Bears Have Their Day
by Jerome "Mel" Hickerson
It was a quiet morning for economic data to review before the open but there was plenty of news during the session. Fears over sovereign debt brought about selling pressure at the open but as we’ve seen repeatedly dip buyers brought the SPX back into positive territory as the high of the day was put on the chart at 10:47. Then the hammer came down as S&P lowered the debt rating on Portugal. The index cascaded 20 points in the next 75 minutes before mounting a valiant 10 point bounce. But then a most unusual thing happened; sellers sold the bounce and the index fell 16 points into the close.
Yes, today was quite different, marking two consecutive days of closing at the lows of the day. Today, there were bears in them woods.
Backing up a bit, I'd like to share a chart that I shared with subscribers last Friday. This is a chart of the VIX from Friday showing a steep rise in the VIX at the close while the SPX was also rising; this is an unusual occurrence and suggested to me that a big money player was expecting some bad news to hit the market. Someone made a lot of money on that bet.
Now, looking ahead, what can we expect? My guess is that the SPX still pays a visit to the 1150-1160 area. There is massive support in these areas and any move below 1150 would have to come on some really bad news, I believe. But even sooner than any visit to that area of support is the question of what happens tomorrow. Wednesday we get the FED announcement and this always complicates trading because it is really impossible to predict the reaction of traders to the announcement. But it is important to recognize that the mornings of these announcement are pretty predictably bullish.
Once again, we revisit the VIX. Over the last year, eight times has the VIX jumped 18% or more within two sessions. Six times the SPX bounced the next day and only one time has it not bounced with a net increase over the following three sessions. (See data chart attached.) Odds would seem therefore to favor a bounce in the coming days. But keep in mind that the FED announcement tomorrow is really a wildcard in the mix.
SPX Summary for Tuesday, April 27, 2010
17 Advancers/478 Decliners
Today's SPX component winners and losers:
• Largest one day loser is ODP with -21.12%
• Largest three day loser is NYT with -15.07%
• Largest five day loser is BAX with -20.75%
• Largest ten day loser is AKS with -22.88%
• Largest one day winner is WU with 6.26%
• Largest three day winner is WU with 8.63%
• Largest five day winner is HBAN with 14.49%
• Largest ten day winner is HBAN with 17.31%
*** SPX Technical Summary ***
The lowest 14 day RSI component is AKS; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 52.
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 -1.26.
58.00% of the SPX components are giving a crossover Buy signal; 17.20% of the SPX components are giving a Sell signal. This is a 3.4 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 5 components.
• From Buy to Neutral: 37 components.
• From Neutral to Sell: 25 components.
• From Neutral to Buy: 4 components.
The moving averages:
Close 1183.71
9 EMA 1205.29 Falling
5 DMA 1205.53 Falling
10 DMA 1204.68 Falling
20 DMA 1195.08 Rising
50 DMA 1159.63 Rising
100 DMA 1134.18 Rising
200 DMA 1086.30 Rising
10 Wk MA 1168.44 Falling
NYSE Summary
On the NYSE 3208 issues were traded with 507 advancing issues and 2624 retreating issues, a ratio of 5.18 to 1 declining. There were 201 new highs and 15 new lows.
Declining volume was higher at a ratio of 17.66 to 1. The closing TRIN was 3.41 and the final tick was -660.
Evidence of trend:
Relative to the previous 30 session average, volume was 47.43% above the average. Of the last 15 sessions 12 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 23 sessions ended on a positive tick, 7 of last 10.
The 5 day moving average of New Highs is 399 while the 5 day moving average of new lows is 11 and the 10 day moving average of Net Advancing is 161.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line decreased from 211992 to 209875. This -1.01% decrease came while the SPX was losing -2.39%. The 10 day moving ratio of positive volume is 0.81 and the 10 day moving Advance/Decline ratio is 1.11. The 10 day moving ratio of positive volume has trended -0.27 over the last three days and the 10 day moving Advance/Decline ratio has trended -0.23 over the last three days.
The NYSE Composite Index lost -2.79% today.
