Deer in the Headlights
by Jerome "Mel" Hickerson
There was not any economic news released before the open today. Intraday we received the minutes from the latest FOMC meeting at 2:00.
The session opened with some selling pressure from the futures; traders were likely a bit cautious ahead of the FOMC minutes and auctions today. But after a four point gap downward and putting the low of the day on the chart just three minutes into the session, the SPX began climbing bullishly.
Then from 11am to 2pm the index had that "deer in the headlight" appearance that we have become so accustomed to recently. The market traded sideways as if traders were holding their breath waiting for the FOMC minutes. Traders apparently appreciated what they found in the release; the index climbed four points shortly after the release. But as so often happens, more than half of that gain was given back going into the close. Mostly it was just a dull, inactive narrow range trading session.
Nothing in today's action caused me to change my perspective that this market is overdue for a mild correction. The internal conditions of this market leave it very vulnerable to any kind of event that could trigger a sell off; but there is nothing yet visible on the horizon to trigger such a corrective move and it is obvious that this market will require something to get things started to the downside. Complacency and bullishness are growing; these are often prerequisites before a pullback, but both are moving into extremes that often lead to pullbacks.
If you are short, either be prepared to be patient or be prepared to be frustrated. Something will eventually trigger a 5%-10% pullback, but it may yet be a week or two before beginning. The topping process is almost always a slower process than a bottoming process.
Day Trade Systems Update: (Signals today)
* Scalp Long UYM at: 12:38
* Scalp Short SPX at: 2:25
The lack of volatility made today a difficult day to trade intraday. Much of the early part of the day our system was telling us to stand down and wait for a better pitch to swing at.
SPX Summary for Tuesday, April 06, 2010
267 Advancers/222 Decliners
Today's SPX component winners and losers:
• Largest one day loser is MEE with -11.68%
• Largest three day loser is MEE with -7.65%
• Largest five day loser is MEE with -10.93%
• Largest ten day loser is GENZ with -11.87%
• Largest one day winner is MI with 5.76%
• Largest three day winner is EK with 15.57%
• Largest five day winner is RF with 12.06%
• Largest ten day winner is JDSU with 19.96%
*** SPX Technical Summary ***
The lowest 14 day RSI component is SAI; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 61.
The greatest positive five day momentum component is RF; the greatest negative five day momentum component is MEE. The average five day momentum of all 500 components is 2.09.
59.20% of the SPX components are giving a crossover Buy signal; 11.40% of the SPX components are giving a Sell signal. This is a 5.2 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 18 components.
• From Buy to Neutral: 16 components.
• From Neutral to Sell: 14 components.
• From Neutral to Buy: 32 components.
The moving averages:
Close 1189.44
9 EMA 1175.89 Rising
10 DMA 1174.23 Rising
20 DMA 1164.73 Rising
50 DMA 1123.75 Rising
100 DMA 1119.12 Rising
200 DMA 1063.85 Rising
10 Wk MA 1133.65 Rising
NYSE Summary
On the NYSE 3180 issues were traded with 1757 advancing issues and 1317 retreating issues, a ratio of 1.33 to 1 advancing. There were 479 new highs and 4 new lows.
Advancing volume was higher at a ratio of 1.72 to 1. The closing TRIN was 0.78 and the final tick was 550.
Evidence of trend:
Relative to the previous 30 session average, volume was -10.42% below the average. Of the last 15 sessions 3 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 25 sessions ended on a positive tick, 6 of last 10.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line increased from 206931 to 207371. This 0.21% increase came while the SPX was gaining 0.17%. The 10 day moving ratio of positive volume is 1.41 and the 10 day moving Advance/Decline ratio is 1.31. The 10 day moving ratio of positive volume has trended 0.36 over the last three days and the 10 day moving Advance/Decline ratio has trended 0.18 over the last three days.
The NYSE Composite Index gained 0.05% today.
Wednesday, April 7
Economics
10:30 Crude Inventories
03:00 Consumer Credit $5.0b
02:00 Germany Retail Sales
05:00 European Union GDP
05:00 European Union PPI
06:00 Germany Manufacturers
Earnings
Before: CHTT, FDO, GBX, MON, MSM
After: MDRX, APOG, BBBY, CPSS, LWSN, MIND, PBY, RT, SCHN, WDFC
Auction
01:00 10-Yr Note Auction
Speeches
02:00 Thomas Hoenig
On Wednesday, February consumer credit is expected to have risen $1.6 billion after rising $5 billion in the previous month. The report from the Federal Reserve is due out in the morning. The weekly oil inventories report from the government is due in the morning. Federal Reserve Chairman Ben Bernanke and Federal Reserve Vice Chairman William Dudley are both expected to speak. Also due to speak: Federal Reserve Governor Thomas Hoenig. Family Dollar Stores Inc. (FDO), Monsanto Company (MON), and Bed Bath & Beyond Inc. (BBBY) will report earnings.
