A New High for the Year
by Jerome "Mel" Hickerson
The session opened today.
Or did it? There were certainly moments today when I wondered if the market opened and maybe no one bothered to show up. There was opening buying pressure from the futures so the SPX gapped up at the open. It was a gap and nap.
At 10:11 the high for 2009 was put on the charts; while the low for the day was technically at the open, the trading low for the day was at 11:32. Between the trading high and low was a mere 4.96 points. Trust me, if you were day trading the index, you were finding it difficult as well as extremely dull.
There isn’t much more that can be said about today’s session. We had a new high for the year as well as a new closing high. Otherwise the session was memorable for the lack of activity.
Looking ahead to Wednesday and Thursday’s session, I expect similar days. The low volume levitation may continue but there are some troubling signs under the hood. Several bellwether stocks closed red today during a green session: GS, GE, RIMM, FDX, UPS, DRYS, DIS to name a few.
Our model has generated a -9 for Wednesday. Ordinarily this would suggest a red close. I wouldn’t bet on it for tomorrow though due to the extraordinarily low volume. But my guess is that if we gap up tomorrow, we at least see a gap fill before a bounce. When I look at the indicators, I am beginning to see numbers that are extremes; the crazy part is that some of these numbers suggest bullishness and others suggest bearishness so in the end the model pretty much cancels them out. But what I am seeing is quite unusual and suggests to me that caution either way is advised, especially in light of the low volume.
Wednesday, December 23
Economics
08:30 Personal Income 0.5% cons.
08:30 Personal Spending 0.7% cons.
08:30 PCE Prices
08:30 PCE Prices- Core 0.1% cons.
09:55 Michigan Sentiment 73.9 cons.
10:00 New Home Sales 440k cons.
10:30 Crude Inventories
Earnings
Before: AM
Government figures on personal income and spending in November come out in the morning. Economists forecast a 0.5% increase in personal incomes, while spending is expected to be unchanged from the month before. Reports on consumer confidence and new home sales are due out shortly after the opening bell. The weekly crude oil inventories report is also due in the morning.
Mel’s Random Hits:
• Total tick for the day was negative. Just below zero, but -7,500. This is very unusual for a day that finished almost +4. The first 90 minutes were positive, then the next 90 minutes were negative. About 1:00 things turned upward again with about 30 negative minutes from 2:45 until 3:15. Mostly the day was notable for nothing extreme in either direction.
• The day's range was 5.76 points. The actual trading range was even smaller. But even if you count the entire range, today was the smallest range of 2009, on the day we set the high for the year and the closing high for the year.
• The day's volume was 64.4% of the average 2009 daily volume. The volume was 72% of the last 10 day average. The volume was the third lowest of the year, the only days with lower volume were the day before Thanksgiving and the day after.
• 36% of the SPX stocks closed with two day RSI above 90. 55% closed with RSI above 80. 5% closed with RSI below 20 and 3% closed with RSI below 10.
• 80% of the SPX are above their five day moving average, 79% are above their 10 day average, and 78% are above their 20 day moving average. These are pretty extreme numbers.
• 11% of the SPX stocks closed below their most recent previous lows.
• 41% of the SPX closed above their most recent previous high.
• 57.8% of stocks closed in the top half of the day's range. (42.2% closed in bottom half.)
• 16.4% of stocks closed in the bottom 20% of the day's range.
• 15.6% of stocks closed in the top 10% of the day's range.
• 29.0% of stocks closed within 2% of their 52 week high. This only happens when were setting new highs for the year, obviously. Just keep in mind what happens when a stock sets a new high. Buyers often rush in to try to capture some of the break out. Now picture 150 stocks within the S&P 500 all doing this at the same time. If you’re bearish, your patience will be tested for a time while this plays out.
• 26.0% of stocks closed within 50% of their 52 week low.
• 24.4% of stocks closed within ¼% of their high for the day.
• 12.8% of stocks closed within ¼% of their low for the day.
• 67.2% of the SPX closed up from the previous close; 61.2% closed higher than the open.
• Sectors weaker than the SPX for the day: Industrials, Utilities, Consumer Discretionary, Financials, and Health Care
• Sectors stronger than the SPX for the day: Basic materials, Energy, Technology, and Consumer Staples
• The $SOX index was again stronger than the SPX.
• The 2 Day RSI of the SPX is 86. The Dow RSI is 84, NASDAQ is 91 and Russell 93. These numbers are overbought and approaching the point of suggesting an imminent pullback; we may see it tomorrow or it may be put off a day or two.
• SPX components moved downward slightly during the after hours.
Have a great Wednesday!
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"Mel"
ETF’s we trade:
Ultra S&P500 ProShares (NYSE: SSO)
Ultra Dow30 ProShares (NYSE: DDM)
Ultra QQQ ProShares (NYSE: QLD)
PS UTLRSHRT QQQ (NYSE: QID)
UltraShort S&P500 ProShares (NYSE: SDS)
UltraShort Dow30 ProShares (NYSE: DXD)
PowerShares QQQ Trust (NASDAQ: QQQQ)
Direxion Daily Small Cp Bear 3X (NYSE:TZA)
Direxion Daily Small Cp Bull 3X (NYSE:TNA)
