A Dragon-fly Doji on the Chart
by Jerome "Mel" Hickerson
Overnight, Spain's auction of 3.5 billion Euros in 10- and 30-year bonds was well received, which produced a rally in Europe. However the weekly jobless claims numbers caused stock futures to pull back before the open. The Consumer Price Index for May fell by -0.2%, which was in line the consensus for a drop of -0.2% and higher than April’s reading of -0.1%. The Labor Department reported that initial claims for unemployment insurance for the week ending June 12th rose by 12,000 to 472K. The week’s total was a above the Reuters consensus for a reading of 450K. Continuing Claims for unemployment for the week ending June 5th were also above consensus at 4.571M vs. expectations for 4.470M. U.S. futures pointed to a modestly up open.
The session opened with a small gap upward before quickly descending into negative territory. 10am data from the Philadelphia Fed was not good and the market responded by moving down eight points to put the low of the day on the chart at 11:03. The SPX then began a two wave lazy ascent that took it through 2pm. From 2pm until about 3:30 the index fell seven points (which seemed large within the context of an eleven point trading range session). But at 3:30 the index surged and continued into the close to close back where the session began.
I wrote last night that I expected weakness today. But in spite of plenty of bad news today, the market shrugged it off to close with a strong finish. Despite being long at the close, I was still surprised by the strength shown.
I remain short-term bullish simply because my rules require that. But today’s SPX chart bar is a bit worrisome. It may simply be consolidation after the recent up move. But the two back-to-back dojis also suggest that the market is indecisive. I have believed for some time that we would find ourselves range bound and this daily chart pattern looks like a possible topping pattern.
Market breadth today was not impressive. The NYSE advance/decline ratio was basically flat but the declining volume was 1.5 to 1 over advancing volume. This shouldn’t be ignored; the strength today may have been a façade. I think tomorrow will tell us.
Day Trade Systems Update: (Signals today)
* GDX Short at: 10:11
* GDX Short at: 10:28
* SSO at: 10:58
* GDX Short at: 11:42
* SDS at: 12:01
* GDX Short at: 12:15
* GDX Short at: 12:37
* SSO at: 1:05
* GDX Short at: 1:35
* GDX Short at: 2:10
* SDS at: 2:16
* SSO at: 2:48
* GDX at: 3:20
Our trade systems kept us busy today. We were focused on ProShares Ultra S&P500 ETF (SSO), ProShares Ultrashort S&P500 ETF (SDS), and our personal gold mine, Market Vectors Gold Miners (GDX). Trading within an eleven point range is not easy and today was pretty typical. I’ve often observed that the systems perform better with at least a 12-14 point range. While we took a few losses and suffered some whipsaw, we ended the day in pretty good shape.
SPX Summary for Thursday, June 17, 2010
250 Advancers/237 Decliners
Today's SPX component winners and losers:
- Largest one day loser is BBBY with -7.58%
- Largest three day loser is GME with -11.56%
- Largest five day loser is DHR with -48.47%
- Largest ten day loser is DHR with -50.21%
- Largest one day winner is MTB with 8.93%
- Largest three day winner is MTB with 15.13%
- Largest five day winner is TER with 14.30%
- Largest ten day winner is ESV with 15.06%
*** SPX Technical Summary ***
The lowest 14 day RSI component is DHR; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 53.
The greatest positive five day momentum component is TER; the greatest negative five day momentum component is DHR. The average five day momentum of all 500 components is 2.89.
51.80% of the SPX components are giving a crossover Buy signal; 2.40% of the SPX components are giving a Sell signal. This is a 21.6 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 14 components.
- From Buy to Neutral: 7 components.
- From Neutral to Sell: 0 components.
- From Neutral to Buy: 25 components.
We continue to see movement to the positive side.
The moving averages:
Close 1116.04
9 EMA 1113.98 Falling
5 DMA 1105.41 Rising
10 DMA 1084.69 Rising
20 DMA 1084.31 Rising
50 DMA 1140.52 Falling
100 DMA 1133.03 Rising
200 DMA 1109.56 Rising
10 Wk MA 1129.64 Rising
NYSE Summary
On the NYSE 3181 issues were traded with 1525 advancing issues and 1545 retreating issues, a ratio of 1.01 to 1 declining. There were 57 new highs and 9 new lows.
Declining volume was higher at a ratio of 1.53 to 1. The closing TRIN was 1.51 and the final tick was 197.
Evidence of trend:
Relative to the previous 30 session average, volume was -25.65% below the average. Of the last 15 sessions 3 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 16 sessions ended on a positive tick, 9 of last 10.
The 5 day moving average of New Highs is 42 while the 5 day moving average of new lows is 12 and the 10 day moving average of Net Advancing is 289. The Net Advancing data indicates a bullish trend.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line decreased from 205670 to 205650. This -0.01% decrease came while the SPX was gaining 0.13%. The 10 day moving ratio of positive volume is 1.07 and the 10 day moving Advance/Decline ratio is 1.21. The 10 day moving ratio of positive volume has trended -0.39 over the last three days and the 10 day moving Advance/Decline ratio has trended -0.32 over the last three days.
The NYSE Composite Index gained 0.09% today.
