Bears Lose Their Grip
Note: Abbreviated update tonight as we were pretty much whacked out by our time at the hospital today.
Our Market Leaders Board reveals strength in all of our leaders today with the Sox leading and the NYSE Composite Index lagging. It is often a signal of impending weakness when the largest index of all lags.
SPX big winners were Citrix Systems Inc (CTXS) 11.11%, Pulte Homes Inc (PHM) 9.6%, and Cabot Oil & Gas Corp (COG) 7.25%. SPX big losers were Akamai Technologies Inc (AKAM) -15.43%, Metropcs Communications Inc (PCS) -12.63%, and H&R Block Inc (HRB) -12.41%.
SPX five day big winners are Pulte Homes Inc (PHM) 16.4%, Edwards Life Sciences (EW) 12.05%, and Citrix Systems Inc (CTXS) 10.95%. SPX five day big losers are Netflix Inc (NFLX) -20.56%, Big Lots Inc (BIG) -19.91%, and First Solar Inc (FSLR) -14.44%.
New Ten Day Highs: ABT, ANF, ARG, ATI, AGN, ALL, AEE, AEP, AXP, AIG, AMT, AMGN, AIV, AIZ, T, ADP, AN, AZO, AVB, AVY, BCR, BBT, BDX, BMS, BIIB, XL, BXP, BSX, BF/B, COG, CPB, COF, CBS, CNP, CF, CVX, CB, XEL, CINF, CTXS, CMS, KO, CCE, CL, CMCSA, CPWR, ED, STZ, GLW, CVS, DRI, DVA, DE, DELL, DFS, D, RRD, DTE, DUK, ROST, ETFC, EMN, ECL, EMR, ESV, EOG, EQT, EFX, EL, EXC, EXPE, FIS, FE, FMC, BEN, GME, GPS, GT, HAR, HRS, HIG, HCP, HCN, HON, HRL, DHI, HBAN, TEG, IPG, IFF, IP, IRM, ITT, JNJ, KMB, KIM, KLAC, KFT, LLL, LEN, LUK, LLY, LTD, LMT, L, LSI, M, MMC, MAS, MA, MJN, MKC, MET, MOLX, MWW, MUR, NSM, NWL, NWSA, NBL, NSC, NU, NTRS, ORLY, OXY, OMC, JCP, PFE, PCG, PNW, PXD, PCL, PNC, PPG, PPL, PX, PCP, PFG, PGN, PLD, PEG, PSA, PHM, QLGC, PWR, RRC, RTN, RF, RDC, SLE, SCG, SCHW, SNI, SHW, SPG, SNA, SWN, HOT, STT, SUN, STI, TE, TLAB, TDC, TER, TIF, TWC, TWX, TIE, TJX, TSS, TRV, AEM, KBH, USB, VTR, VZ, VFC, VNO, DIS, WPI, WDC, WU, AMZN
New Ten Day Lows: AET, AKAM, BLL, HRB, CELG, CHRW, CME, CI, CAG, SAI, CVH, EXPD, ESRX, FDX, FTR, GD, HUM, CLF, K, MDT, MDP, PCS, OI, THC, UPS, UNH, VXX, SH, VAR, WLP
Volume & Breadth Indicators
For the SPX Index there were 396 components advancing and 101 components declining. On the NYSE 3,143 issues were traded with 2,059 advancing issues and 969 retreating issues, a ratio of 2.12 to one advancing. There were 164 new highs and 16 new lows. The five day moving average of New Highs is 100 while the five day moving average of New Lows is 32 and the ten day moving average of Net Advancing is 222. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 2.13 to one. The closing TRIN was 1.09 and the final tick was 436. The five day average of TRIN is 1.37 and the ten day average of TRIN is 1.3. The NYSE Composite Index gained 0.65% today while the SPX gained 0.66%.
For the NYSE, relative to the previous 30 session average, volume was -4.39% below the average. Of the last 15 sessions 4 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 18 sessions ended on a positive tick, 7 of last 10. For the SPX, the day's volume was 97.3% of the average daily volume for the last year. Volume was 109% of the last 10 day average and 94.6% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 117,000 and the average tick for the day was 76. There were 9 ticks greater than 600 and 9 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000.
