A Sleepy Session
by Jerome "Mel" Hickerson
Mild selling pressure at the open saw the session begin with a quick four point drop followed by a recovery before 10am that painted the high of the day on the chart at 9:55. From there, the SPX descended a two wave pattern setting the low of the session at 11:57, after which the index bounced upward almost six points over 90 minutes. The rest of the day was simply a choppy sideways waste of time.
Today’s session was pretty much as expected; a sluggish bullish consolidation after the two successive 1% up days. So no surprises today; but what comes tomorrow? I think we resume our journey upward to the 1110 area.
Last night I received email from several readers who I am too bullish. I want to emphasize once again: I am not bullish longer term but I am bullish for a few days here. A reader or two also thought I was nuts for suggesting that we may be stuck within the 1084-1114 trading range for a while again. We’ll see. I’ll stand by that analysis until I see a reason to change.
Today’s daily bar chart is rather inconclusive. We painted a low range inside day (as expected) but a close higher than the open would have been a bit more bullish. Still, while inside days are often found within reversal patterns, after the two large range up days, an inside bar today was expected and shouldn’t be misinterpreted as a reversal signal. But Thursday’s action may be pivotal; the bounce this week needs to resume.
Our model is suggesting a slight upward move for Thursday’s action. But the unemployment claims data released prior to the open is likely to drive; and I expect some sluggishness trading as traders wait for the much anticipated non farm payroll numbers Friday morning. While I see an upward move as likely on Thursday, there are also troubling signs building for next week. If you’re trading time frame is a couple weeks, short-side seems the better side. But if you’re a day-to-day trader, long-side first, then switch sides. As always – the economic news drives, so closely watch what the market is doing and how it is reacting to the news. Road maps are guidebooks not straightjackets.
Note: I am attaching a chart that subscribers received yesterday because I think some of you may find it interesting.
SPX Summary for Wednesday, February 03, 2010
141 Advancers/350 Decliners
Today's SPX component winners and losers:
• Largest one day loser is WU with -8.86%
• Largest three day loser is GCI with -9.91%
• Largest five day loser is AVY with -13.89%
• Largest ten day loser is X with -26.03%
• Largest one day winner is LXK with 7.53%
• Largest three day winner is LXK with 25.57%
• Largest five day winner is EK with 44.00%
• Largest ten day winner is EK with 40.16%
*** SPX Technical Summary ***
The lowest 14 day RSI component is AIG; the highest 14 day RSI component is EK. The average 14 day RSI of all 500 components is 40.
The greatest positive five day momentum component is EK; the greatest negative five day momentum component is AVY. The average five day momentum of all 500 components is 0.38.
9.40% of the SPX components are giving a crossover Buy signal; 62.00% of the SPX components are giving a Sell signal. This is a 6.6 to 1 ratio of Sell signals over Buy signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 53 components.
• From Buy to Neutral: 8 components.
• From Neutral to Sell: 10 components.
• From Neutral to Buy: 6 components.
Thursday, February 4
Economics
08:30 Initial Claims
08:30 Continuing Claims
08:30 Productivity Prel 5.9% cons.
08:30 Unit Labor Costs -2.1% cons.
10:00 Factory Orders 1.5% cons.
Earnings
Before: AGN, ATK, AVP, BG, BKC, CI, CLX, CME, DWSN, DO, ELNK, FLO, HGG, HSP, IPSU, K, MA, MF, MCO, NOC, NUS, PENN, PAS, RAI, RGLD, HOT, UTEK
After: ATVI, BMI, BEBE, COGO, ESS, FMC, HILT, ILMN, LQDT, MTX, N, OPWV, PFWD, PBI, PWAV, SIMG, SUN
Events
Same Store Sales
January sales from the nation's retailers will be released through the morning. The weekly jobless claims from the Labor Department and the Commerce Department reading on factory orders are also due.
Mel’s Random Hits:
• Total tick for the day was -12,000. Breadth was positive at the open for about 45 minutes before turning negative until about 1pm. The rest of the session was mildly positive.
• The day's range was 8.75 points.
• The day's volume was 77.98% of the average daily volume for the last year. Volume was 84.44% of the last 10 day average.
• 9% of the SPX stocks closed with two day RSI above 90. 20% closed with RSI above 80. 10% closed with RSI below 20 and 4% closed with RSI below 10.
• 73.2% of the SPX are above their five day moving average, 54.8% are above their 10 day average, and 27.6% are above their 20 day moving average.
• 17% of the SPX stocks closed below their most recent previous lows.
• 14% of the SPX closed above their most recent previous high.
• 39.6% of stocks closed in the top half of the day's range. (60.4% closed in bottom half.)
• 21.8 of stocks closed in the bottom 20% of the day's range.
• 3.8% of stocks closed in the top 10% of the day's range.
• 5.2% of stocks closed within 2% of their 52 week high. 20.4% of stocks closed within 5% of their 52 week high.
• 27.2% of stocks closed within 50% of their 52 week low. 9.0% of stocks closed within 25% of their 52 week low.
• 7.4% of stocks closed within ¼% of their high for the day.
• 11.8% of stocks closed within ¼% of their low for the day.
• 26.6% of the SPX closed up from the previous close; 39.0% closed higher than the open.
• Sectors weaker than the SPX for the day: Basic Materials, Financials, Consumer Staples, Utilities, Energy, Industrials, and Health Care.
• Sectors stronger than the SPX for the day: Technology, and Consumer Discretionary.
• The $SOX index strength was stronger than the SPX today.
• The 2 Day RSI of the SPX is 57. The Dow RSI is 66, NASDAQ is 70 and Russell 45. The NASDAQ was relatively strong today; it’s now time for the Russell to step up.
• Over the last five sessions, the average session closed 53% of the range above the low.
• Upward momentum moderated from yesterday’s 1.23 to today’s 0.38. The ratio of SPX components giving a crossover sell signal compared to buy signals remains high at 6.6 to 1.
• This was the 37th close within the range of 1084 and 1114 during the last 59 sessions. Of the 21 sessions that closed outside the range, 20 closed above.
• 246 SPX components moved upward and 142 components downward during the after hours with 117 million shares traded.
Have a great Thursday everyone.
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"Mel"
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