Another Bullish Candle
by Jerome "Mel" Hickerson
Before Friday's open, Greece made it official by asking the EU/IMF to activate the aid package. The Commerce Department reported that Durable Goods orders dropped -1.3% during the month, which was well below the consensus expectations for +0.2%. However, February’s reading was revised to +1.1% (up from +0.5%) and when you strip out the volatile orders for transportation, orders in March increased by +2.8% (which was above the consensus for +0.7% and February’s revised reading of +1.7%). The major overseas markets were split by region with Asia down and Europe up. Futures pointed to a flat open.
The week ending session opened with a tiny gap downward, continuing downward for 15 minutes to set the low of the day at 9:45. A small bounce before 10:00 and then a large intraday gap at 10am on the housing numbers release. But within just a few minutes the euphoria had passed and the SPX began a three wave descent to retest the daily lows. The index bounced sharply at 11:34 and ascended bullishly into the close.
Looking at the intraday chart makes it clear that this was a strong session from 11:30 onward. But this was a rather odd session within the internals: Banks and financials were relatively weak, Technology and chips were relatively weak, and Industrials were relatively weak. It is unusual for the SPX to have a strong day with those sectors lagging. But evidence suggests that institutional buying was powerful and kept the indices afloat in spite of any other weaknesses.
As a whole, this week had the largest weekly gain of the last seven weeks. Oddly enough, it took almost this entire week's gains to erase last Friday's losses. The pattern that was repeated this week was early morning lows with closes near the highs; a bullish pattern.
We've discussed the technical indicators endlessly; every trader knows that these indicators are calling for a pullback just beyond the horizon (and that horizon keeps elusively moving away as we approach.)
So let's try to shift our viewpoint away from that elusive horizon and let's just look at the charts and listen carefully for anything that they may have to say. First up, the daily chart.
I've taken the liberty to mark with red arrows some of the daily bullish candles; there are several (and I am certain to have missed some.)
The second chart is a weekly chart. The final candle, this week, is a bullish candle. I have also marked similar candles on this chart. The monthly chart... same kind of candle for April; notice how many of this type of candle we've seen during this 14 month rally.
Now, just one more chart; let's look at a quarterly chart going back to 2000. Notice this quarter's candle; the same familiar bullish candle seen on the weekly and monthly charts. Now look at the chart closely; do you ever see this type of candle in a market downturn?
But this type of candle can be found at market tops. So we can't rule out the possibility that the market turns in upcoming weeks. I still believe the technical indicators when they tell me that a pullback is on the horizon. But if you listen to the charts, the charts are telling us the bullish trend is more likely to persist than to perish. And we all know that trading the trend is easier than countertrend.
Day Trade Systems Update: (Signals today)
* High of Day Call at: 10:05
* Pullback Alert at: 10:34
* UYM at: 10:38
* UYM at: 11:38
* SPXU at: 1:08
SPX Summary for Friday, April 23, 2010
369 Advancers/119 Decliners
401 Advancers/92 Decliners for the week
Today's SPX component winners and losers:
• Largest one day loser is DV with -6.44%
• Largest three day loser is BAX with -17.41%
• Largest five day loser is BAX with -16.26%
• Largest ten day loser is AKS with -16.85%
• Largest one day winner is WDC with 10.11%
• Largest three day winner is HBAN with 22.81%
• Largest five day winner is HBAN with 28.78%
• Largest ten day winner is ZION with 25.37%
*** SPX Technical Summary ***
The lowest 14 day RSI component is VZ; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 61.
The greatest positive five day momentum component is HBAN; the greatest negative five day momentum component is BAX. The average five day momentum of all 500 components is 3.16.
62.00% of the SPX components are giving a crossover Buy signal; 13.40% of the SPX components are giving a Sell signal. This is a 4.6 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 16 components.
• From Buy to Neutral: 9 components.
• From Neutral to Sell: 8 components.
• From Neutral to Buy: 57 components.
The moving averages:
Close 1217.28
9 EMA 1210.92 Rising
5 DMA 1207.32 Rising
10 DMA 1204.48 Rising
20 DMA 1192.28 Rising
50 DMA 1154.80 Rising
100 DMA 1132.26 Rising
200 DMA 1083.13 Rising
10 Wk MA 1161.02 Rising
NYSE Summary
On the NYSE 3203 issues were traded with 2185 advancing issues and 886 retreating issues, a ratio of 2.47 to 1 advancing. There were 634 new highs and 12 new lows.
Advancing volume was higher at a ratio of 1.99 to 1. The closing TRIN was 1.24 and the final tick was 467.
Evidence of trend:
Relative to the previous 30 session average, volume was 8.89% above the average. Of the last 15 sessions 10 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 24 sessions ended on a positive tick, 8 of last 10.
The 5 day moving average of New Highs is 388 while the 5 day moving average of new lows is 10 and the 10 day moving average of Net Advancing is 447. The Net Advancing data indicates a bullish trend.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line increased from 210905 to 212204. This 0.61% increase came while the SPX was gaining 0.71%. The 10 day moving ratio of positive volume is 1.09 and the 10 day moving Advance/Decline ratio is 1.34. The 10 day moving ratio of positive volume has trended -0.01 over the last three days and the 10 day moving Advance/Decline ratio has trended 0.09 over the last three days.
The NYSE Composite Index gained 0.77% today.
