Bulls Regain Some Composure
by Jerome "Mel" Hickerson
The futures were modestly higher this morning as markets were trying to bounce. After back-to-back down sessions a bounce back attempt should be expected during a healthy market. Most of Asiaclosed green; Europewas red this morning.
The regular session opened with a small pump then began stair-stepping lower and tested the 1040 area at the low of the day at 11:12. The SPX then climbed upward near the 1060 area before once again testing the lows. This second test was strongly bought as the SPX bounced viciously to close at the highs of the day.
Was today’s action enough of a reversal to mark a bottom? Maybe. Sorry I don’t have a better answer but I see plenty of data to suggest that a tradable bottom is in. The problem for me is the chart; in spite of today’s strong reversal, we painted a lower high and a lower low. I can’t switch back over to the bullish side of the aisle until we break that pattern.
But today’s bounce from the 1040 area was significant and shouldn’t be ignored by bearish traders. To be a successful trader, it is vital to keep listening to what the market is saying; forget your bias and simply listen. While repeated testing of the same line of support often results in a breakdown, today did not.
Neither should bullish traders get too confident. Today’s action was driven by Basic Materials and Financials; this is a good thing but Technology and Small Caps were lagging badly; this is not good.
I believe that the most likely road ahead is for a weak multi-day bounce followed with more work on the downside. But alert traders will continue to watch the price action, swing trading only as necessary while taking advantage of the intraday moves.
Our trade systems were focused on Market Vectors Gold Miners (GDX) today and fared quite well. We were long twice, short twice, and profitable on all.
Day Trade Systems Update: (Signals today)
* GDX Short at: 10:47
* GDX Long at: 11:22
* GDX Short at: 12:45
* GDX Long at: 1:58
SPX Summary for Tuesday, June 08, 2010
346 Advancers/140 Decliners
Today's SPX component winners and losers:
- Largest one day loser is ESRX with -51.30%
- Largest three day loser is ESRX with -51.23%
- Largest five day loser is ESRX with -49.91%
- Largest ten day loser is ESRX with -49.82%
- Largest one day winner is GLW with 7.19%
- Largest three day winner is BMY with 6.21%
- Largest five day winner is SWN with 14.30%
- Largest ten day winner is NBR with 17.43%
*** SPX Technical Summary ***
The lowest 14 day RSI component is LEN; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 40.
The greatest positive five day momentum component is SWN; the greatest negative five day momentum component is ESRX. The average five day momentum of all 500 components is -1.55.
9.20% of the SPX components are giving a crossover Buy signal; 64.00% of the SPX components are giving a Sell signal. This is a 7.0 to 1 ratio of Sell signals over Buy signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 21 components.
- From Buy to Neutral: 7 components.
- From Neutral to Sell: 32 components.
- From Neutral to Buy: 11 components.
The action here is mixed; leaning slightly to the bearish side.
The moving averages:
Close 1062.00
9 EMA 1051.67 Falling
5 DMA 1075.71 Falling
10 DMA 1078.37 Falling
20 DMA 1100.49 Falling
50 DMA 1152.20 Falling
100 DMA 1135.11 Falling
200 DMA 1107.16 Rising
10 Wk MA 1134.45 Rising
NYSE Summary
On the NYSE 3202 issues were traded with 1876 advancing issues and 1224 retreating issues, a ratio of 1.53 to 1 advancing. There were 22 new highs and 131 new lows.
Advancing volume was higher at a ratio of 3.12 to 1. The closing TRIN was 0.49 and the final tick was 135.
Once again, a positive final tick. The New Lows lean bearish but this is common on reversal days when the early day lows create many new lows. Follow-through tomorrow is the key.
Evidence of trend:
Relative to the previous 30 session average, volume was 2.05% above the average. Of the last 15 sessions 8 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 12 sessions ended on a positive tick, 5 of last 10.
The 5 day moving average of New Highs is 27 while the 5 day moving average of new lows is 58 and the 10 day moving average of Net Advancing is -56.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line increased from 198797 to 199449. This 0.33% increase came while the SPX was gaining 1.09%. The 10 day moving ratio of positive volume is 0.91 and the 10 day moving Advance/Decline ratio is 0.96. The 10 day moving ratio of positive volume has trended -0.17 over the last three days and the 10 day moving Advance/Decline ratio has trended -0.11 over the last three days.
The NYSE Composite Index gained 1.29% today.
NYSE Statistics:
Absolute Breadth Index: 47.50 up from previous day of 43.81
Cumulative Volume Index: 40,057.56 up from previous day of 36,054.99
High Low Logic Index: 0.46 up from previous day of 0.44
McClellan Oscillator: (106.80) up from previous day of (186.10)
McClellan 10 DMA: (140.06) up from previous day of (160.81)
McClellan Summation Index: (2,108.72) down from previous day of (2,001.87)
% Stocks Above 200 DMA: 40.34 up from previous day of 39.19
% Stocks Above 40 DMA: 15.69 up from previous day of 14.81
New High / New Low Ratio: 13.57 down from previous day of 16.52
26wk New High/Low Ratio: 6.83 down from previous day of 10.99
13wk New High/Low Ratio: 5.08 down from previous day of 7.34
4wk New High/Low Ratio: 6.51 down from previous day of 10.32
Cumulative 4-Week New Hi-Low: 435,268 down from previous day of 436,230
Nasdaq Adv/Decline: 1,343 down from previous day of 1,361
Russell 1000 Advance/ Decline Line: 2,246 up from previous day of 2,207
Russell 2000 Advance/ Decline Line: (2,029) down from previous day of (2,016)
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).