Mel’s Missives from the Matrix:
• Total tick for the day was 215,000. There were 60 ticks greater than 600 and 3 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional absence.
• The day's range was 9.03 points. The 5 DMA of daily range is 9.39.
• Evidence of the intraday trend: At 10am volume was 79.02% of the 10 day average. By noon the volume was 86.56% of the 10 day average, and by 2pm volume was 84.34% of the 10 day average.
• The day's volume was 80.6% of the average daily volume for the last year. Volume was 89% of the last 10 day average and 110.8% of the previous day’s volume.
• Evidence of the intraday trend: The largest increase in relative volume came between 2:00 and 2:15 when relative volume increased 47.0% while the SPX was rising 0.19%. The largest drop in relative volume came between 1:45 and 2:00 when relative volume dropped -21.2% while the SPX was flat.
• 45% of the SPX stocks closed with two day RSI above 90. 59% closed with RSI above 80. 5% closed with RSI below 20 and 2% closed with RSI below 10.
• 78.2% of the SPX are above their five day moving average, 80.4% are above their 10 day average, and 82.8% are above their 20 day moving average.
• 45% of the SPX closed above their most recent previous high.
• 8% of the SPX stocks closed below their most recent previous lows.
• 267 SPX issues advanced and 222 issues declined, a net SPX advance/decline of 45.
• Evidence of the intraday trend: At 10am, 61.8% of the SPX components were in the top half of the range. By noon, 67.8% were in the top half of the range, and by 2pm, 64.2% were in the top half of the range.
• 73.2% of stocks closed in the top half of the day's range. (26.6% closed in bottom half.)
• 19.6% of stocks closed in the top 10% of the day's range. 36.4% of stocks closed in the top 20% of the day's range.
• 2.8% of stocks closed in the bottom 10% of the day's range. 8.4% of stocks closed in the bottom 20% of the day's range.
• 42.8% of stocks closed within 2% of their 52 week high. 63.4% of stocks closed within 5% of their 52 week high.
• 38.6% of stocks closed within 50% of their 52 week low. 9.8% of stocks closed within 25% of their 52 week low.
• 31.2% of stocks closed within ¼% of their high for the day.
• 7.4% of stocks closed within ¼% of their low for the day.
• Evidence of the intraday trend: At 10am, 26.8% of the SPX components were up since the open. By noon, 41.8% were up since the open, and by 2pm, 44% were up since the open.
• 53.6% of the SPX closed up from the previous close; 71.2% closed higher than the open.
• Sectors stronger than the SPX for Tuesday:
- Basic Materials -- Outperformed the SPX by +0%.
- Financials -- Outperformed the SPX by +88%.
- Technology -- Outperformed the SPX by +0%.
- Utilities -- Outperformed the SPX by +50%.
• Sectors weaker than the SPX for Tuesday:
- Energy -- Underperformed the SPX by -25%.
- Industrials -- Underperformed the SPX by -17%.
- Consumer Staples -- Underperformed the SPX by -49%.
- Health Care -- Underperformed the SPX by -23%.
- Consumer Discretionary -- Underperformed the SPX by -5%.
• The $SOX index strength was weaker relative to the SPX Tuesday by -0.79%.
• The XLF outperformed the SPX by 0.88% Tuesday.
• The 2 Day RSI of the SPX is 94. The Dow RSI is 82, the NASDAQ is 93 and the Russell is 95.
• Over the last four sessions, the average session closed 70.32% of the range above the low. Tuesday closed at 74% of the daily range.
• Upside momentum decreased Tuesday, from Monday’s 2.55 to today’s 2.09. The ratio of SPX components giving a crossover buy signal compared to sell signals increased to B 5.19 to 1.
• The ISEE Equity 10 day moving average Tuesday was 221.3. The lowest 10 day average in the last 52 weeks was 141.5 on 06/29/09 and the highest 10 day average in the last 52 weeks was 221.3 on 04/06/10.
• 195 SPX components moved upward and 147 components downward during the after hours with 95 million shares traded.
Good trading on Wednesday everyone!
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"Mel"