NYSE Statistics:
Absolute Breadth Index: 32.74 up from previous day of 26.60
Cumulative Volume Index: 83,552.85 up from previous day of 81,734.05
High Low Logic Index: 0.74 up from previous day of 0.65
McClellan Oscillator: 82.51 up from previous day of 24.49
McClellan 10 DMA: 14.16 up from previous day of 10.78
McClellan Summation Index: 3,604.84 up from previous day of 3,522.33
% Stocks Above 200 DMA: 87.62 up from previous day of 87.01
% Stocks Above 40 DMA: 81.35 up from previous day of 79.44
New High / New Low Ratio: 95.33 down from previous day of 95.52
26wk New High/Low Ratio: 94.83 up from previous day of 94.37
13wk New High/Low Ratio: 94.15 up from previous day of 93.00
4wk New High/Low Ratio: 90.05 up from previous day of 78.94
Cumulative 4-Week New Hi-Low: 444,871 up from previous day of 443,869
Nasdaq Adv/Decline: 1,833 up from previous day of 1,808
Russell 1000 Advance/ Decline Line: 2,828 up from previous day of 2,775
Russell 2000 Advance/ Decline Line: (1,460) up from previous day of (1,496)
Notes:
Absolute Breadth Index: Low numbers suggest a topping process and high numbers suggest a bottoming process.
Cumulative Volume Index: If this begins to trend down while the averages are trending up, it is a bearish sign. If this begins to trend up while the averages are trending down, it is a bullish sign.
High Low Logic Index: High readings are bearish; low readings are bullish.
McClellan Oscillator: -100 is oversold and +100 is overbought. Also watch for crosses above and below zero.
McClellan Summation Index: Interpreted as bullish or bearish when it crosses over the zero line.
Cumulative 4-Week New Hi-Low: The difference between the number of issues reaching new highs (during a 4-week period) and the number of issues reaching new lows (during the same 4-week period).
Mel’s Missives from the Matrix:
• Total tick for the day was 307,000 and the average tick for the day was 200. There were 126 ticks greater than 600 and 4 ticks more extreme than -600. There were 4 ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.
• The day's range was 12.12 points. The 5 DMA of daily range is 13.49.
• Evidence of the intraday trend: At 10am volume was 91.89% of the 10 day average. By noon the volume was 97.85% of the 10 day average, and by 2pm volume was 96.68% of the 10 day average.
• The day's volume was 106.2% of the average daily volume for the last year. Volume was 94.4% of the last 10 day average and 88.1% of the previous day’s volume.
• Evidence of the intraday trend: The largest increase in relative volume came between 10:00 and 10:15 when relative volume increased 41.8% while the SPX was rising 0.39%. The largest drop in relative volume came between 3:00 and 3:15 when relative volume dropped -34.2% while the SPX was dropping -0.01%.
• 48% of the SPX stocks closed with two day RSI above 90. 63% closed with RSI above 80. 6% closed with RSI below 20 and 3% closed with RSI below 10.
• 77.8% of the SPX are above their five day moving average, 77.2% are above their 10 day average, 80.8% are above their 20 day moving average, 86.4% are above their 50 day moving average, and 87.4% are above their 100 day moving average.
• 65% of the SPX closed above their most recent previous high.
• 3% of the SPX stocks closed below their most recent previous lows.
• 369 SPX issues advanced and 119 issues declined, a net SPX advance/decline of 250.
• Evidence of the intraday trend: At 10am, 62.8% of the SPX components were in the top half of the range. By noon, 44.8% were in the top half of the range, and by 2pm, 64.6% were in the top half of the range.
• 83.2% of stocks closed in the top half of the day's range. (16.6% closed in bottom half.)
• 43.8% of stocks closed in the top 10% of the day's range. 61.2% of stocks closed in the top 20% of the day's range.
• 0.4% of stocks closed in the bottom 10% of the day's range. 3% of stocks closed in the bottom 20% of the day's range.
• 45.8% of stocks closed within 2% of their 52 week high. 67.8% of stocks closed within 5% of their 52 week high.
• 37.8% of stocks closed within 50% of their 52 week low. 10.2% of stocks closed within 25% of their 52 week low.
• 50.6% of stocks closed within ¼% of their high for the day.
• 1% of stocks closed within ¼% of their low for the day.
• Evidence of the intraday trend: At 10am, 44.2% of the SPX components were up since the open. By noon, 42% were up since the open, and by 2pm, 55.8% were up since the open.
• 75% of the SPX closed up from the previous close; 73.2% closed higher than the open.
• Sectors stronger than the SPX for Friday:
- Basic Materials -- Outperformed the SPX by +20%.
- Energy -- Outperformed the SPX by +173%.
- Health Care -- Outperformed the SPX by +40%.
• Sectors weaker than the SPX for Friday:
- Financials -- Underperformed the SPX by -46%.
- Industrials -- Underperformed the SPX by -9%.
- Technology -- Underperformed the SPX by -57%.
- Consumer Staples -- Underperformed the SPX by -80%.
- Utilities -- Underperformed the SPX by -0%.
- Consumer Discretionary -- Underperformed the SPX by -41%.
• The $SOX index strength was weaker relative to the SPX Friday by -0.33%.
• The XLF underperformed the SPX by -0.46% Friday.
• The 2 Day RSI of the SPX is 95. The Dow RSI is 95, the NASDAQ is 98 and the Russell is 99.
• Over the last four sessions, the average session closed 83.91% of the range above the low. Friday closed at 98.8% of the daily range.
• Upside momentum increased Friday, from Thursday’s 0.73 to today’s 0. The ratio of SPX components giving a crossover buy signal compared to sell signals also increased to 0 to 1.
• The ISEE Equity 10 day moving average Friday was 231. The lowest 10 day average in the last 52 weeks was 141.5 on 06/29/09 and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
• 228 SPX components moved upward and 143 components downward during the after hours with 131 million shares traded.
Have a great weekend everyone!
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"Mel"
