A Breather or a Turning Point?
by Jerome "Mel" Hickerson
Stock futures were pointing higher before the open on the back of a turnaround in Europe and continuation of the earnings parade. We didn't have any economic data to review before the bell, but we received both the Consumer Confidence and Richmond Fed Manufacturing Indices at 10am.
The session began with a four point gap upward, put the high of the day on the chart just nine minutes in, and then proceeded to sell with a very brief pump right at 10am. The low of the day was put on the chart at 11:10and the rest of the day was mild choppy action trading within a narrow range.
Today’s selling was extremely mild in light of the recent explosion higher; in fact, the Dow even managed to close in positive territory today. Given that we’ve seen three successive 100+ days, today’s breather must be seen as a victory for the bulls.
But the breadth in the SPX, almost 2-to-1 negative, belies the one point index loss. As a result, we’ve moved our short-term signal to Sell, but we’ll watch this carefully. Another doji on the chart tomorrow won’t be surprising.
Today marked the fourth successive day of declining range; an NR7. This is often a clue of a topping process resulting in a large range day within a day or two. The index is overbought and nearing overhead resistance layers; this combination is often worthy of taking note of.
Our Nine Sectors report has been accurately calling short-term market trend changes. Tonight’s look at the Nine Sectors suggests an imminent trend change.
Not an easy day to day trade; an eleven point range is never easy. We managed some small gains and keep adding to our bottom line.
Wednesday, July 28
Economics
08:30 Durable Orders 1.25% cons.
08:30 Durable Orders ex- Transportation
10:30 Crude Inventories
02:00 Fed’s Beige Book
02:00 German CPI
03:50 Japan Retail Sales
Earnings
Before: ATI, APU, ANAD, MT, AVY, BRY, BA, CP, CMS, CCE, CMSCA, COP, CEG, GLW, CFE, D, EK, GD, HES, JNY, LAZ, ID, MSO, NEM, NYB, OSTK, PFCB, PX, QLTI, SEE, S, SU, UTHR, WAT, WYN
After: AATI, AKAM, ARII, ARRS, BMC, CBT, ELY, BEAT, CERN, CTXS, CTV, CALE, CML, DRC, WIRE, EFX, EQIX, RE, GMCR, HMN, HURN, IBRT, KALU, LOGM, NTRI, ORLY, OII, OI, FIRE, TSO, V, VPRT, WLL, WGOV
Auction
01:00 5-Yr Note Auction
Mel’s Missives from the Matrix:
- Total tick for the day was 40,000 and the average tick for the day was 26. There were 113 ticks greater than 600 and 76 ticks more extreme than -600. There were 5 ticks greater than 1000 and 1 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 11.17 points. The intraday trading range - 9:35 to the close - was 11.17. The 5 DMA of daily range is 16.52.
- Evidence of the intraday trend: At 10am volume was 118.8% of the 10 day average. By noon the volume was 116.03% of the 10 day average, and by 2pm volume was 110.96% of the 10 day average.
- The day's volume was 95% of the average daily volume for the last year. Volume was 102.6% of the last 10 day average and 122.7% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 10:00 and 10:15 when relative volume increased 34.3% while the SPX was dropping -0.24%. The largest drop in relative volume came between 10:15 and 10:30 when relative volume dropped -40.3% while the SPX was rising 0.19%.
- 18% of the SPX stocks closed with two day RSI above 90. 29% closed with RSI above 80. 6% closed with RSI below 20 and 2% closed with RSI below 10.
- 83.6% of the SPX are above their five day moving average, 83.6% are above their 10 day average, 85.8% are above their 20 day moving average, 70.4% are above their 50 day moving average, 44.6% are above their 100 day moving average, and 50.4% are above their 150 day moving average.
- 18% of the SPX closed above their most recent previous high.
- 21% of the SPX stocks closed below their most recent previous lows.
- 181 SPX issues advanced and 307 issues declined, a net SPX advance/decline of -126.
- Evidence of the intraday trend: At 10am, 28% of the SPX components were in the top half of the range. By noon, 21.4% were in the top half of the range, and by 2pm, 27.2% were in the top half of the range.
- 31% of stocks closed in the top half of the day's range. (68.8% closed in bottom half.)
- 6.8% of stocks closed in the top 10% of the day's range. 13% of stocks closed in the top 20% of the day's range.
- 13.6% of stocks closed in the bottom 10% of the day's range. 32% of stocks closed in the bottom 20% of the day's range.
- 10% of stocks closed within 2% of their 52 week high. 22% of stocks closed within 5% of their 52 week high.
- 78.2% of stocks closed within 50% of their 52 week low. 44.4% of stocks closed within 25% of their 52 week low.
- 10% of stocks closed within ¼% of their high for the day.
- 14.2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 52.6% of the SPX components were up since the open. By noon, 33.8% were up since the open, and by 2pm, 34.4% were up since the open.
- 35.4% of the SPX closed up from the previous close; 23.2% closed higher than the open.
- Sectors stronger than the SPX for Tuesday:
- Financials -- Outperformed the SPX by +38%.
- Technology -- Outperformed the SPX by +42%.
- Consumer Staples -- Outperformed the SPX by +48%.
- Utilities -- Outperformed the SPX by +157%.
- Health Care -- Outperformed the SPX by +21%.
- Sectors weaker than the SPX for Tuesday:
- Basic Materials -- Underperformed the SPX by -69%.
- Energy -- Underperformed the SPX by -39%.
- Industrials -- Underperformed the SPX by -57%.
- Consumer Discretionary -- Underperformed the SPX by -116%.
- The $SOX index strength was weaker relative to the SPX Tuesday by -0.81%.
- The XLF outperformed the SPX by 0.38% Tuesday.
- The 2 Day RSI of the SPX is 83. The Dow RSI is 92, the NASDAQ is 71 and the Russell is 78.
- Over the last four sessions, the average session closed 78.62% of the range above the low. Tuesday closed at 35.7% of the daily range.
- Upside momentum decreased Tuesday, from Monday’s 5.05 to today’s 3.02. The ratio of SPX components giving a crossover sell signal compared to buy signals increased slightly to B 8.41 to 1.
- The ISEE Equity 10 day moving average Tuesday was 162.6. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 192 SPX components moved upward and 163 components downward during the after hours with 132 million shares traded.
Trade 'em well on Wednesday everyone!
-Mel
