Bears in Charge; Can They Keep Control?
by Jerome "Mel" Hickerson
Today’s session opened with some selling pressure from the futures, then responded bullishly by setting the high of the day at 9:47. But the 10am release of the consumer confidence data showed that there was an unexpected sharp drop of confidence among consumers and the SPX responded with a six point drop within a moment. By 10:15 the index was within a point and a half of where it eventually closed the session as from 10:15 through the close was mostly very narrow range choppy sideways action.
Today’s action left bears cheering but there may not be much left for the bears to cheer right here; a gap down Wednesday followed by a snapper rally would not be too surprising. The proprietary market breadth indicators that I closely follow are strongly suggesting that this rally upward has more room to run; it is debatable whether this means tomorrow or after a further pullback. I ended the session flat and will watch carefully the open tomorrow to try to determine which way to trade. For now, I am leaning Long. If the bulls do manage to regain control of the tape here it would certainly amount to a win for the bulls and would make today’s action appear to have been a gift to the bears as an opportunity to escape short positions.
One important thing to notice: We are yet again mired into the closing range between 1084 and 1114. This stinks if you are an investor. But as traders, the key here is to trade and to not hold. If you take a position, either direction, and use 1084 and 1114 as your stops odds favor you making money. The key is to recognize what is happening and use it to your advantage. The ongoing epic battle between bears and bulls means little to you as a trader; just make some money as the tug of war pulls the index back and forth through the trading range.
SPX Summary for Tuesday, February 23, 2010
46 Advancers/450 Decliners
Today's SPX component winners and losers:
• Largest one day loser is THC with -9.86%
• Largest three day loser is GT with -10.98%
• Largest five day loser is FSLR with -12.93%
• Largest ten day loser is DF with -15.51%
• Largest one day winner is EXPD with 6.65%
• Largest three day winner is MIL with 25.90%
• Largest five day winner is MIL with 27.60%
• Largest ten day winner is SII with 35.11%
*** SPX Technical Summary ***
The lowest 14 day RSI component is DNB; the highest 14 day RSI component is ARG. The average 14 day RSI of all 500 components is 49.
The greatest positive five day momentum component is MIL; the greatest negative five day momentum component is FSLR. The average five day momentum of all 500 components is 0.16.
61.00% of the SPX components are giving a crossover Buy signal; 6.80% of the SPX components are giving a Sell signal. This is a 9.0 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 9 components.
• From Buy to Neutral: 10 components.
• From Neutral to Sell: 15 components.
• From Neutral to Buy: 48 components.
*** Inside the Numbers ***
Neutral
Market Conditions Range Comment
For Date: 24-Feb
VIX % Change 7 -
McClellan Oscillator 51 -100 to 100
15 Day Overbought/Oversold Indicator 8.7 8 to 10
Closing % of Range 4 Day Ave 52.60% 45% to 80%
SPX Adv/Dec Today (404) -300 to 300 Oversold and Bullish
SPX Adv/Dec 5 DMA 18 -200 to 200
Crossover Buy/Sell Ratio B 8.97
SPX % Over 20 DMA 65.20% 20% to 80%
SPX Momentum 0.16 -
Four Week RSI (SPX, DOW, NAS, RUT) 64 30 to 70
Two Day RSI (SPX, DOW, NAS, RUT) 18 20 to 85 Oversold and Bullish
$SOX Direction Down
Sentiment 0.88 .80 to .95
Volume 3 DMA 75.59% 85% to 110%
Range 3 DMA 11.64 14 to 24
MEL's Number 2 -
MEL's Number 3 DMA (8)
Daily Trend None
Total Score 3.63
Wednesday, February 24
Economics
10:00 New Home Sales: 350 k consensus
10:30 Crude Inventories
Earnings
Before: DLTR, EV, CLWR, CHS, GRMN, SJM, JMP, LXP, SKS, TJX, TOL, RIG, TSL
After: BBI, FLS, GNK, EXRX, KONG, LTD, JAVA, RGR,
Events
10:00 Ben Bernanke Speaks (and when he clears his throat, the market gyrates….)
Auction
1:00 5-yr note auction
The government's new home sales report for January, due out in the morning, is expected to show that sales recovered a bit after plunging to a nine-month low in December. Sales are expected to have risen to a 355,000 annual unit rate from a 342,000 rate in December. The House Budget Committee holds a hearing on the Treasury Department's fiscal-year 2011 budget. Treasury Secretary Timothy Geithner is scheduled to testify. The House Oversight Committee holds a hearing on the Toyota recall, with CEO Akio Toyoda scheduled to testify. Transportation Secretary Ray LaHood and others are also due to speak.
Mel’s Random Hits:
• Total tick for the day was +40,000. This is an amazing number for a day that the SPX lost 1.2%. The first half hour was positive, the next 90 minutes were negative. We then had about 45 minute sideways beginning around 11:30, with a negative lunch hour. The rest of the day was positive with the exception of about 30 minutes around 2pm. But closing with a positive tick on a day that was down over 1% and did not start with a large gap down is a bullish feat. Bears should take note and be cautious to see what Wednesday brings.
• The day's range was 16.40 points. But almost the entire range came during the opening hour.
• The day's volume was 83.65% of the average daily volume for the last year. Volume was 100.5% of the last 10 day average.
• 5% of the SPX stocks closed with two day RSI above 90. 7% closed with RSI above 80. 43% closed with RSI below 20 and 19% closed with RSI below 10. Short-term has moved from overbought to oversold.
• 23.0% of the SPX are above their five day moving average, 65.6% are above their 10 day average, and 65.2% are above their 20 day moving average.
• 70% of the SPX stocks closed below their most recent previous lows.
• 3% of the SPX closed above their most recent previous high.
• 17.0% of stocks closed in the top half of the day's range. (83.0% closed in bottom half.)
• 43.2% of stocks closed in the bottom 20% of the day's range.
• 0.6% of stocks closed in the top 10% of the day's range.
• 6.8% of stocks closed within 2% of their 52 week high. 24.6% of stocks closed within 5% of their 52 week high.
• 28.0% of stocks closed within 50% of their 52 week low. 9.0% of stocks closed within 25% of their 52 week low.
• 2.0% of stocks closed within ¼% of their high for the day.
• 21.0% of stocks closed within ¼% of their low for the day.
• 9.6% of the SPX closed up from the previous close; 13.2% closed higher than the open.
• Sectors weaker than the SPX for the day: Energy, Basic Materials, Industrials, Technology, and Financials.
• Sectors stronger than the SPX for the day: Consumer Staples, Health Care, Utilities, and Consumer Discretionary.
• The $SOX index strength was weaker again than the SPX today for the third consecutive day.
• The 2 Day RSI of the SPX is 16. The Dow RSI is 17, NASDAQ is 13 and Russell 24. The Russell had relative strength today.
• Over the last four sessions, the average session closed 52.6% of the range above the low.
• Upside momentum fell from yesterday’s 3.48 to today’s 0.16. The ratio of SPX components giving a crossover buy signal compared to sell signals has dropped slightly to 9 to 1.
• 176 SPX components moved upward and 210 components downward during the after hours with 120 million shares traded.
Good trading Wednesday everyone!
-----------
"Mel"
Today we closed out of:
Proshares Ultrashort S&P500 (SDS) +0.96%
Proshares Ultrashort S&P500 (SDS) +0.88%
Proshares Ultrashort S&P500 (SDS) +0.45%
