Bulls Bounce Back
by Jerome "Mel" Hickerson
Futures flew overnight, moved down several points off the highs, and then ramped up strongly before the open. Going into the session the key question of the day was if the bulls could make the early gains hold up. The Labor Department reported that initial claims for unemployment insurance for the week ending June 6 fell by 3,000 to 456K. The week’s total was above the Reuters consensus for a reading of 456K. Continuing Claims for unemployment for the week ending May 29 were below consensus at 4.462M vs. expectations for 4.604M. For comparison purposes, last week’s revised total was 4.717M (from 4.666M).
The session opened with a huge 20 point up move in the first few minutes, then consolidated briefly before climbing another six points before 10am. It looked like this would be the high of the day as the SPX moved choppily sideways with a slight downward bias until around 1pm. The intraday trading low came at 12:46and the index moved lazily for the next half hour before beginning to methodically climb the ladder into the close, closing just off the high of the day.
It’s impossible for an unbiased observer to not look on today’s action as bullish, just as yesterday’s action was bearish. Today’s chart bar set the third consecutive higher high and third consecutive higher low; all a bullish pattern. The bulls managed to push the ball down the field and further from the abyss. Breadth today was stunningly positive; the positive volume ratio was the highest in more than a year.
But I am bothered by one little piece of data. I track the technology sector and how it moves related to the SPX; I have data going back to January of 1950. I have found a fairly reliable pattern is all this data and this pattern is troubling right now. Nothing is ever 100% in this game; you simply look for patterns that work often, never expecting certainties. This particular data doesn’t trigger often and it is about 70% reliable but it is suggesting a significant down move in the days to come.
Remember: It’s only a suggested move. It could be possibly just a hangover from the wild oscillations we have had recently; I can’t say. But I recommend caution on the long side and won’t feel comfortable until we get several days behind us. It’s worth keeping this in mind; the 1040 abyss is not really that far away.
Our trade systems rocked again today as we focused on Market Vectors Gold Miners (GDX) and ProShares Ultra S&P500 ETF (SSO). The key in a market like today is to simply put bias aside and play what is handed to you; when the market rocks back and forth, don’t fight it, play along with it.
A few words of self-promotion here. Our Marketspath website recently reconfigured and streamlined services. Gary and I have different trading styles and very different methods but we do have one important element in common: We are making money for subscribers. I hope readers pay attention to the nightly chart that I post of my trade signals; it should be obvious that we are doing something right that warrants a look. These calls, as always, were made real-time and posted live for our subscribers to take advantage of.
Day Trade Systems Update: (Signals today)
* GDX Long at: 10:30
* GDX Short at: 11:21
* SSO at: 11:53
* SSO at: 12:10
* GDX Long at: 12:16
* GDX Short at: 1:06
* GDX Long at: 2:02
* SDS at: 3:00
SPX Summary for Thursday, June 10, 2010
488 Advancers/6 Decliners
Today's SPX component winners and losers:
- Largest one day loser is SHLD with -3.87%
- Largest three day loser is APC with -12.79%
- Largest five day loser is APC with -15.06%
- Largest ten day loser is APC with -26.76%
- Largest one day winner is APC with 12.44%
- Largest three day winner is TIE with 16.41%
- Largest five day winner is ESV with 9.74%
- Largest ten day winner is NBR with 23.08%
*** SPX Technical Summary ***
The lowest 14 day RSI component is GIS; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 53.
The greatest positive five day momentum component is ESV; the greatest negative five day momentum component is GIS. The average five day momentum of all 500 components is -1.74.
7.00% of the SPX components are giving a crossover Buy signal; 71.80% of the SPX components are giving a Sell signal. This is a 10.3 to 1 ratio of Sell signals over Buy signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 25 components.
- From Buy to Neutral: 17 components.
- From Neutral to Sell: 19 components.
- From Neutral to Buy: 12 components.
The moving averages:
Close 1086.84
9 EMA 1060.50 Falling
5 DMA 1063.98 Falling
10 DMA 1078.43 Rising
20 DMA 1091.24 Falling
50 DMA 1148.12 Falling
100 DMA 1133.69 Falling
200 DMA 1107.61 Rising
10 Wk MA 1136.96 Rising
NYSE Summary
On the NYSE 3204 issues were traded with 2731 advancing issues and 405 retreating issues, a ratio of 6.74 to 1 advancing. There were 38 new highs and 20 new lows.
Advancing volume was higher at a ratio of 44.07 to 1. The closing TRIN was 0.15 and the final tick was 846.
Evidence of trend:
Relative to the previous 30 session average, volume was -17.00% below the average. Of the last 15 sessions 7 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 14 sessions ended on a positive tick, 6 of last 10.
The 5 day moving average of New Highs is 30 while the 5 day moving average of new lows is 66 and the 10 day moving average of Net Advancing is 196.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line increased from 199522 to 201848. This 1.15% increase came while the SPX was gaining 2.87%. The 10 day moving ratio of positive volume is 1.03 and the 10 day moving Advance/Decline ratio is 1.13. The 10 day moving ratio of positive volume has trended 0.12 over the last three days and the 10 day moving Advance/Decline ratio has trended 0.17 over the last three days.
The NYSE Composite Index gained 3.41% today.
