A Tight Narrow Range Inside Day
by Jerome "Mel" Hickerson
Market Recap:
We began the day with the ongoing concerns in Europe about the Anglo Irish Bank situation as well as word out of China that their economy continues to grow and that more tightening measures are on the way. Futures were quiet overnight suggesting a quiet session today. Overseas markets were also fairly flat.
The session opened without a significant gap, moved down a couple points before a quick three point bounce and then gave that back by 10:00 am. Another quick bounce and then drop put the low of the day on the chart at 10:26. At this point, the bears went into hibernation until 3:00 when they quickly took the SPX down seven points in about 15 minutes. But bulls came fighting back for the last quarter hour bringing the index up to close near the middle of the range.
Eight of the nine sectors closed down today with the sole exception being the energy sector which was boosted all day by a bullish inventory report.
Looking at our Market Leaders board we find mixed results today with the financials continuing to be weak while technology, small caps and emerging markets were continuing higher. The financials continue to keep a lid on this rally while the small caps continue to push higher. Sooner or later, one or the other will join with the opposing forces.
Market Trend: Nine Sectors Report
Today's SPX chart bar painted an inside day and missed being the narrowest range in seven days (NR7) by less than a half point. Days such as this are often followed within a day or two by a wide range day, most often downward. The intraday range for the month of September is now less than 12.5 points; this is typically a characteristic of a topping process.
Turning to our Nine Sectors Report tonight we see three changes, two negative and one positive, as Materials and Consumer Discretionary move back to Sells and Energy becomes a Buy. We will continue to hold our Sell signal again for tomorrow but traders need to take note of Thursday's scheduled POMO which has a strong tendency to flow liquidity into the equities. It will also be end of the quarter which may, or may not, bring some buyers into play. So being alert to whatever happens tomorrow is essential.
Volume & Breadth Indicators
For the SPX Index there were 184 Advancers/301 Decliners. On the NYSE 3,133 issues were traded with 1,670 advancing issues and 1,352 retreating issues, a ratio of 1.24 to one advancing. There were 188 new highs and 7 new lows. The five day moving average of New Highs is 192 while the five day moving average of New Lows is 11 and the ten day moving average of Net Advancing is 225. The Net Advancing data indicates a bullish trend.
Declining volume was higher at a ratio of 1.08 to one. The closing TRIN was 1.34 and the final tick was 670. The NYSE Composite Index lost -0.15% today.
For the NYSE, relative to the previous 30 session average, volume was -.5% below the average. Of the last 15 sessions 4 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 19 sessions ended on a positive tick, 5 of last 10. For the SPX, the day's volume was 88.8% of the average daily volume for the last year. Volume was 106% of the last 10 day average and 103.5% of the previous day’s volume.
This is some intriguing looking data. There were more advancers than decliners on a day that many indices closed lower. But declining volume was higher than advancing volume. This happens when there are more sellers for the declining issues than there are buyers for the advancing issues. This is a clear sign of market exhaustion.
Further, total tick for the day was 145,000 and the average tick for the day was 94. There were 129 ticks greater than 600 and 59 ticks more extreme than -600. There were 2 ticks greater than 1000 and 1 ticks more extreme than -1000. The tick action suggests institutional accumulation.
The tick action today began as bearish until about 10:00 and then was totally lopsided in favor of the bulls until 3:00pm. The amazing thing is that the indices were flat much of the day despite the tick action. This may be suggesting market exhaustion.
The nightly indicators tonight are more bullish than bearish. After a down day to see so many of these indicators still moving higher suggests that today was more up within the data than the price action indicates. Particularly, the Cumulative Volume Index and the McClellan Summation Index need to be moving downward for the bears to regain any traction. Even the movement on the McClellan Oscillator was very little today.
Moving Average Indicators:
64.80% of the SPX components are giving a crossover Buy signal; 10.00% of the SPX components are giving a Sell signal. This is a 6.5 to 1 ratio of Buy signals over Sell signals.
66.8% of the SPX are above their five day moving average, 72.6% are above their 10 day average, 80.8% are above their 20 day moving average, 82.2% are above their 50 day moving average, 74.2% are above their 100 day moving average, and 63.4% are above their 150 day moving average.
The XLF 20 DMA moved above the 100 DMA today. This kind of crossover bodes well longer-term but does nothing to impact the chances of a short-term pullback. Looking at the chart, we see that the left hand columns are almost entirely green; only the longer-term 50 DMA above the 200 DMA remain to cross upward. When you see those crossovers on the right hand side of the chart start turning green, you should become more bullish if you are long-term trader.
Sectors on the Move:
Sectors stronger than the SPX for Wednesday:
- Energy -- Outperformed the SPX by +134%.
- Industrials -- Outperformed the SPX by +24%.
- Technology -- Outperformed the SPX by +6%.
- Utilities -- Outperformed the SPX by +8%.
Sectors weaker than the SPX for Wednesday:
- Basic Materials -- Underperformed the SPX by -51%.
- Financials -- Underperformed the SPX by -49%.
- Consumer Staples -- Underperformed the SPX by -1%.
- Health Care -- Underperformed the SPX by -9%.
- Consumer Discretionary -- Underperformed the SPX by -44%.
Stocks on the Move:
Today's SPX component winners and losers:
- Largest one day loser is URBN with -8.35%
- Largest three day loser is MON with -13.36%
- Largest five day loser is MON with -11.47%
- Largest ten day loser is ADBE with -20.57%
- Largest one day winner is COG with 5.12%
- Largest three day winner is WAG with 10.77%
- Largest five day winner is AMD with 16.29%
- Largest ten day winner is KLAC with 17.03%
In Late Trading:
230 SPX components moved upward and 107 components downward during the after hours with 105 million shares traded.
Thursday, September 30
Economics
08:30 Initial Claims
08:30 Continuing Claims
08:30 GDP- Third Estimate 1.6% con.s
08:30 GDP- Deflator 2.0% cons.
09:45 Chicago PMI 57.0 cons.
Australia HIA New Home Sales -7.0% cons.
Australia Private Sector Credit 2.8% cons.
Australia NBNZ Activity Outlook 25.7 cons.
Japan Annualized Housing Starts 0.772M cons.
Japan Housing Starts 4.3% cons.
Japan Household Spending 1.1%cons.
Japan National Consumer Price Index -0.9% cons.
German Unemployment Change -17k cons.
Euro-Zone Consumer Price Index Estimate 1.6% cons.
Canada GDP 0.2%cons.
Earnings
Before: CRAI, MKC
After: CAN, AZZ, CBK, DMAN, BLUD, LWSN, MU, RECN, SMOD
The third and final reading on gross domestic product growth in the second quarter is due before the bell. The economy is expected to have expanded at a 1.6% annualized rate, unchanged from the previous reading, and still sharply lower from the initial reading had been for a 2.4% growth rate in the period. At the same time, the Department of Labor releases a weekly report on jobless claims. The number of Americans filing new claims for unemployment insurance is expected to have decreased to 457,000 last week from 465,000 inthe previous week. Continuing claims are expected to have dropped to 4.45 million from 4.49 million claims the previous week. The Chicago PMI will be released after the bell. The measure is expected to have moved to 56.0 inSeptember from 56.7 inAugust.
Make it a great Thursday!
-Mel