Wednesday, June 9
Economics
10:00Wholesale Inventories 0.6% cons.
10:30Crude Oil Inventories
02:00Fed’s Beige Book
04:30BritainMerchandise Trade
07:50JapanGDP
Earnings
Before: BF.B, CSIQ, CIEN, PNY, TITN, MTN
After: ALOG, DAC, MEAS, MW, NOA, SHFL
Auction
01:0010-yr Note Auction
Speeches
04:00Ben Bernanke
The government's April wholesale inventories and weekly crude oil inventories reports are due in the morning. The Fed's "beige book" reading on the nation's 12 economic districts is due in the afternoon.
Bernanke testifies at the House Committee on the budget regarding economic and financial conditions. He also speaks in Richmond, Va., at a forum on the labor market. Members of the House of Representatives and the Senate hold the first meeting on reconciling the Wall Street reform bill.
Mel’s Missives from the Matrix:
- Total tick for the day was -87,000 and the average tick for the day was -67. There were 114 ticks greater than 600 and 189 ticks more extreme than -600. There were 16 ticks greater than 1000 and 21 ticks more extreme than -1000. The tick action suggests institutional distribution.
- The day's range was 20.98 points. The intraday trading range - 9:35to the close - was 20.98. The 5 DMA of daily range is 23.57.
- Evidence of the intraday trend: At 10amvolume was 87.47% of the 10 day average. By noonthe volume was 108.92% of the 10 day average, and by 2pmvolume was 108.51% of the 10 day average.
- The day's volume was 123.9% of the average daily volume for the last year. Volume was 92.1% of the last 10 day average and 93.7% of the previous day’s volume.
- 0% of the SPX stocks closed with two day RSI above 90. 2% closed with RSI above 80. 32% closed with RSI below 20 and 17% closed with RSI below 10.
- 14.8% of the SPX are above their five day moving average, 18.8% are above their 10 day average, 11.6% are above their 20 day moving average, 8% are above their 50 day moving average, and 19.8% are above their 100 day moving average.
- 8% of the SPX closed above their most recent previous high.
- 24% of the SPX stocks closed below their most recent previous lows.
- 346 SPX issues advanced and 140 issues declined, a net SPX advance/decline of 206.
- Evidence of the intraday trend: At 10am, 16.8% of the SPX components were in the top half of the range. By noon, 79.8% were in the top half of the range, and by 2pm, 32.6% were in the top half of the range.
- 83.2% of stocks closed in the top half of the day's range. (16.6% closed in bottom half.)
- 38% of stocks closed in the top 10% of the day's range. 52.8% of stocks closed in the top 20% of the day's range.
- 1.2% 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.
- 1.6% of stocks closed within 2% of their 52 week high. 4.2% of stocks closed within 5% of their 52 week high.
- 68.4% of stocks closed within 50% of their 52 week low. 36% of stocks closed within 25% of their 52 week low.
- 31.6% of stocks closed within ¼% of their high for the day.
- 1.2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 33% of the SPX components were up since the open. By noon, 67% were up since the open, and by 2pm, 40.2% were up since the open.
- 71.6% of the SPX closed up from the previous close; 69.4% closed higher than the open.
- Sectors stronger than the SPX for Tuesday:
- Basic Materials -- Outperformed the SPX by +117%.
- Energy -- Outperformed the SPX by +56%.
- Financials -- Outperformed the SPX by +84%.
- Consumer Staples -- Outperformed the SPX by +52%.
- Utilities -- Outperformed the SPX by +21%.
- Sectors weaker than the SPX for Tuesday:
- Industrials -- Underperformed the SPX by -5%.
- Technology -- Underperformed the SPX by -91%.
- Health Care -- Underperformed the SPX by -85%.
- Consumer Discretionary -- Underperformed the SPX by -26%.
- The $SOX index strength was weaker relative to the SPX Tuesday by -1.47%.
- The XLF outperformed the SPX by 0.84% Tuesday.
- The 2 Day RSI of the SPX is 40. The Dow RSI is 46, the NASDAQ is 11 and the Russell is 10.
- Over the last four sessions, the average session closed 47.1% of the range above the low. Tuesday closed at 94.5% of the daily range.
- Upside momentum moved upward Tuesday, from Monday’s -4.55 to today’s -1.55. The ratio of SPX components giving a crossover sell signal compared to buy signals moved positively to S 6.96 to 1.
- The ISEE Equity 10 day moving average Tuesday was 157.2. 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.
Trade 'em well on Wednesday everyone!
-Mel
