Commentary:

The broad market spent yesterday trading in a choppy and narrow range and the major indices closed with mixed results. A 0.7% gain in the Semiconductor Index ($SOX) enabled the Nasdaq to close 0.1% higher, but the S&P 500 lost 0.2%. The Dow was off 0.1%. Like the previous day, stocks saw selling pressure during the final hour, but the indices managed to close above their intraday lows. Semis and a few other sectors showed signs of life, while Biotechs and Oil stocks took a rest; it was an uneventful day overall. The lackluster day was confirmed by the S&P’s tight intraday range of only 5 points.

Total volume in the NYSE fell by 1%, but volume in the Nasdaq was 10% higher than the previous day. This divergence in volume was positive because both the S&P and Dow closed lower, but the Nasdaq closed higher yesterday. We continue to see most of the broad market’s “up” days occur on higher volume, while the “down” days are consistently coming in on lighter volume. Even though price movement in the major indices has been minimal over the past few weeks, no bearish warning signs have been triggered from our daily analysis of the relationship between the broad market’s price and volume.

The Nasdaq Composite once again attempted to break out above resistance of its 2,100 level, but was unable to do so. Nevertheless, the weekly chart still looks great and is still showing a bullish “cup and handle” chart pattern being formed. Short-term support levels in the Nasdaq continue to be: 2,074 (20-day moving avg.), 2,053 (low of June), and 2,025 (200-day moving avg.). The pullback in the S&P was minor and the index remained within the range of the past several days. Support on the S&P is between the 1,200 to 1,205 range. The Dow also retraced only slightly and is still holding above its prior resistance level (new support) around the 10,570 area.

Because the indices are still consolidating last month’s gains by trading in a sideways range, it is more beneficial to look at the longer-term weekly charts instead of the choppy daily charts. The weekly charts show you the “big picture” of what is happening and remove much of the noise that is associated with trading ranges. If you are able to mentally separate the short and longer-term charts, it will help you to sit through the choppiness in anticipation of eventual breakouts. Of course, stops are needed in case the pattern fails. The Nasdaq will eventually break out of its range, but there’s no sense to aggressively enter new positions until it does.

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Today’s Watchlist:

There are no new trade setups for today, as we are now long three ETF positions (BBH, SMH, and PPH).

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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:

BBH long (from June 16) –
bought 167.95, stop 165.10, target (new highs, will trail stop), unrealized points = + 1.55, unrealized P/L = + $155

PPH long (from June 7) –
bought 74.56, stop 73.60, target 79.60, unrealized points = + 0.55, unrealized P/L = + $55

SMH long (from June 1) –
bought 34.82, stop 32.10, target 44.90, unrealized points = (0.32), unrealized P/L = ($96)

Notes:

No changes to the open positions above.

Edited by Deron Wagner,
MTG Founder and
President