Bulls Make a Comeback
by Jerome "Mel" Hickerson
The session opened with a pop and drop movement, moving up four points quickly then giving back almost six points to set the low of the day at 10:30. From that point until 3:34 when the high was painted on the chart, the bulls controlled the game. The last half hour saw a minor push back to close on a slight downward move. But this day belonged to the bulls.
I remain expecting a downward move. But today did not really surprise me a lot. I remind readers that I wrote this last night: “I see the signal that “Thursday’s close should be higher than Wednesday’s open” mixed in with all sorts of “Sell” signals.” It’s unfortunate that I didn’t play the long side signal due to the short signals; but at least I did not fade the gap as planned, either.
I know the bulls are partying tonight, and they deserve to. But bouncing today on less volume than yesterday’s decline isn’t really that impressive. The SPX gained 9.46 points after losing 10.76 yesterday; that may be bullish but it’s still a net loss. I’ll stick with my prognostication made last Friday that this Friday’s close should be lower than last week’s. We are currently above last week’s close, but only a point or so. We’ll see what happens over the next couple of days.
For Thursday, my model is suggesting a decline, or at the very least, a sideways struggle. The 1120 area seems likely over the next several days, with a visit to the 1105 area not an unreasonable possibility.
Thursday, January 14
Economics
08:30 Initial Claims
08:30 Continuing Claims
08:30 Retail Sales 0.4% cons.
08:30 Retail Sales ex-auto 0.3% cons.
08:30 Export Prices ex-ag
08:30 Import Prices ex-oil
10:00 Business Inventories
Earnings
Before: BGG, CRAI, SEED
After: INTC, SHFL
Auction
01:00 30-Yr Bond Auction
The December retail sales report from the Commerce Department is due in the morning. Sales are expected to have risen 0.4% after rising 1.3% in the previous month. Sales excluding autos are expected to have risen 0.3% after rising 1.2% in November. November business inventories, due after the start of trading, are expected to hold steady after rising 0.2% in the previous month. The National Retail Federation issues its holiday sales report, a key measure of chain store sales during the critical November and December period. Weekly initial jobless claims and December import and export prices are also due. There should be plenty of news to drive volatility.
Mel’s Random Hits:
• Total tick for the day was 236,000. Breadth was negative 20 minutes after the open, turned positive about 10:30 and never looked back.
• The day's range was 15.22 points. The 10 day average of the daily range moved over 10 points for the first time in almost a month.
• The day's volume was 75.1% of the average daily volume for the last year. Volume was 107% of the last 10 day average.
• 9% of the SPX stocks closed with two day RSI above 90. 20% closed with RSI above 80. 10% closed with RSI below 20 and 5% closed with RSI below 10.
• 54% of the SPX are above their five day moving average, 66% are above their 10 day average, and 75% are above their 20 day moving average.
• 5% of the SPX stocks closed below their most recent previous lows.
• 35% of the SPX closed above their most recent previous high.
• 88.4% of stocks closed in the top half of the day's range. (11.6% closed in bottom half.)
• 2.2% of stocks closed in the bottom 20% of the day's range.
• 19.2% of stocks closed in the top 10% of the day's range.
• 25.2% of stocks closed within 2% of their 52 week high.
• 23.2% of stocks closed within 50% of their 52 week low.
• 22.6% of stocks closed within ¼% of their high for the day.
• 1.8% of stocks closed within ¼% of their low for the day.
• 85.4% of the SPX closed up from the previous close; 77.8% closed higher than the open.
• Sectors weaker than the SPX for the day: Energy, Industrials, and Consumer Staples.
• Sectors stronger than the SPX for the day: Financials, Technology, Basic Materials, Health Care, Utilities, and Consumer Discretionary.
• The $SOX index strength was stronger than the SPX today.
• The 2 Day RSI of the SPX is 64. The Dow RSI is 75, NASDAQ is 58 and Russell 63. It was a pretty strong day all around. But let’s not get too carried away by a 0.83% gain; remember all those 2% days we used to have? The last 2% day was the “Dubai Default” day, November 27th (a -2% day.) It has been more than two months (November 9th) since the last 2% up day. Last January (remember how awful that time was?) had two days with more than 2% gains. This lack of volatility is not the norm .
• SPX components were flat during the after hours with 111 million shares traded.
• Posted on the Journal today: “10:26:46 Watch for short term SPX bounce here. SPX = 1133.77”. The low of the day was three minutes later at 1133.18 SPX.
• And finally, just a word for any frustrated day traders out there. A trade signal is never a guarantee of a successful trade. Market reversals are common, especially in tight range trading. The key to successful trading is to have enough confidence in the risk management to enter trades knowing that reversals happen but also knowing that the risk management will prevent losses from pounding your portfolio. If you sit out every signal concerned about reversals, you’ll also miss the winning trades.
Have a great Thursday!
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"Mel"
