A Mixed Finish After Morning Lows
by Jerome "Mel" Hickerson
It was a wild night for the futures as they were all over the map, peaking around 8:30 but moving off those highs as the open approached. Jobless claims dropped by 29,000 to 429,000. Despite the positive trend in jobless claims, the market appeared to be more focused on the manufacturing data which showed that the economic recovery in the New York region slowed more than expected.
The Thursday session opened without any significant gap, zigzagged a few minutes indecisively before chopping slightly downward before 10am. Then the Philadelphia Fed economic data was released and it came in well below consensus and the market sold hard setting the low of the day at 10:22. Until 1pm the SPX drifted lazily sideways and upward but just before 1pm the index began an upward move that lasted until about 1:30. The next 90 minutes were again lazy drifting trade. But at 3pm it began to get wild as news hit the market. First, the Senate passed the financial reform bill and the index wanted lower. But about 3:30 two things happened: BP announced that oil was no longer flowing into the Gulf and rumors hit that Goldman Sachs had reached a settlement with the SEC. From there the SOX rocketed upward into the close. The regular session closed just as wildly as the overnight futures.
So we’ve now put up two back-to-back dojis on the daily chart, as well as three consecutive days with lower highs. Some traders are looking at today’s reversal as a bullish sign. I am as open-minded as traders come but please count me out. It is possible that today was a bullish reversal, of course. But I look at the chart and I see a topping pattern. Yes, tops can take a notoriously long time to build but nevertheless, that is what I see on the chart.
To be fair to the bullish case, we must at least take notice that on many of the indices the short term moving averages are crossing above longer term moving averages; this is most often a short-term buy signal and it should be respected.
But today’s reversal is not uncharacteristic of a market top building. The action did nothing to address the wall of technical resistance that lies just overhead of the SPX. Until that wall of resistance is broken, I’ll remain engaged short-side and avoid long-side (except for day trading, of course).
Day Trade Systems Update: (Signals today)
* GDX at: 10:37(+0.25)
* SDS at: 11:33(+0.10)
* GDX Short at: 11:47(+0.25)
* GDX at: 12:34(+0.02)
* SDS at: 1:34(+0.25)
We had a pretty good day taking what the market was willing to give us today; we played both sides but our preference was for the short side.
Friday, July 16
Economics
08:30 Core CPI 0.1% cons.
08:30 CPI 0.0% cons.
09:00 Net Long-Term TIC Flows
09:55 Mich Sentiment 72.0 cons.
09:00 Euro-Zone Trade Balance
Earnings
Before: BAC, C, FHN, GCI, GE, GPC, KNL, MAT, COL, WBS
The Commerce Department releases the Consumer Price Index, a measure of consumer inflation, in the morning. CPI is expected to have held steady in June after falling 0.2% last month. Core CPI is expected to have risen 0.1% after rising 0.1% in the previous month. The revised reading on July consumer sentiment from the University of Michigan is due in the morning. Sentiment is expected to have fallen to 74.5 from the previous reading of 76 from early July.
Mel’s Missives from the Matrix:
- Total tick for the day was 132,000 and the average tick for the day was 86. There were 165 ticks greater than 600 and 63 ticks more extreme than -600. There were 23 ticks greater than 1000 and 5 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 18.13 points. The intraday trading range - 9:35 to the close - was 17.81. The 5 DMA of daily range is 14.67.
- Evidence of the intraday trend: At 10am volume was 111.06% of the 10 day average. By noon the volume was 105.97% of the 10 day average, and by 2pm volume was 100.4% of the 10 day average.
- The day's volume was 91.4% of the average daily volume for the last year. Volume was 100.9% of the last 10 day average and 105.2% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 1:00 and 1:15 when relative volume increased 56.1% while the SPX was rising 0.21%. The largest drop in relative volume came between 10:15 and 10:30 when relative volume dropped -40.4% while the SPX was rising 0.01%.
- 19% of the SPX stocks closed with two day RSI above 90. 30% closed with RSI above 80. 5% closed with RSI below 20 and 1% closed with RSI below 10.
- 73.6% of the SPX are above their five day moving average, 94.2% are above their 10 day average, 73.4% are above their 20 day moving average, 50.4% are above their 50 day moving average, 34.2% are above their 100 day moving average, and 42.6% are above their 150 day moving average.
- 17% of the SPX closed above their most recent previous high.
- 15% of the SPX stocks closed below their most recent previous lows.
- 263 SPX issues advanced and 218 issues declined, a net SPX advance/decline of 45.
- Evidence of the intraday trend: At 10am, 36.8% of the SPX components were in the top half of the range. By noon, 25.4% were in the top half of the range, and by 2pm, 54.2% were in the top half of the range.
- 86.2% of stocks closed in the top half of the day's range. (13.6% closed in bottom half.)
- 11% of stocks closed in the top 10% of the day's range. 49.4% of stocks closed in the top 20% of the day's range.
- 0.8% of stocks closed in the bottom 10% of the day's range. 1.2% of stocks closed in the bottom 20% of the day's range.
- 7% of stocks closed within 2% of their 52 week high. 16% of stocks closed within 5% of their 52 week high.
- 72.6% of stocks closed within 50% of their 52 week low. 41.4% of stocks closed within 25% of their 52 week low.
- 19% of stocks closed within ¼% of their high for the day.
- 1% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 32.6% of the SPX components were up since the open. By noon, 12.4% were up since the open, and by 2pm, 28.8% were up since the open.
- 51.8% of the SPX closed up from the previous close; 55% closed higher than the open.
- Sectors stronger than the SPX for Thursday:
- Basic Materials -- Outperformed the SPX by +1%.
- Technology -- Outperformed the SPX by +23%.
- Consumer Staples -- Outperformed the SPX by +21%.
- Utilities -- Outperformed the SPX by +58%.
- Health Care -- Outperformed the SPX by +22%.
- Consumer Discretionary -- Outperformed the SPX by +23%.
- Sectors weaker than the SPX for Thursday:
- Energy -- Underperformed the SPX by -20%.
- Financials -- Underperformed the SPX by -9%.
- Industrials -- Underperformed the SPX by -12%.
- The $SOX index strength was weaker relative to the SPX Thursday by -0.36%.
- The XLF underperformed the SPX by -0.09% Thursday.
- The 2 Day RSI of the SPX is 98. The Dow RSI is 87, the NASDAQ is 95 and the Russell is 44.
- Over the last four sessions, the average session closed 78.03% of the range above the low. Thursday closed at 86% of the daily range.
- Upside momentum decreased again Thursday, from Wednesday’s 3.46 to today’s 2.51. The ratio of SPX components giving a crossover sell signal compared to buy signals moved upward to B 8.86 to 1.
- The ISEE Equity 10 day moving average Thursday was 178.4. 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.
- 267 SPX components moved upward and 128 components downward during the after hours with 165 million shares traded.
Trade 'em well on Friday everyone!
-Mel
