Bulls Continue the Surge
by Jerome "Mel" Hickerson
Early morning, the same-store sales numbers from the nation's retailers came in mixed. The Labor Department reported that initial claims for unemployment insurance for the week ending July 3rd fell by 21,000 to 454K. The week’s total was below the Reuters consensus for a reading of 462K. Continuing Claims for unemployment for the week ending June 26th were also below consensus at 4.413M vs. expectations for 4.60. Stock futures moved higher on the jobs report.
The session opened with a small upward gap, then quickly climbed higher and put the high of the day on the chart at 9:39. The morning and early afternoon were waves downward but appear to have been more of consolidation that really damaging to the index. The low of the day was at 2:21and was followed by vigorous buying to bring the SPX back near the earlier highs. The final ten minutes saw some profit taking and selling but the indices still closed near their highs. Nothing really bearish about today’s action, especially when you factor in yesterday’s large explosive upward move.
Some traders are still looking for (longing for?) a crash. Major market crashes are uncommon events; while I will never rule out the possibility, I won’t spend too much time (or money!) looking for a rare event. But I think it is as foolish to look for the market to go straight up as it is foolish to look for it to go straight down. Experience trading teaches us that the market breathes; in and out. 47 points up in three days suggests that it is time to exhale.
It's been nearly three months since the SPX last strung together three consecutive higher closes; that streak ended on April 15th, the day after the XLF, NYSE Composite and EEM topped out. So this explosive rally has been long in coming.
I won’t be at all surprised to see the indices retreat on Friday.
Day Trade Systems Update: (Signals today)
* SSO Scalp at: 11:14
* SSO Scalp at: 11:58
* GDX Scalp Short at: 12:55
* GDX Short at: 1:10
We had a good day trading today. The best profit of the day came on the only trade that was ever underwater (the second GDX Short) so the profit made it worth the stress.
Friday, July 9
Economics
10:00 Wholesale Inventories 0.6% cons.
02:00 German CPI
02:45 France Industrial Production
04:00 Italy Industrial Production
04:30 Great Britain Merchandise Trade
04:30 Great Britain Producer Price index.
Earnings
Before: PSMT
The Commerce Department releases the wholesale inventories report in the morning. Inventories are expected to have risen 0.6% in May after increasing 0.4% in April.
Mel’s Missives from the Matrix:
- Total tick for the day was 119,000 and the average tick for the day was 77. There were 186 ticks greater than 600 and 80 ticks more extreme than -600. There were 27 ticks greater than 1000 and 3 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 13.01 points. The intraday trading range - 9:35 to the close - was 12.83. The 5 DMA of daily range is 21.63.
- Evidence of the intraday trend: At 10am volume was 107.13% of the 10 day average. By noon the volume was 95.93% of the 10 day average, and by 2pm volume was 93.01% of the 10 day average.
- The day's volume was 96.8% of the average daily volume for the last year. Volume was 92.9% of the last 10 day average and 97% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 2:15 and 2:30 when relative volume increased 30.3% while the SPX was dropping -0.05%. The largest drop in relative volume came between 2:30 and 2:45 when relative volume dropped -43.2% while the SPX was rising 0.17%.
- 38% of the SPX stocks closed with two day RSI above 90. 68% closed with RSI above 80. 2% closed with RSI below 20 and 1% closed with RSI below 10.
- 95.8% of the SPX are above their five day moving average, 79.8% are above their 10 day average, 35.2% are above their 20 day moving average, 28.6% are above their 50 day moving average, 25% are above their 100 day moving average, and 35.4% are above their 150 day moving average.
- 73% of the SPX closed above their most recent previous high.
- 1% of the SPX stocks closed below their most recent previous lows.
- 401 SPX issues advanced and 86 issues declined, a net SPX advance/decline of 315.
- Evidence of the intraday trend: At 10am, 35.8% of the SPX components were in the top half of the range. By noon, 22.6% were in the top half of the range, and by 2pm, 30.2% were in the top half of the range.
- 77.6% of stocks closed in the top half of the day's range. (22.2% closed in bottom half.)
- 23.6% of stocks closed in the top 10% of the day's range. 43% of stocks closed in the top 20% of the day's range.
- 0.6% of stocks closed in the bottom 10% of the day's range. 1.8% of stocks closed in the bottom 20% of the day's range.
- 2.6% of stocks closed within 2% of their 52 week high. 10.4% of stocks closed within 5% of their 52 week high.
- 67.2% of stocks closed within 50% of their 52 week low. 37% of stocks closed within 25% of their 52 week low.
- 31.2% of stocks closed within ¼% of their high for the day.
- 1% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 75% of the SPX components were up since the open. By noon, 55.6% were up since the open, and by 2pm, 61.6% were up since the open.
- 80.2% of the SPX closed up from the previous close; 59% closed higher than the open.
- Sectors stronger than the SPX for Thursday:
- Basic Materials -- Outperformed the SPX by +71%.
- Energy -- Outperformed the SPX by +39%.
- Industrials -- Outperformed the SPX by +24%.
- Consumer Staples -- Outperformed the SPX by +56%.
- Sectors weaker than the SPX for Thursday:
- Financials -- Underperformed the SPX by -37%.
- Technology -- Underperformed the SPX by -55%.
- Utilities -- Underperformed the SPX by -18%.
- Health Care -- Underperformed the SPX by -9%.
- Consumer Discretionary -- Underperformed the SPX by -29%.
- The $SOX index strength was weaker relative to the SPX Thursday by -1%.
- The XLF underperformed the SPX by -0.37% Thursday.
- The 2 Day RSI of the SPX is 94. The Dow RSI is 94, the NASDAQ is 92 and the Russell is 83.
- Over the last four sessions, the average session closed 67.42% of the range above the low. Thursday closed at 91% of the daily range.
- Upside momentum moved upward Thursday, from Wednesday’s 1.6 to today’s 3.77. The ratio of SPX components giving a crossover sell signal compared to buy signals moved bullishly to S 14.88 to 1.
- The ISEE Equity 10 day moving average Thursday was 169.3. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10 and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 208 SPX components moved upward and 178 components downward during the after hours with 87 million shares traded.
Trade 'em well on Friday everyone!
-Mel
