Bears Last Stand?
by Jerome "Mel" Hickerson
Before the open, the government reported that Import Prices for the month of February were down -0.3%, which was a tenth more than the consensus for a drop of -0.2%. Housing Starts in February fell 5.89% to an annualized rate of 575K, which was a little above the consensus for 570K. The January numbers were revised higher to 611K from 591K. Building Permits for February fell 1.6% to 612K, but were higher than the consensus of 601K.
Overnight the overseas markets were mostly higher with only Japan and Hong Kong showing smallish declines. Stock futures were up modestly and the regular session opened with a small move upward, quickly surrendered the gains putting the low of the day on the charts at 9:51. The following hour was a weak two wave ascent until buyers hit just before 11am. By 11:20, the SPX had reached a plateau and gently descended into the FOMC announcement.
With the announcement, the dance began. The first step was a surge upward, followed by the customary 15 minute countermove before settling in to surge upward into the close. But today was one of those rare FOMC days when volume barely tagged the ten day average and the range was well under 1%. It’s sad when the FOMC announcement can’t even stir up some volatility.
All systems struggle from time to time; my system has two parts: Day trading and Swing trading. The day trading element depends on some volatility and intraday trading range; a 12 point trading range is usually the dividing line between a good day and a poor day. The swing trading element fares best in markets that move in both directions. Permabears thrive in one direction down markets and permabulls thrive in unidirectional upward markets. My system thrives somewhere in between, where the market lives most of the time. But being hit with a market that moves in only one direction all the while trading in tight daily ranges, well…stinks. The only system I’ve heard of that doesn’t struggle from time to time is Bernie Madoff’s and last I heard he was a guest of the Federal government. My system is real and is successful over time. But the market is giving it a cold hand right here and now.
The SPY is at a 13 day winning streak; that has never happened before. The current Dow streak is only at six but even that has been exceeded only twice in this year long rally and both times were only seven days. This is truly an odd time for the market; the ramp up from the February lows without an earnings season kick off to fuel the surge is extremely rare.
For tomorrow, it’s Armageddon for the bears; if the bears fail to close the week lower than where we are right now (1159.46), then I won’t know what to think except that this rocket is moonbound without any stops along the way. Everything in my matrix says we close Thursday lower than today’s close.
SPX Summary for Tuesday, March 16, 2010
406 Advancers/88 Decliners
Today's SPX component winners and losers:
• Largest one day loser is S with -3.36%
• Largest three day loser is BSX with -10.46%
• Largest five day loser is BSX with -9.30%
• Largest ten day loser is BSX with -10.46%
• Largest one day winner is HOG with 6.87%
• Largest three day winner is GE with 10.04%
• Largest five day winner is ZION with 15.23%
• Largest ten day winner is AIG with 34.15%
*** SPX Technical Summary ***
The lowest 14 day RSI component is CHK; the highest 14 day RSI component is FO. The average 14 day RSI of all 500 components is 71.
The greatest positive five day momentum component is ZION; the greatest negative five day momentum component is BSX. The average five day momentum of all 500 components is 1.85.
76.60% of the SPX components are giving a crossover Buy signal; 4.80% of the SPX components are giving a Sell signal. This is a 16.0 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 7 components.
• From Buy to Neutral: 14 components.
• From Neutral to Sell: 3 components.
• From Neutral to Buy: 22 components.
NYSE Summary
On the NYSE 3177 issues were traded with 2247 advancing issues and 814 retreating issues, a ratio of 2.76 to 1 advancing. There were 405 new highs and 1 new low.
Advancing volume was higher at a ratio of 5.03 to 1. The closing TRIN was 0.55 and the final tick was 689.
Evidence of trend:
Relative to the previous 30 session average, volume was -6.56% below the average. Of the last 15 sessions 2 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 26 sessions ended on a positive tick, 9 of last 10.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line increased from 201345 to 202778. This 0.71% increase came while the SPX was gaining 0.77%.
Wednesday, March 17
Economics
08:30 Core PPI 0.1% cons.
08:30 PPI -0.1% cons.
10:30 Crude Inventories
Earnings
Before: ATU, GIS, NWPX, HEAT, SMTS, TNP
After: CLC, GES, MLHR, HIS, NKE, STRI
Speeches
Richard Fisher
Events
AMSC, LIME, HEV, DOW at Jefferies Global Cleantech Conference
R at Credit Suisse Transportation Small/Mid Cap Conference
ARRS Analyst and Investor Conference
LSI Analyst Day
DFS Analyst Meeting
TREX Analyst Meeting
DT Investor Day
CNW, RBC at Stephens West Coast 1-on-1 Conference
AOB, RGN, SQNM, AKNS at ROTH OC Growth Stock Conference
JACK, CBRL at JPMorgan Gaming, Lodging, Restaurant & Leisure Conference
MDU Analyst Meeting
ARUN Analyst Meeting
The Producer Price index (PPI) is expected to have fallen 0.1% in February after rising 1.4% in the previous month. The core PPI is expected to have risen 0.1% after rising 0.3% in January. The weekly crude oil inventories report is also due in the morning.
Mel’s Random Hits:
• Total tick for the day was 188,000.
• The day's range was 9.93 points.
• The day's volume was 83.88% of the average daily volume for the last year. Volume was 100.1% of the last 10 day average and 105.2% of the previous day’s volume.
• 27% of the SPX stocks closed with two day RSI above 90. 44% closed with RSI above 80. 7% closed with RSI below 20 and 3% closed with RSI below 10.
• 78% of the SPX are above their five day moving average, 83% are above their 10 day average, and 90.6% are above their 20 day moving average.
• 54% of the SPX stocks closed below their most recent previous lows.
• 3% of the SPX closed above their most recent previous high.
• 84% of stocks closed in the top half of the day's range. (16% closed in bottom half.)
• 2.6% of stocks closed in the bottom 20% of the day's range.
• 35.2% of stocks closed in the top 10% of the day's range.
• 36.6% of stocks closed within 2% of their 52 week high. 57.8% of stocks closed within 5% of their 52 week high.
• 33.2% of stocks closed within 50% of their 52 week low. 9.6% of stocks closed within 25% of their 52 week low.
• 50.6% of stocks closed within ¼% of their high for the day.
• 2.2% of stocks closed within ¼% of their low for the day.
• 80.4% of the SPX closed up from the previous close; 74.4% closed higher than the open.
• Sectors weaker than the SPX for Tuesday:
- Consumer Staples
- Health Care
- Consumer Discretionary
• Sectors stronger than the SPX for Tuesday:
- Basic Materials
- Energy
- Financials
- Industrials
- Tech
- Utilities
• The $SOX index strength was stronger than the SPX Tuesday.
• The 2 Day RSI of the SPX is 99. The Dow RSI is 99, NASDAQ is 97 and Russell 84.
• Over the last four sessions, the average session closed 83.5% of the range above the low.
• Upside momentum increased Tuesday, from Monday’s 0.97 to today’s 1.85. The ratio of SPX components giving a crossover buy signal compared to sell signals also moved upward to 16 to 1.
• Positive reactions to FOMC decisions have not been good for stocks in the days following, especially when it occurs at new yearly highs. The SPX has closed at a 52 week high on FOMC day eight times since 1996. There was a lower close in the near term every time.
• 188 SPX components moved upward and 185 components downward during the after hours with 105 million shares traded.
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)