The tick data today should not be overlooked. The absence of large ticks suggests that institutions were sitting today's action out, simply waiting on the sidelines.
Moving Average and Support/Resistance Indicators:
81% of the SPX are above their five day moving average, 75.2% are above their 10 day average, 63.6% are above their 20 day moving average, 55.2% are above their 50 day moving average, and 75.6% are above their 200 day moving average.
There were two significant moving average crossovers today as the Dow 5 DMA moved above the 20 DMA and the Dow 20 DMA crossed below the 50 DMA. Our moving average Power Rating is 52 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Thursday:
- Energy -- Outperformed the SPX by +36%.
- Financials -- Outperformed the SPX by +17%.
- Technology -- Outperformed the SPX by +11%.
- Consumer Staples -- Outperformed the SPX by +21%.
- Consumer Discretionary -- Outperformed the SPX by +42%.
Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -78%.
- Industrials -- Underperformed the SPX by -8%.
- Utilities -- Underperformed the SPX by -11%.
- Health Care -- Underperformed the SPX by -70%.
What We Learned from Thursday's Action:
Thursday was session 2 to close above the 5 DMA, session 2 to close above the 10 DMA, session 2 to close above the 20 DMA, and session 2 to close above the 50 DMA. This was also session 13 for the 5 DMA to close below the 20 DMA. One early sign of a sustainable rally or pullback is often a close above or below the 10 DMA. The SPX closed 19.9 points above the 10 DMA.
The SPX 5 DMA is 1381.63, 10 DMA is 1380.08, 20 DMA is 1386.94, 50 DMA is 1382.15, 100 DMA is 1334.17, and 200 DMA is 1274.19.
On Thursday the SPX traded above the opening range but did not trade below the opening range. 75.4% of the SPX closed up from the previous close; 83% closed higher than the open. During Thursday's session the SPX gained 9.34 points from open to close. The SPX intraday trading range was 13.64 points. The 5-Day average intraday trading range is 9.4 points, the 10-Day average is 11.2 points, and the 20-Day average is 12.07 points. The trading range is contracting. The 5-Day SPX gain is 1.67%, the 10-Day gain is 0.89%, and the 15-Day gain is 0.07%.
Note: The Opening Range Breakout is one of the simplest day trading set-ups to understand. The first hour of the trading day is the most volatile. Bears and bulls are battling it out in the stock market, trying to show you who’s going to be in charge for the day. If we break out of that trading range, it's telling us that new buying or selling is impacting traders' assessments of value. Looking back at today’s breakouts also helps us grasp sentiment going forward because when a clear trend is established it often carries through for several sessions.
The Market Environment for Friday is -1. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be higher. Mel's 10 Day Oscillator is 44 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bearish for Friday's session.
Today was troubling for the bears. While Wednesday's rally was reasonably anticipated, today's continuation was unexpected. Our internals have turned upward, suggesting higher prices.
The tick action today was very unconvincing. We're going to cautiously wait to see what Friday brings but this is an uncomfortable place to be short.
Friday, April 27
08:30 Employment Cost Index – consensus 0.5%
08:30 GDP QoQ – consensus 2.5%
08:30 Personal Consumption – consensus 2.3%
08:30 GDP Price Index – consensus 2.1%
08:30 Core PCE – consensus 2.1%
09:55 University of Michigan Confidence – consensus 75.7
11:00 Fed selling $8b-$8.75b notes in 2 to 3-year range
JPY Bank of Japan Rate Decision
01:30 CNY Industrial Profits
05:00 JPY Housing Starts
06:00 EUR German Gfk Consumer Confidence
07:00 CHF KOF Swiss Leading Indicator
Before: AIMC, ACO, AXL, ABFS, ALV, B, CPN, CVX, CVH, COV, DTE, FLIR, GT, HELE, HMSY, IMAX, IMGN, IP, KKR, KVHI, LBY, LPNT, MGLN, HZO, MRK, MOG.A, NAFC, NWL, NEM, PPC, PG, PB, PFS, RUTH, SAIA, SNMX, SPG, TOT, VFC, VTR, WY, ZBRA
After: PVR, PBI
Thank you for reading. Think on it, trade on it, and be well.