The Wagner Daily | November 25, 2005

Commentary:

The S&P and Nasdaq registered their sixth consecutive day of gains on Wednesday, despite a bearish reversal in the late afternoon. Both indices gained 0.3% for the day, although each index was showing an intraday gain of more than twice that amount before the selloff that started in the final ninety minutes of trading. The Dow Jones Industrials similarly advanced 0.4%, but the small-cap Russell 2000 Index only eked out a gain of 0.1%. The S&P Midcap 400 Index closed 0.2% higher. Even though the major indices continued their winning streak, the selling in the final ninety minutes was a change from the strength we have been seeing in a majority of recent late afternoon sessions. Broad market weakness into the close often leads to selling pressure the next day, particularly if the late afternoon selloff occurred after numerous days of gains.

Not surprisingly, total volume in the NYSE declined by 17% on Wednesday, while volume in the Nasdaq came in 15% lower than the previous day’s level. The drop in turnover put both exchanges below their 50-day average volume levels, but this is to be expected on the day preceding a major holiday. Nevertheless, market internals were positive across the board. Most likely, total volume levels will be proportionately lighter in today’s holiday-shortened session that finishes at 1:00 pm EST.

Because today’s session is wedged between Thanksgiving Day and the weekend, the U.S. equities markets will close at 1:00 pm EST. Holiday-shortened trading sessions usually suffer from minimal institutional activity, which in turn can make the market choppy and indecisive. As such, we are advising against entering any new positions today, both on the long and short side of the markets. Instead, watch the how market reacts to Wednesday afternoon’s weakness and whether or not it follows through to the downside. If you are already long, be sure to trail your stops tightly to protect your gains in the event of a correction, just as we have done with our stop on the remaining shares of GLD (Gold Trust). We will take an updated look at the primary support and resistance levels of the major indices in Monday’s newsletter, but your best bet for now is to patiently wait for new opportunities to present themselves next week, after institutions return to the scene.

Today’s Watchlist:

Due to the holiday-shortened session, there are no new setups for today. We will look for new ETF trade setups in the beginning of next week.

Daily Performance Report:

Below is an overview of all open positions, as well as a performance report on all positions that were closed only since the previous day’s newsletter. Net P/L figures are based on the $50,000 Wagner Daily model account size. Changes to open positions since the previous report are listed in red text below:

Open positions (coming into today):

stop 48.23

unrealized P/L = + $1,085

TLT long (500 shares from Nov. 16 entry) –
bought 89.87, stop 89.55, target 92.15, unrealized points = + 0.31, unrealized P/L = + $155

Closed positions (since last report):

Current equity exposure ($100,000 max. buying power):

$69,665

Notes:

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here for glossary and explanation of terms used in The Wagner Daily

Click here to view MTG’s past performance results (updated monthly).

Edited by Deron Wagner,
MTG Founder and
Head Trader