Consolidation, Yet Upward
by Jerome "Mel" Hickerson
Stock futures pointed to a modestly up open on the back of strong gains in overseas markets and a host of economic data pointing to economic improvement in the US. ADP reported that the private sector job market expanded for the fourth straight month in May as job growth was 55,000 jobs last month, which was below the consensus expectations for a gain of 70,000. The government reported Nonfarm Productivity in the first quarter increased by +2.8%, which was below the consensus for +3.6% and Q4’s revised increase of +6.6% On the inflation front, Unit Labor Costs were reported to have fallen -1.3% versus the Q4’s revised reading of -5.6% and Q3’s drop of -4.4%. The Labor Department reported that initial claims for unemployment insurance for the week ending May 29 fell by 10,000 to 453K. The week’s total was a bit below the Reuters consensus for a reading of 455K. Continuing Claims for unemployment for the week ending May 22 were a bit above consensus at 4.666M vs. expectations for 4.610M. Same-store sales from the nation's retailers came in a little light.
The session opened with a small pop upward, quickly retraced and then moved upward to set the high of the day at 9:59. The SPX traded choppily downward in two waves to set the low of the day at 12:26before beginning a steady march higher to close back near the highs of the day.
It’s possible to see anything you wish if you are biased enough. Today may mark the end of a mild upswing in a longer down move. Or, today may have been a resting day on the way back up during an even longer upturn.
The bears may indeed be right. But I am neither bull nor bear; I strive to simply watch what Price and Breadth are telling me. I see Price sitting just below the 1103 line in the sand that I have been watching. I do not see price sitting at the 1040 line, the other line in the sand I am watching. I see market breadth advancing, with New Highs beginning once again to take the lead over New Lows. I see a chart pattern moving higher; the SPX sits more than 6% above the May 25th lows.
My thinking is that we begin to trade back and forth within this range for a while. But any break above 1103 that sticks is a signal for me that the market wants higher.
Day Trade Systems Update: (Signals today)
* SSO at: 10:34
* GDX at: 10:36
* GDX at: 12:15
* GDX at: 12:40
* SSO at: 1:07
* GDX (Aggressive Only) Short at: 3:06
Our trade systems faired pretty well today. The Market Vectors Gold Miner (GDX) trade at 12:15stopped out and re-entered but otherwise the day was decent. Proshares Trust Ultra (SSO) seemed easier than GDX today. We continue to take small profits when the market offers them.
SPX Summary for Thursday, June 03, 2010
340 Advancers/148 Decliners
Today's SPX component winners and losers:
- Largest one day loser is JWN with -4.35%
- Largest three day loser is FTI with -13.15%
- Largest five day loser is FTI with -14.59%
- Largest ten day loser is APC with -18.70%
- Largest one day winner is CRM with 7.75%
- Largest three day winner is RRC with 13.33%
- Largest five day winner is RRC with 19.88%
- Largest ten day winner is CRM with 16.97%
*** 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 42.
The greatest positive five day momentum component is RRC; the greatest negative five day momentum component is FTI. The average five day momentum of all 500 components is 3.19.
6.20% of the SPX components are giving a crossover Buy signal; 16.20% of the SPX components are giving a Sell signal. This is a 2.6 to 1 ratio of Sell signals over Buy signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 114 components.
- From Buy to Neutral: 0 components.
- From Neutral to Sell: 5 components.
- From Neutral to Buy: 11 components.
Notice the large move from Sell to Neutral.
The moving averages:
Close 1102.83
9 EMA 1104.16 Rising
5 DMA 1092.88 Rising
10 DMA 1083.93 Falling
20 DMA 1111.56 Falling
50 DMA 1158.65 Falling
100 DMA 1137.63 Falling
200 DMA 1106.24 Rising
10 Wk MA 1149.76 Rising
Bulls need to begin to see the 10 DMA rising soon.
NYSE Summary
On the NYSE 3193 issues were traded with 1944 advancing issues and 1140 retreating issues, a ratio of 1.71 to 1 advancing. There were 54 new highs and 8 new lows.
Advancing volume was higher at a ratio of 1.71 to 1. The closing TRIN was 1 and the final tick was -227.
The negative final tick suggests that there was significant selling at the close. But Breadth and positive volume are encouraging for bulls.
Evidence of trend:
Relative to the previous 30 session average, volume was -22.72% below 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, 13 sessions ended on a positive tick, 3 of last 10.
The 5 day moving average of New Highs is 24 while the 5 day moving average of new lows is 18 and the 10 day moving average of Net Advancing is 80.
The five day MA of New Highs has now surpassed the New Lows.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line increased from 201952 to 202756. This 0.40% increase came while the SPX was gaining 0.4%. The 10 day moving ratio of positive volume is 1.02 and the 10 day moving Advance/Decline ratio is 1.05. The 10 day moving ratio of positive volume has trended 0.33 over the last three days and the 10 day moving Advance/Decline ratio has trended 0.36 over the last three days.
The NYSE Composite Index gained 0.3% today.