NYSE Statistics:
Absolute Breadth Index: 59.68 down from previous day of 60.48
Cumulative Volume Index: 48,997.09 down from previous day of 50,537.79
High Low Logic Index: 0.36 down from previous day of 0.39
McClellan Oscillator: 185.53 down from previous day of 209.05
McClellan 10 DMA: 56.21 up from previous day of 38.27
McClellan Summation Index: (1,143.35) up from previous day of (1,328.88)
% Stocks Above 200 DMA: 59.93 down from previous day of 60.21
% Stocks Above 40 DMA: 44.96 up from previous day of 42.31
New High / New Low Ratio: 87.88 up from previous day of 71.25
26wk New High/Low Ratio: 78.69 up from previous day of 62.54
13wk New High/Low Ratio: 74.57 up from previous day of 62.28
4wk New High/Low Ratio: 91.15 up from previous day of 85.44
Cumulative 4-Week New Hi-Low: 437,194 up from previous day of 436,627
Nasdaq Adv/Decline: 1,495 up from previous day of 1,494
Russell 1000 Advance/ Decline Line: 2,470 down from previous day of 2,477
Russell 2000 Advance/ Decline Line: (1,819) down from previous day of (1,819)
Notes:
Absolute Breadth Index: Low numbers suggest a topping process and high numbers suggest a bottoming process.
Cumulative Volume Index: If this begins to trend down while the averages are trending up, it is a bearish sign. If this begins to trend up while the averages are trending down, it is a bullish sign.
High Low Logic Index: High readings are bearish; low readings are bullish.
McClellan Oscillator: -100 is oversold and +100 is overbought. Also watch for crosses above and below zero.
McClellan Summation Index: Interpreted as bullish or bearish when it crosses over the zero line.
Cumulative 4-Week New Hi-Low: The difference between the number of issues reaching new highs (during a 4-week period) and the number of issues reaching new lows (during the same 4-week period).
Friday, June 18
Economics
No Significant U.S. Economic Releases
02:00 German PPI
Earnings
No earnings releases.
The Labor Department will release a report on state unemployment levels at 10 a.m. ET. Options expire.
Mel’s Missives from the Matrix:
- Total tick for the day was 26,000 and the average tick for the day was 17. There were 111 ticks greater than 600 and 94 ticks more extreme than -600. There were 8 ticks greater than 1000 and 7 ticks more extreme than -1000.
- The day's range was 11.85 points. The intraday trading range - 9:35 to the close - was 11.44. The 5 DMA of daily range is 16.18.
- Evidence of the intraday trend: At 10am volume was 82.41% of the 10 day average. By noon the volume was 85.18% of the 10 day average, and by 2pm volume was 86.12% of the 10 day average.
- The day's volume was 91.3% of the average daily volume for the last year. Volume was 84.8% of the last 10 day average and 101.3% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 3:00 and 3:15 when relative volume increased 45.6% while the SPX was dropping -0.26%. The largest drop in relative volume came between 1:30 and 1:45 when relative volume dropped -37.5% while the SPX was rising 0.04%.
- 24% of the SPX stocks closed with two day RSI above 90. 35% closed with RSI above 80. 6% closed with RSI below 20 and 2% closed with RSI below 10.
- 77.2% of the SPX are above their five day moving average, 93.2% are above their 10 day average, 84.2% are above their 20 day moving average, 41% are above their 50 day moving average, and 48.2% are above their 100 day moving average.
- 19% of the SPX closed above their most recent previous high.
- 23% of the SPX stocks closed below their most recent previous lows.
- 250 SPX issues advanced and 237 issues declined, a net SPX advance/decline of 13.
- Evidence of the intraday trend: At 10am, 45.6% of the SPX components were in the top half of the range. By noon, 48% were in the top half of the range, and by 2pm, 65.4% were in the top half of the range.
- 70.8% of stocks closed in the top half of the day's range. (29% closed in bottom half.)
- 20.4% of stocks closed in the top 10% of the day's range. 33.6% of stocks closed in the top 20% of the day's range.
- 0% of stocks closed in the bottom 10% of the day's range. 2% of stocks closed in the bottom 20% of the day's range.
- 9.6% of stocks closed within 2% of their 52 week high. 21.6% of stocks closed within 5% of their 52 week high.
- 59.6% of stocks closed within 50% of their 52 week low. 26.8% of stocks closed within 25% of their 52 week low.
- 28.4% of stocks closed within ¼% of their high for the day.
- 0.2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 51% of the SPX components were up since the open. By noon, 34% were up since the open, and by 2pm, 48% were up since the open.
- 49.4% of the SPX closed up from the previous close; 37.4% closed higher than the open.
- Sectors stronger than the SPX for Thursday:
- Industrials -- Outperformed the SPX by +18%.
- Technology -- Outperformed the SPX by +15%.
- Consumer Staples -- Outperformed the SPX by +77%.
- Utilities -- Outperformed the SPX by +61%.
- Health Care -- Outperformed the SPX by +1%.
- Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -67%.
- Energy -- Underperformed the SPX by -9%.
- Financials -- Underperformed the SPX by -32%.
- Consumer Discretionary -- Underperformed the SPX by -79%.
- The $SOX index strength was weaker relative to the SPX Thursday by -0.32%.
- The XLF underperformed the SPX by -0.32% Thursday.
- The 2 Day RSI of the SPX is 92. The Dow RSI is 95, the NASDAQ is 97 and the Russell is 76.
- Over the last four sessions, the average session closed 63.01% of the range above the low. Thursday closed at 88.2% of the daily range.
- Upside momentum moved downward Thursday, from Wednesday’s 6.41 to today’s 2.89. The ratio of SPX components giving a crossover sell signal compared to buy signals moved positively to B 21.58 to 1.
- The ISEE Equity 10 day moving average Thursday was 142.8. 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.
- 229 SPX components moved upward and 104 components downward during the after hours with 111 million shares traded.
Trade 'em well on Friday everyone!
-Mel
