A Positive but Bearish Session
by Jerome "Mel" Hickerson
The week began with the usual Monday buying pressure from the futures. The futures were up high overnight but gave back half their gains before the regular session opened. The session then opened, gapped upward, looking strong until just before 10:00. The housing data was a negative and the indices quickly filled the opening gap. From then until the intraday low of the day was set at 11:37 (the low of the day was at the open) the indices traded in three waves downward. From the lows, the SPX worked its way slowly upward setting the high of the day at 3:01, but then couldn’t hold a large part of the gains, selling sharply into the close. While the major indices closed green, the underlying tenor of the market did not feel positive. The SPX closed more than two points lower than it was one minute after the open.
At the risk of really annoying my friends the permabears, let’s take a look at the daily chart of the SPX. We painted a low range inside bar on the chart today. A bar such as this is typical at turnaround points on the chart. Not always, of course, but commonly a low range inside day will precede a short term direction change.
Our System 1 two day swing signal has not fared well the last few days; this typically is a sign of a weak market. A failure to see something more significant than a five point bounce tomorrow certainly should suggest that we are likely to see a more significant down trend. The market is vulnerable and weak at this point; momentum has switched to the bears and without a quick game changer that seems likely to continue for a while.
After hours today AAPL released their quarterly earnings report. It was not received particularly positively by the market; it matters not what the numbers were, it is how it is received that matters. (Although AAPL did close the after hours $1.00 higher than the regular session close.)
SPX Summary for Monday, January 25, 2010
330 Advancers/161 Decliners
Today's SPX component winners and losers:
• Largest one day loser is COF with -3.53%
• Largest three day loser is COF with -16.14%
• Largest five day loser is AA with -14.20%
• Largest ten day loser is AA with -21.16%
• Largest one day winner is AKS with 5.35%
• Largest three day winner is HBAN with 12.12%
• Largest five day winner is HBAN with 12.38%
• Largest ten day winner is SVU with 17.26%
The greatest positive five day momentum component is HBAN; the greatest negative five day momentum component is AA. The average five day momentum of all 500 components is -3.2.
17.40% of the SPX components are giving a crossover Buy signal; 42.20% of the SPX components are giving a Sell signal. This is a 2.4 to 1 ratio of Sell signals over Buy signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 4 components.
• From Buy to Neutral: 29 components.
• From Neutral to Sell: 51 components.
• From Neutral to Buy: 8 components.
Tuesday, January 26
Economics
09:00 Case-Shiller 20 City Index -5.20% cons.
10:00 Consumer Confidence 52.9 cons.
10:00 FHFA Home Price Index
Earnings
Before: ABC, BHI, CRS, CBE, GLW, DAL, DD, EMC, ENR, JNJ, KCI, MHP, NUE, BTU, RYN, SHW, TLAB, TRV, TUES, X, VZ, GWW,
After: ALTR, BBOX, BXP, ELY, CNI, DV, GILD, INFN, MCK, PTV, RFMD, SYK, TPX, YHOO
Auctions
01:00 2-Yr Note Auction
The consumer confidence index from the Conference Board is due out shortly after the start of trading. The index is expected to have dipped to 52.9 in January from 53.3 in December. The S&P/Case Shiller Home Price index is expected to show that prices fell 5.2% in November from the previous month. The Congressional Budget Office has its 2010 budget and economic outlook press briefing, starting at 11:00 a.m. ET.
Mel’s Random Hits:
• Total tick for the day was effectively zero; an odd number on any day. Breadth was positive for the first hour and much of the middle of the day, but the second hour and the closing hour were negative.
• The day's range was 10.57 points.
• The day's volume was 81.2% of the average daily volume for the last year. Volume was 90.9% of the last 10 day average.
• 2% of the SPX stocks closed with two day RSI above 90. 3% closed with RSI above 80. 33% closed with RSI below 20 and 21% closed with RSI below 10.
• 16% of the SPX are above their five day moving average, 15% are above their 10 day average, and 22% are above their 20 day moving average.
• 14% of the SPX stocks closed below their most recent previous lows.
• 4% of the SPX closed above their most recent previous high.
• 39.2% of stocks closed in the top half of the day's range. (60.8% closed in bottom half.)
• 21.6 of stocks closed in the bottom 20% of the day's range.
• 2.8% of stocks closed in the top 10% of the day's range.
• 2.0% of stocks closed within 2% of their 52 week high.
• 27.6% of stocks closed within 50% of their 52 week low.
• 3.8% of stocks closed within ¼% of their high for the day.
• 13.4% of stocks closed within ¼% of their low for the day.
• 65.8% of the SPX closed up from the previous close; 32.8% closed higher than the open.
• Sectors weaker than the SPX for the day: Consumer Staples, Consumer Discretionary, and Health Care.
• Sectors stronger than the SPX for the day: Basic Materials, Financials, Energy, Industrials, Utilities, and Technology.
• The $SOX index strength was stronger than the SPX today. I believe that I incorrectly reported Friday as an up day for the SOX; I regret the error.
• The 2 Day RSI of the SPX is 19. The Dow RSI is 16, NASDAQ is 16 and Russell 10. A bounce is still being called for but weakness is apparent.
• Over the last five sessions, the average session closed 40% of the range above the low. This remains near the lowest five day average of the rally. Slightly lower were occasions in mid and late May, July 8th/9th, late October, and December 8th/9th/10th. Typically you see a significant bounce when this number falls below 40%. All of the instances above bounced more than 25 points within days.
• 199 SPX components moved upward and 167 components downward during the after hours with 124 million shares traded.
Have a great Tuesday.
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"Mel"