NYSE Statistics:
Absolute Breadth Index: 46.49 down from previous day of 55.63
Cumulative Volume Index: 41,463.39 up from previous day of 39,952.68
High Low Logic Index: 0.47 down from previous day of 0.51
McClellan Oscillator: 6.10 up from previous day of (52.91)
McClellan 10 DMA: (208.44) up from previous day of (245.53)
McClellan Summation Index: (1,705.28) up from previous day of (1,711.38)
% Stocks Above 200 DMA: 57.68 up from previous day of 55.57
% Stocks Above 40 DMA: 22.73 up from previous day of 20.75
New High / New Low Ratio: 82.14 up from previous day of 50.00
26wk New High/Low Ratio: 66.30 up from previous day of 37.99
13wk New High/Low Ratio: 63.55 up from previous day of 30.16
4wk New High/Low Ratio: 77.48 up from previous day of 41.36
Cumulative 4-Week New Hi-Low: 436,881 up from previous day of 436,767
Nasdaq Adv/Decline: 1,486 up from previous day of 1,462
Russell 1000 Advance/ Decline Line: 2,369 up from previous day of 2,331
Russell 2000 Advance/ Decline Line: (1,858) up from previous day of (1,891)
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).
Friday, June 4
Economics
08:30Nonfarm Payrolls 500k cons.
08:30Unemployment Rate 9.8% cons.
08:30Hourly Earnings 0.1% cons.
08:30Average Workweek 34.2 cons.
02:00German Retail Sales
05:00European Union GDP
Earnings
Before: AMWD, BTH, MPR
Speeches
09:30Dennis Lockhart
The May jobs report from the Department of Labor is due before the start of trading. Employers are expected to have added 500,000 jobs to their payrolls after adding 290,000 inthe previous month. The unemployment rate is expected to rise to 10% from 9.9% in April.
Mel’s Missives from the Matrix:
- Total tick for the day was 51,000 and the average tick for the day was 40. There were 113 ticks greater than 600 and 97 ticks more extreme than -600. There were 4 ticks greater than 1000 and 10 ticks more extreme than -1000.
- The day's range was 13.86 points. The intraday trading range - 9:35to the close - was 13.65. The 5 DMA of daily range is 20.77.
- Evidence of the intraday trend: At 10amvolume was 78.92% of the 10 day average. By noonthe volume was 75.74% of the 10 day average, and by 2pmvolume was 77.79% of the 10 day average.
- The day's volume was 100.2% of the average daily volume for the last year. Volume was 79% of the last 10 day average and 103.9% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 3:30and 3:45when relative volume increased 35.4% while the SPX was dropping -0.05%. The largest drop in relative volume came between 12:30and 12:45when relative volume dropped -43.6% while the SPX was rising 0.12%.
- 8% of the SPX stocks closed with two day RSI above 90. 30% closed with RSI above 80. 2% closed with RSI below 20 and 1% closed with RSI below 10.
- 75.6% of the SPX are above their five day moving average, 81.4% are above their 10 day average, 41% are above their 20 day moving average, 19.8% are above their 50 day moving average, and 39.8% are above their 100 day moving average.
- 61% of the SPX closed above their most recent previous high.
- 3% of the SPX stocks closed below their most recent previous lows.
- 340 SPX issues advanced and 148 issues declined, a net SPX advance/decline of 192.
- Evidence of the intraday trend: At 10am, 78.8% of the SPX components were in the top half of the range. By noon, 40.2% were in the top half of the range, and by 2pm, 27.4% were in the top half of the range.
- 66.6% of stocks closed in the top half of the day's range. (33.2% closed in bottom half.)
- 13.8% of stocks closed in the top 10% of the day's range. 32% 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. 4.2% of stocks closed in the bottom 20% of the day's range.
- 4.6% of stocks closed within 2% of their 52 week high. 12.4% of stocks closed within 5% of their 52 week high.
- 60.8% of stocks closed within 50% of their 52 week low. 28% of stocks closed within 25% of their 52 week low.
- 18.4% 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, 84.4% of the SPX components were up since the open. By noon, 60.4% were up since the open, and by 2pm, 44.8% were up since the open.
- 67.2% of the SPX closed up from the previous close; 56.6% closed higher than the open.
- Sectors stronger than the SPX for Thursday:
- Energy -- Outperformed the SPX by +94%.
- Industrials -- Outperformed the SPX by +6%.
- Technology -- Outperformed the SPX by +52%.
- Utilities -- Outperformed the SPX by +65%.
- Health Care -- Outperformed the SPX by +19%.
- Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -160%.
- Financials -- Underperformed the SPX by -93%.
- Consumer Staples -- Underperformed the SPX by -24%.
- Consumer Discretionary -- Underperformed the SPX by -9%.
- The $SOX index strength was stronger relative to the SPX Thursday by 0.78%.
- The XLF underperformed the SPX by -0.93% Thursday.
- The 2 Day RSI of the SPX is 74. The Dow RSI is 75, the NASDAQ is 83 and the Russell is 75.
- Over the last four sessions, the average session closed 52.03% of the range above the low. Thursday closed at 78.3% of the daily range.
- Upside momentum moved upward Thursday, from Wednesday’s 2.25 to today’s 3.19. The ratio of SPX components giving a crossover sell signal compared to buy signals moved positively to S 2.61 to 1.
- The ISEE Equity 10 day moving average Thursday was 148.2. 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.
- 178 SPX components moved upward and 152 components downward during the after hours with 90 million shares traded.
Trade 'em well on Friday everyone!
-Mel
