Bulls Strike Back
Market Recap:
Stock futures were pointing to a slight advance at the open on the back of ongoing concerns relating to the Spain bailout, potential bailout of Cypress, and the upcoming elections in Greece. However, futures in the U.S. seemed to be taking their cues from Europe on a tick-by-tick basis. The NFIB Small Business Optimism index fell -0.1 in May to an overall reading of 94.4, which was above the consensus for a reading of 94.2 The government reported that Import Prices for the month of May rose by +1.3%, which was above the consensus for a drop of -1.3%. Export prices fell by -0.4%, which was below expectations for -0.1% as well as last month’s level of +0.4%.
The session began with a small gap higher but quickly reversed lower after the opening half hour of trading. But the indices rallied just before 11:00 am, then stalled for several hours, before heading higher again throughout the afternoon. The major indices closed the day at their intra-sessions highs.
Our Market Leaders Board has all of our leaders having good sessions with the Sox and Financials leading the way higher while Technology was lagging a bit.
SPX big winners were First Solar Inc (FSLR) 20.89%, Federated Investors B (FII) 4.98%, and TripAdvisor (TRIP) 4.83%. SPX big losers were Saint Jude Medical Inc (STJ) -5.94%, Harman Internat Ind Inc (HAR) -3.87%, and Apollo Group Inc Cl A (APOL) -3.1%.
SPX five day big winners are First Solar Inc (FSLR) 18.18%, Sprint Nextel Corp (S) 15.42%, and Iron Mountain Inc (IRM) 14.86%. SPX five day big losers are Alpha Natural Resources (ANR) -19.47%, Sara Lee Corp (SLE) -7.31%, and Harman Internat Ind Inc (HAR) -6.19%.
New Ten Day Highs: MMM, MO, BA, COF, CCL, CVH, CSX, DPS, FII, FSLR, GE, MAT, MDT, WFR, MRK, MCHP, ORLY, PCAR, RTN, SNDK, SHW, STT, TWC, VLO, VRSN, VZ, WPO, WLP
New Ten Day Lows: ANF, AKS, ATI, BHI, BAX, BBBY, CELG, CSC, CNX, DELL, DVN, DTV, FHN, FLIR, GME, HAR, HAS, JCI, JNPR, JCP, PNC, RL, RSH, RSG, SWY, SLE, SWN, STJ, SPLS, TLAB, X, GOOG
Volume & Breadth Indicators
For the SPX Index there were 447 components advancing and 53 components declining. On the NYSE 3,139 issues were traded with 2,384 advancing issues and 666 retreating issues, a ratio of 3.58 to one advancing. There were 33 new highs and 54 new lows. The five day moving average of New Highs is 67 while the five day moving average of New Lows is 37 and the ten day moving average of Net Advancing is 176.
Advancing volume was higher at a ratio of 6.1 to one. The closing TRIN was 0.6 and the final tick was -97. The five day average of TRIN is 1.22 and the ten day average of TRIN is 1.25. The NYSE Composite Index gained 1.32% today while the SPX gained 1.15%.
For the NYSE, relative to the previous 30 session average, volume was -15.59% below 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, 14 sessions ended on a positive tick, 6 of last 10. For the SPX, the day's volume was 87.4% of the average daily volume for the last year. Volume was 92.8% of the last 10 day average and 102.8% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 160,000 and the average tick for the day was 103. There were 135 ticks greater than 600 and 48 ticks more extreme than -600. There were 16 ticks greater than 1000 and 5 ticks more extreme than -1000. The tick action suggests institutional accumulation.
Moving Average and Support/Resistance Indicators:
42.2% of the SPX are above their five day moving average, 63.2% are above their 10 day average, 44.6% are above their 20 day moving average, 21.6% are above their 50 day moving average, and 46.2% are above their 200 day moving average.
There several significant moving average crossovers today as the SPX, NYSE Composite Index, Dow, Russell Technology, Russell 2000 small caps, Emerging Markets, and Sox all had their 5 DMA cross above the 20 DMA. These are all short-term bullish crossovers. Notice how the green is invading the left our chart. Our moving average Power Rating is 42 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Tuesday:
- Basic Materials -- Outperformed the SPX by +69%.
- Energy -- Outperformed the SPX by +25%.
- Financials -- Outperformed the SPX by +35%.
- Industrials -- Outperformed the SPX by +45%.
Sectors weaker than the SPX for Tuesday:
- Technology -- Underperformed the SPX by -16%.
- Consumer Staples -- Underperformed the SPX by -69%.
- Utilities -- Underperformed the SPX by -89%.
- Health Care -- Underperformed the SPX by -23%.
- Consumer Discretionary -- Underperformed the SPX by -9%.
Checking the sectors of the SPX tonight: (The sector Buy and Sell signals come from a mechanical trend trading system; there will be some whipsaw but the signal will never be on the wrong side for long.)
The Basic Materials sector advancing issues (29) totaled 918,866 shares traded (31,685 average per stock) and declining issues (1) totaled 46,362 shares traded (46,362 average per stock.) 23 components are on an uptrend (3 new uptrends today) and 7 components are on a downtrend (no new downtrends today.) There were 1 New Highs and 2 New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed 1.36% above the 20-Day average.
The Energy sector advancing issues (39) totaled 1,732,896 shares traded (44,433 average per stock) and declining issues (5) totaled 654,529 shares traded (130,906 average per stock.) 21 components are on an uptrend (8 new uptrends today) and 23 components are on a downtrend (no new downtrends today.) There were no New Highs and 5 New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed -.18% below the 20-Day average.
The Financials sector advancing issues (78) totaled 5,476,965 shares traded (70,218 average per stock) and declining issues (3) totaled 211,988 shares traded (70,663 average per stock.) 60 components are on an uptrend (23 new uptrends today) and 21 components are on a downtrend (no new downtrends today.) There were no New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed -.07% below the 20-Day average.