NYSE Statistics:
Absolute Breadth Index: 50.23 down from previous day of 51.25
Cumulative Volume Index: 45,281.17 up from previous day of 39,562.72
High Low Logic Index: 0.50 down from previous day of 0.52
McClellan Oscillator: 69.20 up from previous day of (81.58)
McClellan 10 DMA: (85.56) up from previous day of (116.81)
McClellan Summation Index: (2,121.10) up from previous day of (2,190.30)
% Stocks Above 200 DMA: 50.44 up from previous day of 41.11
% Stocks Above 40 DMA: 22.74 up from previous day of 16.81
New High / New Low Ratio: 66.67 up from previous day of 40.91
26wk New High/Low Ratio: 53.61 up from previous day of 27.38
13wk New High/Low Ratio: 51.11 up from previous day of 23.28
4wk New High/Low Ratio: 67.90 up from previous day of 33.57
Cumulative 4-Week New Hi-Low: 435,251 up from previous day of 435,174
Nasdaq Adv/Decline: 1,404 up from previous day of 1,339
Russell 1000 Advance/ Decline Line: 2,336 up from previous day of 2,240
Russell 2000 Advance/ Decline Line: (1,940) up from previous day of (2,031)
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).
Friday, June 11
Economics
08:30Retail Sales 0.2%cons.
08:30Retail Sales ex-auto 0.1% cons.
09:55MichiganSentiment 75 cons.
10:00Business Inventories 0.5% cons.
02:45FranceCPI
04:30BritainIndustrial Production
Earnings
No earnings scheduled.
Speeches
08:20Charles Plosser
The May retail sales report from the Commerce Department is expected to have risen 0.3% after rising 0.4% in the previous month. Sales excluding volatile autos are expected to have risen 0.1% after rising 0.4% in the previous month. The Universityof Michigan's consumer sentiment index is expected to have risen to 74.8 inJune from 73.6 inlate May. The report is due after the start of trading. The April reading on business inventories, also from the government, is due out after the start of trading. Inventories likely rose 0.5% after rising 0.4% last month.
Mel’s Missives from the Matrix:
- Total tick for the day was 209,000 and the average tick for the day was 136. There were 197 ticks greater than 600 and 52 ticks more extreme than -600. There were 18 ticks greater than 1000 and 1 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 29.08 points. The intraday trading range - 9:35to the close - was 15.31. The 5 DMA of daily range is 24.26.
- The day's volume was 102.8% of the average daily volume for the last year. Volume was 81.6% of the last 10 day average and 80.4% of the previous day’s volume.
- 16% of the SPX stocks closed with two day RSI above 90. 59% closed with RSI above 80. 1% closed with RSI below 20 and 1% closed with RSI below 10.
- 93.6% of the SPX are above their five day moving average, 66.4% are above their 10 day average, 50.2% are above their 20 day moving average, 18.4% are above their 50 day moving average, and 32.8% are above their 100 day moving average.
- 66% of the SPX closed above their most recent previous high.
- 1% of the SPX stocks closed below their most recent previous lows.
- 488 SPX issues advanced and 6 issues declined, a net SPX advance/decline of 482.
- Evidence of the intraday trend: At 10am, 90% of the SPX components were in the top half of the range. By noon, 61% were in the top half of the range, and by 2pm, 71.6% were in the top half of the range.
- 91.4% of stocks closed in the top half of the day's range. (8.4% closed in bottom half.)
- 52.8% of stocks closed in the top 10% of the day's range. 71.4% of stocks closed in the top 20% of the day's range.
- 0% of stocks closed in the bottom 10% of the day's range. 0.8% of stocks closed in the bottom 20% of the day's range.
- 2.8% of stocks closed within 2% of their 52 week high. 10.4% of stocks closed within 5% of their 52 week high.
- 62.8% of stocks closed within 50% of their 52 week low. 31.4% of stocks closed within 25% of their 52 week low.
- 51% of stocks closed within ¼% of their high for the day.
- 0.6% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 97.8% of the SPX components were up since the open. By noon, 96.6% were up since the open, and by 2pm, 96.4% were up since the open.
- 98.2% of the SPX closed up from the previous close; 91.6% closed higher than the open.
- Sectors stronger than the SPX for Thursday:
- Basic Materials -- Outperformed the SPX by +34%.
- Energy -- Outperformed the SPX by +201%.
- Financials -- Outperformed the SPX by +8%.
- Industrials -- Outperformed the SPX by +86%.
- Consumer Discretionary -- Outperformed the SPX by +53%.
- Sectors weaker than the SPX for Thursday:
- Technology -- Underperformed the SPX by -74%.
- Consumer Staples -- Underperformed the SPX by -132%.
- Utilities -- Underperformed the SPX by -103%.
- Health Care -- Underperformed the SPX by -113%.
- The $SOX index strength was stronger relative to the SPX Thursday by 0.79%.
- The XLF outperformed the SPX by 0.08% Thursday.
- The 2 Day RSI of the SPX is 62. The Dow RSI is 64, the NASDAQ is 55 and the Russell is 56.
- Over the last four sessions, the average session closed 51.84% of the range above the low. Thursday closed at 94.7% of the daily range.
- Upside momentum moved upward Thursday, from Wednesday’s -4.35 to today’s -1.74. The ratio of SPX components giving a crossover sell signal compared to buy signals moved negatively to S 10.26 to 1.
- The ISEE Equity 10 day moving average Thursday was 148.8. The lowest 10 day average in the last 52 weeks was 141.5 on 06/29/09and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 209 SPX components moved upward and 199 components downward during the after hours with 189 million shares traded.
Trade 'em well on Friday everyone!
-Mel
