Another Late Session Sell-Off
by Jerome "Mel" Hickerson
As morning dawned and the market week began, stock futures and global markets pointed lower on the back of weaker than expected PMI reports out of China, the Eurozone, and France. But May ISM Manufacturing and Construction Spending data released at 10amhelped to spur the market back upward.
The session began with a spike downward that was shallower than the futures had suggested resulting in the low of the morning being put on the chart just three minutes into the day. Following this was a nice rally attempt until about 10:30, putting the high of the day on the chart at 10:32. The index then traded with a downward bias until about noonwhen it began a gentle upward journey that lasted almost two hours. But someone opened the trap door and the bottom fell out for the closing hour, especially the last 30 minutes. The low of the day was at the close.
The late sell off today was anything but bullish; we have seen too many sessions recently where the close is at the lows. There are only two things I see that the bulls can hang their hopes on: 1) Today’s volume was quite low (and likely to be all week), and 2) Until 1040 is violated, the market at least has a floor under it. But if that floor caves in, the next 40 points could disappear quickly.
I’ve probably been as bullish as anyone but today spooked me. I end each day in cash so I don’t care which way the market goes; I only care that the volatility continues and I care for what is good for the country. There are so many signals that this market should bounce… yet the price action simply ignores it and sells off at the close many days.
This late day movement is telling. Today’s late sell-off was blamed on the Attorney General’s announcement that the government is beginning civil and criminal investigation into the oil spill in the Gulf. But the time comes when the only action that matters is Price action; a market that wants to sell can always find a reason and a market that wants to climb can always overcome bad news.
The volume spikes with each downward move are also telling us something here. The propensity for selling every rally is growing. The first day of the month should have had some bullishness to it; it was very brief today. Odds of more business to the downside seem to be increasing although I will remain bullish until last week’s lows are taken out.
Day Trade Systems Update: (Signals today)
* GDX at: 11:52
* GDX Exit at: 12:29
* Bounce at: 1:01
* SDS at: 1:36
* SDS Exit at: 0:00
* SDS at: 2:38
* SDS Exit at: 2:56
Our trade systems were productive again today. We were long twice – Market Vectors Gold Miner (GDX) and Proshares Trust Ultra S&P (SSO), and we were short twice – Proshares Ultrashort S&P (SDS).
SPX Summary for Tuesday, June 01, 2010
27 Advancers/465 Decliners
Today's SPX component winners and losers:
- Largest one day loser is APC with -19.27%
- Largest three day loser is APC with -21.11%
- Largest five day loser is APC with -20.70%
- Largest ten day loser is APC with -26.31%
- Largest one day winner is RSH with 2.89%
- Largest three day winner is NTAP with 16.00%
- Largest five day winner is NTAP with 16.03%
- Largest ten day winner is NTAP with 10.90%
*** SPX Technical Summary ***
The lowest 14 day RSI component is JNJ; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 36.
The greatest positive five day momentum component is NTAP; the greatest negative five day momentum component is APC. The average five day momentum of all 500 components is -0.25.
3.60% of the SPX components are giving a crossover Buy signal; 62.00% of the SPX components are giving a Sell signal. This is a 17.2 to 1 ratio of Sell signals over Buy signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 80 components.
- From Buy to Neutral: 2 components.
- From Neutral to Sell: 4 components.
- From Neutral to Buy: 8 components.
This is interesting here. Don’t fail to notice that the movement is all to the positive side.
The moving averages:
Close 1070.71
9 EMA 1082.32 Falling
5 DMA 1081.03 Falling
10 DMA 1087.37 Falling
20 DMA 1118.47 Falling
50 DMA 1161.43 Falling
100 DMA 1138.48 Falling
200 DMA 1105.15 Rising
10 Wk MA 1146.95 Falling
This remains quite negative.
NYSE Summary
On the NYSE 3179 issues were traded with 667 advancing issues and 2444 retreating issues, a ratio of 3.66 to 1 declining. There were 29 new highs and 37 new lows.
Declining volume was higher at a ratio of 12.32 to 1. The closing TRIN was 3.36 and the final tick was -623.
There is no way to sugar-coat these numbers; this is bearish.
Evidence of trend:
Relative to the previous 30 session average, volume was -9.00% below the average. Of the last 15 sessions 9 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 14 sessions ended on a positive tick, 2 of last 10.
The 5 day moving average of New Highs is 22 while the 5 day moving average of new lows is 42 and the 10 day moving average of Net Advancing is -569. The Net Advancing data indicates a bearish trend.
The 5 day average of New Lows continues to be greater than the New Highs; bearish.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line decreased from 201504 to 199727. This -0.89% decrease came while the SPX was losing -1.75%. The 10 day moving ratio of positive volume is 0.69 and the 10 day moving Advance/Decline ratio is 0.69. The 10 day moving ratio of positive volume has trended -0.05 over the last three days and the 10 day moving Advance/Decline ratio has trended 0 over the last three days.
The NYSE Composite Index lost -1.92% today.
