Anxiety Over Earnings and Portugal
Market Recap:
This morning it appeared that the bears could be attracting a following as concerns regarding Europe were driving world markets lower with the problems in Portugal looking like they could be reaching a boiling point. With a big auction in Portugal scheduled for Wednesday, this issue could come to a head in the next couple days. So futures were pointing lower as the session approached and we had nothing on the economic calendar at all today for the U.S to move things along.
The first session of the week began with an official gap down of only one point but was really closer to three points for practical purposes. The index quickly shed a total of seven points before bouncing several points. But before 10am the index again headed lower again to put the low of the day on the chart right at the top of the hour. And then yet again the dip buyers arrived to take the tape higher off the lows as this was another frustration for the bears. After a choppy morning the rest of the session gradually traded higher with the high of the day in the last half hour.
The 1262 area is clearly setting up as a zone of support as three of the last five sessions have bottomed and bounced from that area. We have now essentially gone sideways sine the large opening gap on the first session of the year. The opening hour of the year closed at just below 1273 and today's close was a fraction below 1270. So the trend certainly is more sideways than either higher or lower. Yet this market appears to be consolidating sideways; a sideways "correction" if you will. This would seem to bode well for the bulls.
Checking our Market Leaders board this evening shows a mixed board with Technology, chip makers (SOX) and small caps (Russell 2000) all higher. Honestly, if you were going to build a rally from here, these are three main elements you would want to be leading the way higher.
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report we had three changes tonight as the Financials and Utilities move from Neutral to Sell and the Health Care sector moves from Buy to Neutral. This is certainly some of the weakest "selling" you can ever see with three successive down days resulting in a total of less than seven points net surrendered.
Twenty-three of the last twenty-six sessions have traded within a twelve point range and of the same twenty-six sessions only the January 3rd session with the large gap higher has netted more than seven points either direction. This has truly been five weeks of tight range and minimal progress.
Volume & Breadth Indicators
For the SPX Index there were 235 components advancing and 246 components declining. On the NYSE 3,129 issues were traded with 1,567 advancing issues and 1,471 retreating issues, a ratio of 1.07 to one advancing. There were 133 new highs and 13 new lows. The five day moving average of New Highs is 180 while the five day moving average of New Lows is 9 and the ten day moving average of Net Advancing is 138.
Declining volume was higher at a ratio of 1.21 to one. The closing TRIN was 1.29 and the final tick was 650. The five day average of TRIN is 1.05 and the ten day average of TRIN is 1.. The NYSE Composite Index lost -0.18% today while the SPX lost -0.14%.
For the NYSE, relative to the previous 30 session average, volume was -1.85% below the average. Of the last 15 sessions 5 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 20 sessions ended on a positive tick, 6 of last 10. For the SPX, the day's volume was 85.8% of the average daily volume for the last year. Volume was 121.2% of the last 10 day average and 78.9% of the previous day’s volume.
Breadth was slightly positive today but the volume was in the declining stocks. This remains a very weak rally or a very weak pullback.
Total tick for the day was 138,000 and the average tick for the day was 89. There were 122 ticks greater than 600 and 58 ticks more extreme than -600. There were no ticks greater than 1000 and 1 tick more extreme than -1000.
Intraday volume tapered off after the early morning selling and the most notable volume spike came around 2:30 on a down move. Checking the Nightly Breadth indicators still has a bearish look. The McClellan Oscillator still looks bearish as well as the Summation Index. Once again, the numbers look more like a 1% down day rather than a sixth of that.
Moving Average and Support/Resistance Indicators:
51.6% of the SPX are above their five day moving average, 53.8% are above their 10 day average, 61.4% are above their 20 day moving average, 77.4% are above their 50 day moving average, and 87% are above their 200 day moving average.
There were no significant moving average crossovers today.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Basic Materials -- Outperformed the SPX by +41%.
- Industrials -- Outperformed the SPX by +28%.
- Technology -- Outperformed the SPX by +6%.
- Consumer Staples -- Outperformed the SPX by +13%.
- Consumer Discretionary -- Outperformed the SPX by +6%.
Sectors weaker than the SPX for Monday:
- Energy -- Underperformed the SPX by -26%.
- Financials -- Underperformed the SPX by -8%.
- Utilities -- Underperformed the SPX by -41%.
- Health Care -- Underperformed the SPX by -2%.
In Late Trading:
151 SPX components moved upward and 174 components downward during the after hours with 270 million shares traded.
Tuesday, January 11
Economics
10:00 Wholesale Inventories 1.0% cons.
Britain Retail Sales
Britain RICS House Price Balance
Australian Trade Balance
Canada Housing Starts
Japan Trade Balance
POMO Schedule
Treasury Coupon Purchase: 7/31/2016-12/31/2017: $7-9 bln
Earnings
Before: LEN, SNX
After: FUL, SNX
The Commerce Department releases the wholesale inventories report in the morning. Inventories are expected to have risen 1.3% in November after jumping 1.9% in October.
Make it a good Tuesday!
-Mel