A Wild One
by Jerome "Mel" Hickerson, MarketsPath.com
Prior to the open, the Labor Department reported that initial claims for unemployment insurance for the week ending July 24th fell by 11,000 to 457K. The week’s total was 2K below the Reuters consensus for a reading of 459K. Continuing Claims for unemployment for the week ending July 17 were above consensus at 4.565M vs. expectations for 4.550M and last week’s 4.484M. Stock futures were pointing to a strong opening.
The session opened with about a five point gap upward, continued upward a couple more points and quickly put the high of the day on the chart at 9:37am. It was a sell fest until a few minutes afternoon when the low of the day was put on the chart at 12:05, about 24 points below the high. The rest of the afternoon was very choppy but upward except for a mild selloff the last half hour. The session ended about eight points off the lows.
Much of the data tonight is inconclusive; there are many conflicts within the data. The Advance/Decline of the NYSE actually increased today despite the red indices yet the A/D volume was negative. It’s easy to look at today’s tape and decide that the bulls managed to win after bringing the indices far off their lows.
The tick action today was simply wild; it heavily favored the bulls: 32 ticks greater than 1000 and only eight ticks more extreme than -1000.
But when we review the Nine Sectors report, we see that seven of the SPX sectors moved to Sell signals today; this can not be seen as a win for the bulls.
My hunch is that we see more whipsaw action on Friday, including possibly a green close. But the safer bet is short-side. I won’t bet against the swing signals other than for day trade scalps.
It was a tough day for our trade systems. It seemed that every time we got a signal and entered a position that the market would reverse and we were left out to dry. Days like this will happen with any system; the key is to manage trades so that losses are minimal.
Friday, July 30
Economics
08:30 GDP-Adv
08:30 Chain Deflator-Adv
08:30 Employment Cost Index
09:45 Chicago PMI
09:55 University of Michigan Sentiment
04:00 Italy CPI
04:00 Italy PPI
05:00 EMU HICP Flash
05:00 EMU Unemployment Rate
08:30 Canada GDP
Earnings
Before: AXL, AGP, ACI, BWA, CVX, UFS, FO, ITT, LPX, MRK, MGI, TYPE, RUTH, SPG, WY
GDP growth in the second quarter is expected to be revised down to a 2.5% annualized rate from the initially reported 2.7% rate. The Chicago PMI, a regional reading on manufacturing, is expected to have fallen to 56.5 in July from 59.1 in June. The revised reading on consumer sentiment from the University of Michigan is expected to come in at 67.5 in July, up from the previously reported 66.5.
Mel’s Missives from the Matrix:
- Total tick for the day was 137,000 and the average tick for the day was 89. There were 213 ticks greater than 600 and 88 ticks more extreme than -600. There were 32 ticks greater than 1000 and 8 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 23.08 points. The intraday trading range - 9:35 to the close - was 22.68. The 5 DMA of daily range is 14.88.
- Evidence of the intraday trend: At 10am volume was 93.3% of the 10 day average. By noon the volume was 104.03% of the 10 day average, and by 2pm volume was 106.69% of the 10 day average.
- The day's volume was 92.9% of the average daily volume for the last year. Volume was 104.3% of the last 10 day average and 122% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 11:00 and 11:15 when relative volume increased 25.9% while the SPX was dropping -0.40%. The largest drop in relative volume came between 12:15 and 12:30 when relative volume dropped -47.4% while the SPX was rising 0.09%.
- 5% of the SPX stocks closed with two day RSI above 90. 10% closed with RSI above 80. 32% closed with RSI below 20 and 12% closed with RSI below 10.
- 26.2% of the SPX are above their five day moving average, 61% are above their 10 day average, 74% are above their 20 day moving average, 63% are above their 50 day moving average, 39.8% are above their 100 day moving average, and 47.2% are above their 150 day moving average.
- 11% of the SPX closed above their most recent previous high.
- 36% of the SPX stocks closed below their most recent previous lows.
- 158 SPX issues advanced and 328 issues declined, a net SPX advance/decline of -170.
- Evidence of the intraday trend: At 10am, 28.4% of the SPX components were in the top half of the range. By noon, 3% were in the top half of the range, and by 2pm, 20.4% were in the top half of the range.
- 26.4% of stocks closed in the top half of the day's range. (73.4% closed in bottom half.)
- 0.6% of stocks closed in the top 10% of the day's range. 2.8% of stocks closed in the top 20% of the day's range.
- 7.4% of stocks closed in the bottom 10% of the day's range. 21% of stocks closed in the bottom 20% of the day's range.
- 4.8% of stocks closed within 2% of their 52 week high. 17.2% of stocks closed within 5% of their 52 week high.
- 80% of stocks closed within 50% of their 52 week low. 48.4% of stocks closed within 25% of their 52 week low.
- 0.8% of stocks closed within ¼% of their high for the day.
- 6.2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 75.4% of the SPX components were up since the open. By noon, 13.8% were up since the open, and by 2pm, 30.6% were up since the open.
- 31.2% of the SPX closed up from the previous close; 14.6% closed higher than the open.
- Sectors stronger than the SPX for Thursday:
- Basic Materials -- Outperformed the SPX by +33%.
- Energy -- Outperformed the SPX by +26%.
- Financials -- Outperformed the SPX by +50%.
- Industrials -- Outperformed the SPX by +33%.
- Health Care -- Outperformed the SPX by +46%.
- Sectors weaker than the SPX for Thursday:
- Technology -- Underperformed the SPX by -51%.
- Consumer Staples -- Underperformed the SPX by -86%.
- Utilities -- Underperformed the SPX by -112%.
- Consumer Discretionary -- Underperformed the SPX by -8%.
- The $SOX index strength was weaker relative to the SPX Thursday by -1.5%.
- The XLF outperformed the SPX by 0.5% Thursday.
- The 2 Day RSI of the SPX is 24. The Dow RSI is 35, the NASDAQ is 20 and the Russell is 33.
- Over the last four sessions, the average session closed 50.06% of the range above the low. Thursday closed at 37.2% of the daily range.
- Upside momentum increased slightly Thursday, from Wednesday’s 3.52 to today’s 0.5. The ratio of SPX components giving a crossover sell signal compared to buy signals also increased slightly to B 8.41 to 1.
- The ISEE Equity 10 day moving average Thursday was 170. 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.
- 212 SPX components moved upward and 164 components downward during the after hours with 130 million shares traded.
Trade 'em well on Friday everyone!
-Mel