NYSE Statistics:
Absolute Breadth Index: 32.26 down from previous day of 32.26
Cumulative Volume Index: 74,220.87 down from previous day of 74,220.87
High Low Logic Index: 0.73 down from previous day of 0.73
McClellan Oscillator: (106.28) down from previous day of (106.28)
McClellan 10 DMA: (14.69) down from previous day of (1.48)
McClellan Summation Index: 3,537.81 down from previous day of 3,537.81
% Stocks Above 200 DMA: 83.99 down from previous day of 83.99
% Stocks Above 40 DMA: 66.39 down from previous day of 66.39
New High / New Low Ratio: 93.12 down from previous day of 93.12
26wk New High/Low Ratio: 86.28 down from previous day of 86.28
13wk New High/Low Ratio: 79.59 down from previous day of 79.59
4wk New High/Low Ratio: 46.61 down from previous day of 46.61
Cumulative 4-Week New Hi-Low: 445,899 down from previous day of 445,899
Nasdaq Adv/Decline: 1,771 down from previous day of 1,771
Russell 1000 Advance/ Decline Line: 2,712 down from previous day of 2,712
Russell 2000 Advance/ Decline Line: (1,553) down from previous day of (1,553)
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, April 28
Economics
10:30 Crude Inventories
02:15 FOMC Minutes
04:00 German PPI
09:30 Australia CPI
Earnings
Before: FLWS, ATI, AOL, ABX, BCRX, CMCSA, GLW, CRY, DTG, ETH, BEN, GD, GT, HES, IACI, JBLU, JNY, MSO, NOC, OC, PFCB, PX, RCL, RDS.A, SEE, SBNY, SLAB, S, TMO, TEL, UMC, WLB, WYN
After: ACE, AKAM, ALL, AIZ, BIDU, CBT, COG, BEAT, CBG, CRA, CERN, CLF, SCOR, CLB, CCI, DIVX, WIRE, ESRX, DAVE, FSLR, GG, GMCR, HRS, ITRI, KALU, LNC, LOGM, MANT, MORN, ORLY, OII, OPWV, PEET, RAI, RNOW, TTEK, VRSN, WLT, WLL, XLNX
Auction
1:00 5-yr Note Auction
The Federal Reserve's two-day policy meeting finishes, with an announcement on interest rates due in the afternoon. The FED is widely expected to hold the fed funds rate steady at historic lows near zero percent. What the FED says in the statement will likely move markets in the afternoon, particularly if they give more details about how they plan to withdraw trillions in stimulus put into play amid the height of the financial crisis. Any indication about the timing for raising interest rates would also move markets.
Mel’s Missives from the Matrix:
• Total tick for the day was -211,000 and the average tick for the day was -138. There were 36 ticks greater than 600 and 171 ticks more extreme than -600. There were no ticks greater than 1000 and 22 ticks more extreme than -1000. The tick action suggests institutional distribution.
• The day's range was 29.76 points. The 5 DMA of daily range is 17.69.
• Evidence of the intraday trend: At 10am volume was 104.88% of the 10 day average. By noon the volume was 121.81% of the 10 day average, and by 2pm volume was 126.22% of the 10 day average.
• The day's volume was 148.6% of the average daily volume for the last year. Volume was 121.7% of the last 10 day average and 131.9% of the previous day’s volume.
• Evidence of the intraday trend: The largest increase in relative volume came between 11:15 and 11:30 when relative volume increased 83.8% while the SPX was dropping -0.73%. The largest drop in relative volume came between 11:45 and 12:00 when relative volume dropped -61.9% while the SPX was dropping -0.25%.
• 2% of the SPX stocks closed with two day RSI above 90. 2% closed with RSI above 80. 56% closed with RSI below 20 and 22% closed with RSI below 10.
• 6.4% of the SPX are above their five day moving average, 25% are above their 10 day average, 44.6% are above their 20 day moving average, 74.4% are above their 50 day moving average, and 79.6% are above their 100 day moving average.
• 2% of the SPX closed above their most recent previous high.
• 86% of the SPX stocks closed below their most recent previous lows.
• 19 SPX issues advanced and 476 issues declined, a net SPX advance/decline of -457.
• Evidence of the intraday trend: At 10am, 45.2% of the SPX components were in the top half of the range. By noon, 4.2% were in the top half of the range, and by 2pm, 23.6% were in the top half of the range.
• 2.6% of stocks closed in the top half of the day's range. (97.2% 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.
• 62.8% of stocks closed in the bottom 10% of the day's range. 86.4% of stocks closed in the bottom 20% of the day's range.
• 2.4% of stocks closed within 2% of their 52 week high. 40.2% of stocks closed within 5% of their 52 week high.
• 43.2% of stocks closed within 50% of their 52 week low. 11.6% of stocks closed within 25% of their 52 week low.
• 0.6% of stocks closed within ¼% of their high for the day.
• 46.4% of stocks closed within ¼% of their low for the day.
• Evidence of the intraday trend: At 10am, 19.4% of the SPX components were up since the open. By noon, 7% were up since the open, and by 2pm, 11% were up since the open.
• 3.8% of the SPX closed up from the previous close; 6% closed higher than the open.
• Sectors stronger than the SPX for Tuesday:
- Technology -- Outperformed the SPX by +38%.
- Consumer Staples -- Outperformed the SPX by +59%.
- Utilities -- Outperformed the SPX by +64%.
- Health Care -- Outperformed the SPX by +118%.
• Sectors weaker than the SPX for Tuesday:
- Basic Materials -- Underperformed the SPX by -122%.
- Energy -- Underperformed the SPX by -78%.
- Financials -- Underperformed the SPX by -101%.
- Industrials -- Underperformed the SPX by -29%.
- Consumer Discretionary -- Underperformed the SPX by -69%.
• The $SOX index strength was weaker relative to the SPX Tuesday by -1.16%.
• The XLF underperformed the SPX by -1.01% Tuesday.
• The 2 Day RSI of the SPX is 8. The Dow RSI is 10, the NASDAQ is 8 and the Russell is 15.
• Over the last four sessions, the average session closed 52.57% of the range above the low. Tuesday closed at 6.8% of the daily range.
• Upside momentum decreased Tuesday, from Monday’s 2.71 to today’s -1.26. The ratio of SPX components giving a crossover buy signal compared to sell signals also decreased to B 3.37 to 1.
• The ISEE Equity 10 day moving average Tuesday was 231.8. 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.
• 201 SPX components moved upward and 177 components downward during the after hours with 168 million shares traded.
Trade 'em well on Wednesday everyone!
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"Mel"
