Death Cross - Revisited
by Jerome "Mel" Hickerson
Prior to Friday’s open, stock futures pointed a little lower after the Bank of England downgraded its outlook for GDP growth going forward. The Consumer Price Index for July rose by +0.3%, which was a tenth above the consensus for +0.2% and higher than June’s reading of -0.1%. When you strip out food and energy, the so-called Core CPI came in with a gain of +0.1%, which was in line with expectations and below June’s +0.2%. Next up, the Commerce Department reported that Retail Sales rose in the month of July by +0.4%. This was below the consensus for +0.5%. When you strip out the sales of autos, sales were up by +0.2%, which was a tenth below the consensus for an increase of +0.3%.
The final session of the week began with a small two point gap down. The SPX popped quickly to recover those points, then gave them back again just as quickly before climbing to set the high of the day at 10:06. The index then retreated to set the low of the day at 11:39 just seven points below the high. The index climbed back near the highs during the mid afternoon but surrendered those points back to close near the lows of the day.
The Nine Sectors Report is not showing any sign of relief from the selling. While I still look for the SPX to bounce, I am taking the Neutral signal back to a Sell. There are just too many confirmations of the Sell signal to keep holding the Neutral outlook.
Let’s look at one of those Sell confirmations by looking at the daily chart with the 50 DMA and the 200 DMA. Since early May, the index has been trading much of the time sandwiched between the 50 and 200 DMA. This was bearish in early May when the 50 DMA was overhead resistance and the 200 DMA was support below. The SPX fell through the 200 DMA support in late May and has failed several times at regaining the 200 DMA. The 50 DMA became support in late July and it held until Thursday. Now the index faces both the 50 and 200 DMA as barriers overhead. The last occurrence of this technical setup saw the SPX lose 150 points before the financial crisis struck.
Our trade systems made a little money in Friday’s tight range but the brokers made more as we were really just spinning our wheels. Days like this happen and it can be frustrating; still, no damage was done except to our egos. Overall, it wasn’t such a bad week.
Mel’s Missives from the Matrix:
- Total tick for the day was 99,000 and the average tick for the day was 65. There were 116 ticks greater than 600 and 59 ticks more extreme than -600. There were 4 ticks greater than 1000 and 1 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 7.25 points. The intraday trading range - 9:35to the close - was 7.17. The 5 DMA of daily range is 15.3.
- Evidence of the intraday trend: At 10am volume was 89.61% of the 10 day average. By noon the volume was 84.79% of the 10 day average, and by 2pm volume was 81.38% of the 10 day average.
- The day's volume was 68.3% of the average daily volume for the last year. Volume was 77.8% of the last 10 day average and 69.4% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 2:45 and 3:00 when relative volume increased 27.5% while the SPX was dropping -0.13%. The largest drop in relative volume came between 10:30 and 10:45 when relative volume dropped -28.1% while the SPX was rising 0.07%.
- 0% of the SPX stocks closed with two day RSI above 90. 1% closed with RSI above 80. 66% closed with RSI below 20 and 52% closed with RSI below 10.
- 7.8% of the SPX are above their five day moving average, 8.6% are above their 10 day average, 21.2% are above their 20 day moving average, 41.4% are above their 50 day moving average, 28.8% are above their 100 day moving average, and 38.4% are above their 150 day moving average.
- 9% of the SPX closed above their most recent previous high.
- 19% of the SPX stocks closed below their most recent previous lows.
- 165 SPX issues advanced and 317 issues declined, a net SPX advance/decline of -152.
- Evidence of the intraday trend: At 10am, 83.8% of the SPX components were in the top half of the range. By noon, 39.6% were in the top half of the range, and by 2pm, 64.8% were in the top half of the range.
- 27.6% of stocks closed in the top half of the day's range. (72.2% closed in bottom half.)
- 1.4% of stocks closed in the top 10% of the day's range. 4.6% of stocks closed in the top 20% of the day's range.
- 22% of stocks closed in the bottom 10% of the day's range. 35.6% of stocks closed in the bottom 20% of the day's range.
- 3.2% of stocks closed within 2% of their 52 week high. 11.8% of stocks closed within 5% of their 52 week high.
- 85.8% of stocks closed within 50% of their 52 week low. 58.4% of stocks closed within 25% of their 52 week low.
- 3.2% of stocks closed within ¼% of their high for the day.
- 29.6% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 64.4% of the SPX components were up since the open. By noon, 40% were up since the open, and by 2pm, 55.8% were up since the open.
- 33.4% of the SPX closed up from the previous close; 52.8% closed higher than the open.
- Sectors stronger than the SPX for Friday:
- Energy -- Outperformed the SPX by +22%.
- Financials -- Outperformed the SPX by +18%.
- Industrials -- Outperformed the SPX by +15%.
- Consumer Staples -- Outperformed the SPX by +35%.
- Utilities -- Outperformed the SPX by +75%.
- Health Care -- Outperformed the SPX by +18%.
- Sectors weaker than the SPX for Friday:
- Basic Materials -- Underperformed the SPX by -9%.
- Technology -- Underperformed the SPX by -8%.
- Consumer Discretionary -- Underperformed the SPX by -74%.
- The $SOX index strength was weaker relative to the SPX Friday by -0.52%.
- The XLF outperformed the SPX by 0.18% Friday.
- The 2 Day RSI of the SPX is 2. The Dow RSI is 2, the NASDAQ is 2 and the Russell is 3.
- Over the last four sessions, the average session closed 34.13% of the range above the low. Friday closed at 5.3% of the daily range.
- Upside momentum decreased slightly Friday, from Thursday’s -4.14 to today’s -4.06. The ratio of SPX components giving a crossover sell signal compared to buy signals decreased and flipped over to the sell side to S 2.29 to 1.
- The ISEE Equity 10 day moving average Friday was 166.4. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10 and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 112 SPX components moved upward and 246 components downward during the after hours with 83 million shares traded.
Have a great weekend everyone!
-Mel
