Bulls Keep the Pressure On
Stock futures were following European markets lower in response to a poor auction in Portugal and continued strength in the dollar. However, things picked up a bit in response to the report from ADP. ADP reported that the private sector job market expanded again during the month of December. The report shows that private sector jobs rose by 297K jobs during the month, which was well above the consensus expectations for a gain of about 107K. November’s report was revised lower to a gain of 92,000 jobs, up from the initial report of +93K.
The session began with a modest two point gap lower and quickly moved three more points downward to put the low of the day on the chart just two minutes after the open. The dip buyers quickly arrived to begin to run the tape higher; from noon through 3pm the index traded sideways within a two point range as momentum died and sellers were already absent. The closing hour briefly broke above that two point range by a quarter point but even that was a brief excursion putting the high of the session on the chart at 3:14.
In this market it seems that even a monkey can buy on red and make money. This will end eventually but it's hard to say when. Data points to an imminent pullback, just as it has since mid December. There is simply no escape for the bears as the bullish romp seems never-ending.
Checking our Market Leaders board tonight we have a mixed board but mostly the leaders closed higher with the only exceptions being Emerging Markets and Germany.
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report tonight, the report shows the effects of the bullish session as several sectors are on the move in a positive direction. We have now gone 87 sessions without closing below the 50 DMA, the last close below the 50 DMA was September 1st. Stretches like this are rare with the last such stretch ending on February 26th, 2007, and prior to that was 2003.
We have entered a period of time when what has worked with an 80% success rate in the past simply fails repeatedly. It is periods like this that create the 20% failure rates and it's not fun when they all come clustered together. It's a difficult time to day trade as well because day trading is much simpler with volatility and volatility comes on down moves, much less frequently on up moves.
The best thing to do here is to be patient and go long if and when we see a pullback. Become one of the dip buyers.
Volume & Breadth Indicators
For the SPX Index there were 313 components advancing and 169 components declining. On the NYSE 3,130 issues were traded with 1,821 advancing issues and 1,231 retreating issues, a ratio of 1.48 to one advancing. There were 176 new highs and 9 new lows. The five day moving average of New Highs is 179 while the five day moving average of New Lows is 6 and the ten day moving average of Net Advancing is 321. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 2.37 to one. The closing TRIN was 0.62 and the final tick was 879. The five day average of TRIN is .86 and the ten day average of TRIN is .98. The NYSE Composite Index gained 0.22% today while the SPX gained 0.5%.
For the NYSE, relative to the previous 30 session average, volume was 10.4% above the average. Of the last 15 sessions 5 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, 5 of last 10. For the SPX, the day's volume was 104.2% of the average daily volume for the last year. Volume was 178.9% of the last 10 day average and 105% of the previous day’s volume.
Breadth was reasonably strong today. But New Highs continue to be rather weak for a time when the indices are continuously putting up 52 week highs. Yet this is what is: A bullish romp. There are two or three of these extended no-pullbacks-allowed periods every decade and this is one.
Total tick for the day was 143,000 and the average tick for the day was 92. There were 60 ticks greater than 600 and 1 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.
The Nightly Breadth Indicators have a bullish look to them tonight but we can't escape the fact that market breadth continues to not be as strong as it should be at 52 week highs. For now, this means little. But if and when a pullback should begin, the weakness in the market breadth could come to the front and make any pullback sharp and quick.
Moving Average and Support/Resistance Indicators:
61% of the SPX are above their five day moving average, 63.4% are above their 10 day average, 70.2% are above their 20 day moving average, 82% are above their 50 day moving average, and 88% are above their 200 day moving average.
There were no significant moving average crossovers today.
Sectors on the Move:
Sectors stronger than the SPX for Wednesday:
- Financials -- Outperformed the SPX by +73%.
- Industrials -- Outperformed the SPX by +1%.
- Technology -- Outperformed the SPX by +9%.
- Consumer Discretionary -- Outperformed the SPX by +37%.
Sectors weaker than the SPX for Wednesday:
- Basic Materials -- Underperformed the SPX by -38%.
- Energy -- Underperformed the SPX by -14%.
- Consumer Staples -- Underperformed the SPX by -46%.
- Utilities -- Underperformed the SPX by -109%.
- Health Care -- Underperformed the SPX by -25%.
In Late Trading:
223 SPX components moved upward and 110 components downward during the after hours with 96 million shares traded.
Thursday, January 6
08:30 Initial Claims
08:30 Continuing Claims
Swiss Consumer Price Index
Great Britain Purchasing Manager Index
Euro-Zone Consumer Confidence
Euro-Zone Retail Sales
German Factory Orders
Canada Purchasing Managers
Treasury Coupon Purchase: 1/31/2015-6/30/2016: $6-8 bln
Before: STZ, LEN, MON, MSM, PSMT, RBN, RPM, TXI
After: BODY, DQ, DMAN, DRWI, GPN, IHS, LWSN, NTSP, PACB, SABA, SCHN, SHP, SMSC, XRTX
Have a great Thursday!