NYSE Statistics:
Absolute Breadth Index: 53.98 down from previous day of 59.89
Cumulative Volume Index: 34,681.12 down from previous day of 40,068.19
High Low Logic Index: 0.46 up from previous day of 0.38
McClellan Oscillator: (207.35) down from previous day of (122.56)
McClellan 10 DMA: (271.50) up from previous day of (274.84)
McClellan Summation Index: (1,658.47) down from previous day of (1,451.12)
% Stocks Above 200 DMA: 48.62 down from previous day of 55.07
% Stocks Above 40 DMA: 15.32 down from previous day of 18.15
New High / New Low Ratio: 43.48 down from previous day of 75.86
26wk New High/Low Ratio: 34.46 down from previous day of 57.57
13wk New High/Low Ratio: 25.95 down from previous day of 49.53
4wk New High/Low Ratio: 33.62 down from previous day of 61.67
Cumulative 4-Week New Hi-Low: 436,805 down from previous day of 436,884
Nasdaq Adv/Decline: 1,402 down from previous day of 1,464
Russell 1000 Advance/ Decline Line: 2,237 down from previous day of 2,328
Russell 2000 Advance/ Decline Line: (1,977) down from previous day of (1,890)
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).
Wednesday, June 2
Economics
10:00 Pending Home Sales 4.35% cons.
10:30 Crude Oil Inventories
09:30 Australian Merchandise Trade
Earnings
Before: CSIQ, DAKT, LAYN, MDCI, ROLL, SCVL, UNFI
After: ABM, APSG, CWTR, CPRT, CYBX, DAC, DDMX, GEF, HOV
The Pending home sales index for April is expected to have risen 3.5% after rising 5.3% in March. The report is due before the start of trading. The U.S.government's weekly crude oil inventories report is due in the morning. May auto and truck sales are due throughout the afternoon.
Mel’s Missives from the Matrix:
- Total tick for the day was -10,000 and the average tick for the day was -8. There were 114 ticks greater than 600 and 123 ticks more extreme than -600. There were 12 ticks greater than 1000 and 18 ticks more extreme than -1000.
- The day's range was 24.88 points. The intraday trading range - 9:35to the close - was 24.3. The 5 DMA of daily range is 24.28.
- Evidence of the intraday trend: At 10amvolume was 69.33% of the 10 day average. By noonthe volume was 74.08% of the 10 day average, and by 2pmvolume was 71.21% of the 10 day average.
- The day's volume was 85.5% of the average daily volume for the last year. Volume was 74.6% of the last 10 day average and 105.3% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 2:00and 2:15when relative volume increased 59.6% while the SPX was dropping -0.30%. The largest drop in relative volume came between 2:15and 2:30when relative volume dropped -57.4% while the SPX was rising 0.08%.
- 1% of the SPX stocks closed with two day RSI above 90. 2% closed with RSI above 80. 26% closed with RSI below 20 and 4% closed with RSI below 10.
- 15% of the SPX are above their five day moving average, 19.8% are above their 10 day average, 8.6% are above their 20 day moving average, 8.6% are above their 50 day moving average, and 24.2% are above their 100 day moving average.
- 2% of the SPX closed above their most recent previous high.
- 84% of the SPX stocks closed below their most recent previous lows.
- 27 SPX issues advanced and 465 issues declined, a net SPX advance/decline of -438.
- Evidence of the intraday trend: At 10am, 42.6% of the SPX components were in the top half of the range. By noon, 39.2% were in the top half of the range, and by 2pm, 56.6% were in the top half of the range.
- 3.8% of stocks closed in the top half of the day's range. (96% closed in bottom half.)
- 0.2% of stocks closed in the top 10% of the day's range. 0.2% of stocks closed in the top 20% of the day's range.
- 72.8% of stocks closed in the bottom 10% of the day's range. 80.6% of stocks closed in the bottom 20% of the day's range.
- 1.2% of stocks closed within 2% of their 52 week high. 4.6% of stocks closed within 5% of their 52 week high.
- 63.2% of stocks closed within 50% of their 52 week low. 33.8% of stocks closed within 25% of their 52 week low.
- 0.6% of stocks closed within ¼% of their high for the day.
- 68% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 9.6% of the SPX components were up since the open. By noon, 23.8% were up since the open, and by 2pm, 36.8% were up since the open.
- 4.8% of the SPX closed up from the previous close; 17% closed higher than the open.
- Sectors stronger than the SPX for Tuesday:
- Technology -- Outperformed the SPX by +66%.
- Consumer Staples -- Outperformed the SPX by +147%.
- Health Care -- Outperformed the SPX by +54%.
- Consumer Discretionary -- Outperformed the SPX by +21%.
- Sectors weaker than the SPX for Tuesday:
- Basic Materials -- Underperformed the SPX by -156%.
- Energy -- Underperformed the SPX by -300%.
- Financials -- Underperformed the SPX by -26%.
- Industrials -- Underperformed the SPX by -49%.
- Utilities -- Underperformed the SPX by -62%.
- The $SOX index strength was weaker relative to the SPX Tuesday by -0.54%.
- The XLF underperformed the SPX by -0.26% Tuesday.
- The 2 Day RSI of the SPX is 23. The Dow RSI is 26, the NASDAQ is 29 and the Russell is 22.
- Over the last four sessions, the average session closed 34.27% of the range above the low. Tuesday closed at 2.8% of the daily range.
- Upside momentum moved downward Tuesday, from Friday’s 1.1 to today’s -0.25. The ratio of SPX components giving a crossover sell signal compared to buy signals moved positively to S 17.22 to 1.
- The ISEE Equity 10 day moving average Tuesday was 150.2. The lowest 10 day average in the last 52 weeks was 141.5 on 06/29/09and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 192 SPX components moved upward and 157 components downward during the after hours with 175 million shares traded.
Trade 'em well on Wednesday everyone!
-Mel
