Assault on 1131
by Jerome "Mel" Hickerson
Overnight futures bottomed just before 6am and rallied on the back of the ADP employment numbers, moving upward off the lows almost eight points before the open, pointing towards a modestly higher open.
The session began with a small two point gap upward and zigzagged upward another couple of points before 10am. 10am saw a quick almost three point gap higher as the ISM data exceeded expectations and suggested that the economy is expanding. That was followed by some heavy selling to put the low of the day on the chart at 10:38am. The rest of the session climbed steadily higher with the exception of a shallow pullback between 12:30 and 1:30pm. This was yet another session that would be difficult to argue that the bulls did not control the tape.
The tick action today belonged entirely to the bulls. While the extreme (greater than 1000 ticks) were few today, the greater than 600 ticks were very lopsided in favor of the bulls, 144 to 8.
If you’re a bear, this move higher is painful to endure. But until that June high of 1131 is taken out, we still have a lower high on the chart. On the other hand, August will put an end to the stair-stepping downward pattern on the monthly charts as this monthly bar has already breached above the July highs.
The bulls have a lot going their way with the seemingly endless drip drip drip of low volume levitation higher. But the bears can point out the overbought conditions and the low volume that has gotten the market up here; any assault of bad news is likely to open the floodgates of volume on the downside.
We’ve really got a mixed bag with the Nine Sectors as we see three Sells, two Buys, and four Neutrals. I continue to believe that layering in shorts here with a stop above 1131 makes sense for swing traders. These small range days are a characteristic of a topping process; but this process can continue quite a long while.
Our trade systems are happier with at least a 12-14 point range; these eight and nine point days are difficult to trade. We eked out some gains again today but we would welcome more volatility to trade.
Thursday, August 5
Economics
08:30 Initial Claims
08:30 Continuing Claims
06:00 German Manufactures Orders
07:45 EMU ECB Announcement
Earnings
Before: ACM, ATK, ARCC, BZH, BVF, CEL, CNQ, CSIQ, CAH, CBOE, CI, CHD, DK, DTV, EBIX, FIG, FWLT, FSYS, HWK, HGG, H, HOC, KSWS, LAMR, PCS, MF, OMG, OHI, ROLL, SMBL, JOE, SXCI, TDS, TDW, VIA.B, WMG, WWE
After: ATVI, ALJ, NILE, CPKI, CF, COGT, CROX, TRAK, DM, EBS, KFT, ME, MHK, NANO, ORCC, POWR, RMD, SGMS, SQNM, KNOT, VCLK,
The Department of Labor releases weekly jobless claims figures in the morning. The number of Americans filing new claims for unemployment last week is expected to drop slightly to 455,000. Continuing claims, a measure of Americans who have been receiving benefits for a week or more, is expected to fall to 4.53 million.
Mel’s Missives from the Matrix:
- Total tick for the day was 257,000 and the average tick for the day was 167. There were 144 ticks greater than 600 and 8 ticks more extreme than -600. There were 3 ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 9.29 points. The intraday trading range - 9:35 to the close - was 9.14. The 5 DMA of daily range is 14.04.
- Evidence of the intraday trend: At 10am volume was 82.01% of the 10 day average. By noon the volume was 91.75% of the 10 day average, and by 2pm volume was 92.55% of the 10 day average.
- The day's volume was 82.2% of the average daily volume for the last year. Volume was 90.2% of the last 10 day average and 102.7% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 12:15 and 12:30 when relative volume increased 23.6% while the SPX was rising 0.13%. The largest drop in relative volume came between 1:15 and 1:30 when relative volume dropped -31.8% while the SPX was dropping -0.04%.
- 21% of the SPX stocks closed with two day RSI above 90. 37% closed with RSI above 80. 7% closed with RSI below 20 and 3% closed with RSI below 10.
- 76.8% of the SPX are above their five day moving average, 71% are above their 10 day average, 75% are above their 20 day moving average, 70.8% are above their 50 day moving average, 51% are above their 100 day moving average, and 56% are above their 150 day moving average.
- 39% of the SPX closed above their most recent previous high.
- 11% of the SPX stocks closed below their most recent previous lows.
- 381 SPX issues advanced and 106 issues declined, a net SPX advance/decline of 275.
- Evidence of the intraday trend: At 10am, 59.8% of the SPX components were in the top half of the range. By noon, 54% were in the top half of the range, and by 2pm, 52% were in the top half of the range.
- 75.4% of stocks closed in the top half of the day's range. (24.4% closed in bottom half.)
- 18.8% of stocks closed in the top 10% of the day's range. 44% of stocks closed in the top 20% of the day's range.
- 2.6% of stocks closed in the bottom 10% of the day's range. 6% of stocks closed in the bottom 20% of the day's range.
- 11.8% of stocks closed within 2% of their 52 week high. 23% of stocks closed within 5% of their 52 week high.
- 78.8% of stocks closed within 50% of their 52 week low. 45.8% of stocks closed within 25% of their 52 week low.
- 30% of stocks closed within ¼% of their high for the day.
- 3% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 76.4% of the SPX components were up since the open. By noon, 67.4% were up since the open, and by 2pm, 64% were up since the open.
- 76.4% of the SPX closed up from the previous close; 72.2% closed higher than the open.
- Sectors stronger than the SPX for Wednesday:
- Basic Materials -- Outperformed the SPX by +31%.
- Energy -- Outperformed the SPX by +19%.
- Industrials -- Outperformed the SPX by +52%.
- Technology -- Outperformed the SPX by +2%.
- Health Care -- Outperformed the SPX by +38%.
- Consumer Discretionary -- Outperformed the SPX by +105%.
- Sectors weaker than the SPX for Wednesday:
- Financials -- Underperformed the SPX by -21%.
- Consumer Staples -- Underperformed the SPX by -24%.
- Utilities -- Underperformed the SPX by -22%.
- The $SOX index strength was stronger relative to the SPX Wednesday by 0.37%.
- The XLF underperformed the SPX by -0.21% Wednesday.
- The 2 Day RSI of the SPX is 79. The Dow RSI is 81, the NASDAQ is 80 and the Russell is 74.
- Over the last four sessions, the average session closed 73.21% of the range above the low. Wednesday closed at 86% of the daily range.
- Upside momentum increased Wednesday, from Tuesday’s -0.02 to today’s 1.78. The ratio of SPX components giving a crossover sell signal compared to buy signals also increased slightly to B 4.56 to 1.
- The ISEE Equity 10 day moving average Wednesday was 168.6. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10 and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 179 SPX components moved upward and 164 components downward during the after hours with 106 million shares traded.
Trade 'em well on Thursday everyone!
-Mel