The Industrials sector advancing issues (57) totaled 1,788,082 shares traded (31,370 average per stock) and declining issues (4) totaled 136,540 shares traded (34,135 average per stock.) 45 components are on an uptrend (9 new uptrends today) and 16 components are on a downtrend (no new downtrends today.) There were no New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed -.29% below the 20-Day average.
The four 'risk sectors' totaled 203 advancing issues and 13 declining issues today with 43 new uptrends and 0 new downtrends. 69.% of Risk Sector components are uptrending.
The Technology sector advancing issues (70) totaled 5,912,844 shares traded (84,469 average per stock) and declining issues (8) totaled 397,276 shares traded (49,660 average per stock.) 57 components are on an uptrend (17 new uptrends today) and 21 components are on a downtrend (no new downtrends today.) There were 1 New Highs and 3 New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed .51% above the 20-Day average.
The Consumer Staples sector advancing issues (34) totaled 1,152,499 shares traded (33,897 average per stock) and declining issues (7) totaled 457,365 shares traded (65,338 average per stock.) 29 components are on an uptrend (5 new uptrends today) and 12 components are on a downtrend (1 new downtrends today.) There were 2 New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed .34% above the 20-Day average.
The Utilities sector advancing issues (23) totaled 443,025 shares traded (19,262 average per stock) and declining issues (9) totaled 467,487 shares traded (51,943 average per stock.) 31 components are on an uptrend (no new uptrends today) and 1 components are on a downtrend (no new downtrends today.) There were no New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed 1.92% above the 20-Day average.
The Health Care sector advancing issues (45) totaled 1,600,507 shares traded (35,567 average per stock) and declining issues (7) totaled 314,334 shares traded (44,905 average per stock.) 39 components are on an uptrend (10 new uptrends today) and 13 components are on a downtrend (1 new downtrends today.) There were 1 New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed .19% above the 20-Day average.
The Consumer Discretionary sector advancing issues (72) totaled 3,149,822 shares traded (43,748 average per stock) and declining issues (9) totaled 411,302 shares traded (45,700 average per stock.) 49 components are on an uptrend (11 new uptrends today) and 32 components are on a downtrend (3 new downtrends today.) There were 1 New Highs and 2 New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed .24% above the 20-Day average.
Based on the SPX sector data, we are on a Buy for the SPX and the Russell 2000.
What We Learned from Tuesday's Action:
Tuesday was session 1 to close above the 5 DMA, session 5 to close above the 10 DMA, session 1 to close above the 20 DMA, and session 27 to close below the 50 DMA. This was also session 1 for the 5 DMA to close above the 20 DMA. One early sign of a sustainable rally or pullback is often a close above or below the 10 DMA. The SPX closed 19.05 points above the 10 DMA.
The SPX 5 DMA is 1317.78, 10 DMA is 1305.13, 20 DMA is 1310.68, 50 DMA is 1352.97, 100 DMA is 1357.94, and 200 DMA is 1289.8.
On Tuesday the SPX traded both below and above the opening range. 84.2% of the SPX closed up from the previous close; 78.4% closed higher than the open. During Tuesday's session the SPX gained 14.78 points from open to close. The SPX intraday trading range was 17.69 points. The 5-Day average intraday trading range is 19.44 points, the 10-Day average is 17.38 points, and the 20-Day average is 18.64 points. The trading range is expanding. The 5-Day SPX gain is 3.01%, the 10-Day gain is 0.83%, and the 15-Day gain is 0.62%.
Note: The Opening Range Breakout is one of the simplest day trading set-ups to understand. The first hour of the trading day is the most volatile. Bears and bulls are battling it out in the stock market, trying to show you who’s going to be in charge for the day. If we break out of that trading range, it's telling us that new buying or selling is impacting traders' assessments of value. Looking back at today’s breakouts also helps us grasp sentiment going forward because when a clear trend is established it often carries through for several sessions.
Looking Ahead:
The Market Environment for Wednesday is +6. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be sideways. Mel's 10 Day Oscillator is 37 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, we are bullish for Wednesday's session.
Well, well. Bulls managed a very nice comebacker today. This was a session pretty much as we had expected, with an early morning low and late session high. It was a fun day of trading.
Our Market Internals data suggests that we will soon be seeing higher prices, even if Wednesday consolidates or sells off a bit. Any time you see more than half of the stocks uptrending while the "risk" sectors are above their Pivots you're looking at a bullish trend. Certainly, all trends end. But you have to stay with it until it ends; we will continue to buy dips.
Wednesday, June 13
Economics
07:00 MBA Mortgage Purchase Index
08:30 Producer Price Index – consensus -0.6%, prior -0.2%
08:30 PPI Ex Food & Energy – consensus 0.2%, prior 0.2%
08:30 Advance Retail Sales – consensus -0.1%, prior 0.1%
08:30 Retail Sales less Autos – consensus 0.0%, prior 0.1%
08:30 Retail Sales ex Auto & Gas – consensus 0.4%, prior 0.1%
10:00 Business Inventories – consensus 0.3%, prior 0.3%
11:00 Fed to purchase $4.5b-$5.5b in 8 to 10-year range
1:00 U.S. to sell $21b 10-year notes (reopening)
06:00 EUR German CPI
09:00 EUR Eurozone Industrial Production
21:00 NZD Reserve Bank of New Zealand Rate Decision
12:30 Germany to sell EU5b 10-yr notes
Earnings
No major earnings
There were no significant economic news items on Tuesday. On Wednesday we will get the PPI, retail sales and oil inventories.
Thank you for reading. Think on it, trade on it, and be well.
-Mel