strength in the Biotechs and Semiconductors enabled the Nasdaq to close 1.0% higher, its second best percentage gain in over a month. Both the S&P 500 and Dow Jones Industrials registered their fourth consecutive day of gains and each index also gained 0.6% on the day. The Medical and Pharmaceutical sectors remained among the better performers. Oil and Oil service sectors were among the weakest.
Unfortunately for the bulls, volume across the board was mixed. Total market volume in the NYSE increased over the previous day’s level, but only by 1%. Worse is the fact that yesterday’s solid 1% gain in the Nasdaq coincided with a 3% decrease in volume. We’ve been discussing it so much and don’t want to be redundant, but one important fact remains; the low volume levels on the “up” days continue to show us that institutions have just not been ready to rush into buying stocks. Nevertheless, yesterday’s broad-based gains were positive on a technical basis, as they enabled many of the major indices and sectors to rally above pivotal resistance levels. The big question is whether or not the bears will step in and quickly erode this week’s gains.
Taking an updated look at the Nasdaq daily chart, you will notice the index closed firmly above its 200-day MA “magnet” that we have been discussing and also closed at its highest price since March 15. This should enable the index to build a little momentum and attempt to have a decent follow-through rally sometime next week. However, resistance of the 50-day moving average is at 2,042, only 24 points above yesterday’s close. If you enter new positions on the long side of the Nasdaq, consider selling into strength or at least tightening your stops when the Nasdaq runs into its 50-day MA. Most likely, the bears will attempt to drive the index lower upon its first attempt to rally above its 50-day MA. The daily chart below illustrates the breakout above its recent consolidation, as well as resistance of the 50-day MA just overhead:
Today’s watch list:
PPH – Pharmaceutical HOLDR
Long
Trigger = 10 cents over high of first 20 minutes
Target = 77.60 (61.8% Fibo retracement of primary downtrend)
Stop = 71.80 (below yesterday’s low)
Notes = We were stalking PPH for entry yesterday, but it did not trigger. We still like the setup and are looking for possible entry today, but only if it trades over its 20-minute high. Complete explanation of trade setup is in yesterday’s Wagner Daily.
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:
-
IWM short (from April 1) –
shorted 121.79, stop 123.80, target 117.70, unrealized points = (0.90), unrealized P/L = ($90)
Notes:
No changes today.
Edited by Deron Wagner,
MTG Founder and
President