Another Bullish Start for the Week
by Jerome "Mel" Hickerson
Overnight news had the futures up and the markets opened the week with a surge at the open, gapping up seven points in the first minute. From there the SPX coiled and worked its way upward with a strong final 30 minutes, setting the high of the day at 3:47. The bulls had control of the tape from the open and never relinquished it.
The market answered Friday’s question whether we were looking at a bear flag or ascending triangle today. The only negative for the bulls today was the lack of volume. Breadth was strongly bullish and technical damage was done to the bearish case. The SPX gapped up and never looked back, working upward steadily into the close. At the end of today’s session, the index had recovered entirely from the second of the two waves downward in the recent correction. Since the reversal day on February 5th we have essentially seen the market recover almost half of the losses incurred during the correction.(See attached chart.)
For tomorrow, our model is calling for some weakness, at least early in the day. We elected to enter a short position at the close due to several overbought indicators. If the SPX manages to climb beyond the overhead resistance in the 1096 area, we’ll look for the exit and try again later.
Longer term, the path of least resistance is no longer downward; the path is clearly muddled as we are once again within the zone of 1084-1114 with which we are so familiar. My hunch is that we close within this zone for a while. But at this point it is not wise to be too bearish; the SPX has managed to withstand several technical tests and seems determined to surmount those tests. Just don’t get too bullish, either, as short-term indicators have swung to the overbought side and this suggests some choppy trade ahead.
SPX Summary for Tuesday, February 16, 2010
467 Advancers/29 Decliners
Today's SPX component winners and losers:
• Largest one day loser is CTAS with -3.46%
• Largest three day loser is BSX with -10.49%
• Largest five day loser is DF with -15.11%
• Largest ten day loser is DF with -17.06%
• Largest one day winner is IP with 6.91%
• Largest three day winner is JDSU with 16.50%
• Largest five day winner is HAR with 24.76%
• Largest ten day winner is ARG with 36.64%
*** SPX Technical Summary ***
The lowest 14 day RSI component is BSX; the highest 14 day RSI component is SLE. The average 14 day RSI of all 500 components is 51.
The greatest positive five day momentum component is HAR; the greatest negative five day momentum component is DF. The average five day momentum of all 500 components is 4.19.
17.80% of the SPX components are giving a crossover Buy signal; 42.40% 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: 113 components.
• From Buy to Neutral: 1 component.
• From Neutral to Sell: 3 components.
• From Neutral to Buy: 45 components.
Wednesday, February 17
Economics
08:30 Building Permits
08:30 Export Prices ex-ag
08:30 Housing Starts
08:30 Import Prices ex-oil
09:15 Capacity Utilization
09:15 Industrial Production
02:00 FOMC Minutes
Earnings
Before: XEC, DE, DVN, DTG, GENZ, IMA, JAKK, KOP, MSO, NICE, OMG, OC, PFCB, VSI, XTO
After: AAP, AEM, AMAT, BEAT, CECO, CLF, CHK, DENN, GUID, HPQ, JACK, LVS, NTAP, NVDA, OII, PEET, PCLN, SKX, TEX, UNTD
Mel’s Random Hits:
• Total tick for the day was +350,000. There were no negative time periods; this one belonged to the bulls from start to finish. This is rare.
• The day's range was 16.54 points. And the index gained 19.36. Gapped upward, never closed the gap.
• The day's volume was 74.86% of the average daily volume for the last year. Volume was 81.76% of the last 10 day average but 95.9% of Friday. This was the lowest volume since January 14th.
• 55% of the SPX stocks closed with two day RSI above 90. 77% closed with RSI above 80. 2% closed with RSI below 20 and 1% closed with RSI below 10. Short-term is reaching overbought.
• 91.0% of the SPX are above their five day moving average, 84.6% are above their 10 day average, and 60.0% are above their 20 day moving average. Another absolutely huge change in these numbers today.
• 1% of the SPX stocks closed below their most recent previous lows.
• 85% of the SPX closed above their most recent previous high.
• 90.0% of stocks closed in the top half of the day's range. (10.0% closed in bottom half.)
• 2.6% of stocks closed in the bottom 20% of the day's range.
• 51.8% of stocks closed in the top 10% of the day's range.
• 6.6% of stocks closed within 2% of their 52 week high. 21.4% of stocks closed within 5% of their 52 week high.
• 27.6% of stocks closed within 50% of their 52 week low. 8.0% of stocks closed within 25% of their 52 week low.
• 57.2% of stocks closed within ¼% of their high for the day. Powerful evidence that we closed at the highs today.
• 2.3% of stocks closed within ¼% of their low for the day.
• 94.0% of the SPX closed up from the previous close; 85.4% closed higher than the open.
• Sectors weaker than the SPX for the day: Consumer Staples, Technology, Health Care, Consumer Discretionary, and Utilities.
• Sectors stronger than the SPX for the day: Financials, Energy, Basic Materials, and Industrials.
• The $SOX index strength was stronger again than the SPX today.
• The 2 Day RSI of the SPX is 89. The Dow RSI is 85, NASDAQ is 96 and Russell 97. The NASDAQ and Russell again are lead the way today; that is often bullish. But these numbers are short-term overbought and suggest a pullback.
• Over the last four sessions, the average session closed 83% of the range above the low. This overbought indicator is often bearish for the next day’s session.
• Upside momentum bounced from Friday’s 1.53 to today’s 4.19. The ratio of SPX components giving a crossover sell signal compared to buy signals has dropped dramatically to 2.4 to 1.
• 167 SPX components moved upward and 123 components downward during the after hours with 156 million shares traded. Volume was heavy.
Have a great Wednesday everyone.
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"Mel"
ETF’s we trade:
Ultra S&P500 ProShares (NYSE: SSO)
Ultra Dow30 ProShares (NYSE: DDM)
Ultra QQQ ProShares (NYSE: QLD)
PS UTLRSHRT QQQ (NYSE: QID)
UltraShort S&P500 ProShares (NYSE: SDS)
UltraShort Dow30 ProShares (NYSE: DXD)
PowerShares QQQ Trust (NASDAQ: QQQQ)
Direxion Daily Small Cp Bear 3X (NYSE:TZA)
Direxion Daily Small Cp Bull 3X (NYSE:TNA)
