In keeping with the tradition of broad market strength ahead of the Thanksgiving holiday, most of the major indices notched a round of modest gains in Wednesday's session. After grinding higher throughout the lethargic session, the S&P 500 rose 0.5%. The Nasdaq Composite and Dow Jones Industrial Average both advanced 0.3%. Mid-caps showed a bit of relative strength, enabling the S&P Midcap 400 to gain 0.7%. However, the small-cap Russell 2000 lagged with a closing loss of 0.1%. The S&P 500 closed near its best level of the day, while the rest of the main stock market indexes settled in the upper third of their intraday ranges. Not surprisingly, volume in both exchanges was sharply lower ahead of the holiday.

Going into the shortened Black Friday session, it may be a much busier day than would otherwise be expected. If you haven't yet seen the news, Dubai World, a state-run conglomerate with interests of more than 60 billion dollars, has just announced a six-month halt to all debt repayment. The news sparked fears of a sovereign default, causing European markets to plunge, while the U.S. markets were closed for the holiday.

Frankly, a decent correction from lofty levels of the present would be good for the longer-term health of the markets. However, when the correction is driven by news such as this, panic selling often sets in, causing the distribution to be less than orderly. Fortunately, we're short the Regional Bank HOLDR (RKH), which is likely to be under pressure on Friday. Though we obviously had no way of knowing about the Dubai World news, financials have been showing relative weakness for weeks. Goldman Sachs (GS), a barometer for the S&P 500, has been selling off for the past two weeks, and is already testing its October 2009 low. A break of that low in Friday's session could weigh quite heavily on the S&P. We'll have an updated market outlook on Monday, after seeing how stocks fare in Friday's shortened session.

NOTE: As per our holiday schedule, this November 27 issue of The Wagner Daily is very brief, primarily giving an open position recap at the bottom, along with a shortened commentary section. Regular publication will resume on Monday, November 30. Enjoy the holiday with your friends and family.

Open ETF positions:

Long - FCG, DAG (only 1/4 position size)
Short (including inversely correlated "short ETFs") - RKH, TWM

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.