Bears Try to Get Something Going
by Jerome "Mel" Hickerson
The day began with the Commerce Department reporting that Durable Goods orders grew by +0.5% during the month, which was below the consensus expectations for +0.6%. January’s reading was revised to +3.9% (Up from +3.0%). Asian markets were higher while European markets were lower on the Portugal news. Many of the European markets proceeded to close positive but near flat. New home sales were 308,000, less than the expected 315,000. Crude oil inventories rose 7 million barrels, more than last week’s 1 million.
Our regular session opened under some selling pressure from the futures. This produced a three or four point gap down at the open followed by a quick 50% bounce which faded by 10am. The SPX quickly recovered, threatening to go positive before double-topping intraday putting the high on the chart at 10:39. From then until 11:16 the index surrendered to the bears and painted the first leg of a double-bottom onto the chart. A 75 minute bounce followed topping out at 12:48 before turning back down and putting the low of the day on the chart at 1:51. The rest of the day was choppy mostly sideways trade. From top to bottom today was barely seven points; days like this are often difficult to trade but today was volatile enough intraday that it was possible to day trade successfully.
Our system had a decent day today, giving two bounce alerts, one at 11:18 and the other at 1:24. We also had some productive scalp signals (see attached chart.) A seven point range is rarely easy; today was not easy but it wasn’t impossible.
Our matrix continues to look for a pullback in the days to come; not necessarily tomorrow but the data does suggest that we should see some weakness before the end of the week.
A quick look at the charts shows a series of declining tops on the 60 minute SPX chart. The daily chart is showing a series of “train tracks”, alternating up and down bars the last four sessions; this pattern in common before pullbacks (take a good look at January’s chart.) But nothing is a given in this market; bears must assert themselves before the index puts another high on the chart.
SPX Summary for Wednesday, March 24, 2010
110 Advancers/380 Decliners
Today's SPX component winners and losers:
• Largest one day loser is JBL with -10.29%
• Largest three day loser is GENZ with -6.70%
• Largest five day loser is BHI with -10.24%
• Largest ten day loser is CNX with -14.98%
• Largest one day winner is GNW with 4.36%
• Largest three day winner is TIE with 13.99%
• Largest five day winner is TIE with 14.85%
• Largest ten day winner is CLF with 20.16%
*** SPX Technical Summary ***
The lowest 14 day RSI component is CHK; the highest 14 day RSI component is RX. The average 14 day RSI of all 500 components is 65.
The greatest positive five day momentum component is TIE; the greatest negative five day momentum component is BHI. The average five day momentum of all 500 components is -0.08.
69.80% of the SPX components are giving a crossover Buy signal; 7.20% of the SPX components are giving a Sell signal. This is a 9.7 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 4 components.
• From Buy to Neutral: 40 components.
• From Neutral to Sell: 12 components.
• From Neutral to Buy: 16 components.
NYSE Summary
On the NYSE 3183 issues were traded with 1055 advancing issues and 2018 retreating issues, a ratio of 1.91 to 1 declining. There were 270 new highs and 4 new lows.
Declining volume was higher at a ratio of 1.38 to 1. The closing TRIN was 0.72 and the final tick was -150. Note that we closed again today on a negative tick.
Evidence of trend:
Relative to the previous 30 session average, volume was -3.99% 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, 27 sessions ended on a positive tick, 8 of last 10.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line decreased from 204667 to 203704. This -0.47% decrease came while the SPX was losing -0.55%. The 10 day moving ratio of positive volume is 1.13 and the 10 day moving Advance/Decline ratio is 1.2. The 10 day moving ratio of positive volume has trended -0.1 over the last three days and the 10 day moving Advance/Decline ratio has trended -0.08 over the last three days.
The NYSE Composite Index lost -0.94% today.
Thursday, March 25
Economics
08:30 Initial Claims
08:30 Continuing Claims
02:45 France Consumer Manufactured Goods
05:30 Italy Retail Sales
05:30 Great Britain Retail Sales
07:30 Japan CPI
07:30 Japan CPI Core
Earnings
Before: ADES, BBY, CAG, CONN, FRED, LULU, MKC, UTIW
After: ACN, APP, FINL, ORCL, PBY, TIBX, WTSLA
Speeches
09:10 Sandra Pianalto
Auction
01:00 7-Yr Note Auction
Events
HXM at Citi 18th Annual Latin America Conference
SRE Analyst Meeting
POL at BB&T Capital Markets Commercial & Industrial Conference
LMNX Investor Day
ABD, BGS, DLM, URI at Barclays Capital High Yield Bond and Syndicated Loan Conference
Weekly jobless claims and continuing jobless claims are due out from the Department of Labor in the early morning. Claims are expected to have fallen to 450,000 last week from 457,000 in the previous week. Continuing claims are expected to have fallen to 4.560 million from 4.579 million in the previous week. Although the quarterly earnings reporting period is mostly over, a few companies are still reporting results this week. Best Buy reports in the morning and is expected to report earnings of $1.79 per share, versus $1.61 per share a year ago. Oracle also reports after the bell and is expected to have earned 38 cents versus 35 cents a year ago.
Mel’s Random Hits:
• Total tick for the day was -19,000. There were 48 ticks greater than 600 and 67 ticks more extreme than -600. There were 0 ticks greater than 1000 and 5 ticks more extreme than -1000. The tick action suggests institutional distribution.
• The day's range was 7.03 points. The 5 DMA of daily range is 11.68.
• Evidence of the intraday trend: At 10am volume was 78.72% of the 10 day average. By noon the volume was 98.07% of the 10 day average, and by 2pm volume was 99.43% of the 10 day average.
• The day's volume was 91.6% of the average daily volume for the last year. Volume was 97.3% of the last 10 day average and 107% of the previous day’s volume.
• 9% of the SPX stocks closed with two day RSI above 90. 17% closed with RSI above 80. 18% closed with RSI below 20 and 8% closed with RSI below 10.
• 47.6% of the SPX are above their five day moving average, 63.4% are above their 10 day average, and 80.8% are above their 20 day moving average.
• 16% of the SPX closed above their most recent previous high.
• 25% of the SPX stocks closed below their most recent previous lows.
• 110 SPX issues advanced and 380 issues declined, a net SPX advance/decline of -270.
• Evidence of the intraday trend: At 10am, 37.2% of the SPX components were in the top half of the range. By noon, 41.6% were in the top half of the range, and by 2pm, 29.2% were in the top half of the range.
• 30.2% of stocks closed in the top half of the day's range. (69.8% closed in bottom half.)
• 2.8% of stocks closed in the top 10% of the day's range. 7% of stocks closed in the top 20% of the day's range.
• 17% of stocks closed in the bottom 10% of the day's range. 31% of stocks closed in the bottom 20% of the day's range.
• 29% of stocks closed within 2% of their 52 week high. 58.4% of stocks closed within 5% of their 52 week high.
• 37.4% of stocks closed within 50% of their 52 week low. 9.6% of stocks closed within 25% of their 52 week low.
• 5.4% of stocks closed within ¼% of their high for the day.
• 26.2% of stocks closed within ¼% of their low for the day.
• Evidence of the intraday trend: At 10am, 17.6% of the SPX components were up since the open. By noon, 25.6% were up since the open, and by 2pm, 21.4% were up since the open.
• 22% of the SPX closed up from the previous close; 33.8% closed higher than the open.
• Sectors stronger than the SPX for Wednesday:
- Basic Materials -- Outperformed the SPX by +25%.
- Energy -- Outperformed the SPX by +1%.
- Financials -- Outperformed the SPX by +67%.
- Technology -- Outperformed the SPX by +6%.
- Consumer Discretionary -- Outperformed the SPX by +17%.
• Sectors weaker than the SPX for Wednesday:
- Industrials -- Underperformed the SPX by -17%.
- Consumer Staples -- Underperformed the SPX by -17%.
- Utilities -- Underperformed the SPX by -60%.
- Health Care -- Underperformed the SPX by -50%.
• The $SOX index strength was weaker relative to the SPX Wednesday by -1.37%.
• The XLF outperformed the SPX by 0.67% Wednesday.
• The 2 Day RSI of the SPX is 61. The Dow RSI is 69, the NASDAQ is 60 and the Russell is 55.
• Over the last four sessions, the average session closed 59.73% of the range above the low. Wednesday closed at 25.7% of the daily range.
• Upside momentum decreased Wednesday, from Tuesday’s 1.33 to today’s -0.08. The ratio of SPX components giving a crossover buy signal compared to sell signals also dropped to B 9.69 to 1.
• The ISEE Equity 10 day moving average Wednesday was 194.7. 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 207.3 on 01/19/10.
• 143 SPX components moved upward and 216 components downward during the after hours with 92 million shares traded.
Good trading on Thursday everyone!
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"Mel"
