Dow Again Holding 10K
by Jerome "Mel" Hickerson
Market Recap:
Overnight futures tried to takeoff but traders were unimpressed with Japan's decisions in their "emergency meeting" and lower stock prices in Europe were putting pressure on our futures before the open. Economic reports showed that personal incomes were up by +0.2% in July, which was a tenth below the consensus expectations for an increase of +0.3%. June’s reading was unchanged at 0.0%. Personal spending for the month rose by +0.4, which a tenth ahead of the expectations of +0.3% and June’s unchanged reading.
The week began without a noticeable gap but followed with a move downward of several points. The rest of the session continued with a choppy multi-wave descent to close near the lows of the day. Bears were in control of this low volume affair from start to finish; there were really no significant bounces throughout the day.
As much as some TV talking heads rattle on about the market's volatility, not only are we mired within a trading range, but even the intraday volatility is lacking as moves recently have been all one way during the session. If your trading style is to scalp bounces and pullbacks, you're struggling right now. Most traders will welcome the return of some volume hopefully after the holiday next week.
On the Market Leaders board, the SOX and XLF have returned into bear market territory and the Russell 2000 is right on their heels.
Market Trend: Nine Sectors Report
The Nine Sectors Report tonight shows only two movements, both moves being from Buy to Neutral. Considering the market action today, this is a pretty mild move within the sectors and does not yet suggest a trend change so we will stick with the Long signal. But it is rather precarious; for the SPX, a close below 1047 is probably a good place to exit any long positions.
Volume & Breadth Indicators
For the SPX Index there were 17 Advancers/468 Decliners. On the NYSE 3,129 issues were traded with 688 advancing issues and 2,358 retreating issues, a ratio of 3.43 to 1 declining. There were 121 new highs and 37 new lows. The 5 day moving average of New Highs is 138 while the 5 day moving average of New Lows is 74 and the 10 day moving average of Net Advancing is -209. The Net Advancing data indicates a bearish trend. The Net Advancing data indicates a bearish trend.
Declining volume was higher at a ratio of 13.09 to 1. The closing TRIN was 3.82 and the final tick was -701. The NYSE Composite Index lost -1.47% today.
For the NYSE, relative to the previous 30 session average, volume was -20.29% below the average. Of the last 15 sessions 7 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 20 sessions ended on a positive tick, 5 of last 10. For the SPX, the day's volume was 60.6% of the average daily volume for the last year. Volume was 72.9% of the last 10 day average and 66.8% of the previous day’s volume.
A very negative final tick as traders obviously were reluctant to hold overnight positions. Declining volume was much higher than declining issues; this is often bearish. But on the flipside, volume today fell far short of Friday’s when the market was rising (Monday was the lowest volume of 2010). Most often volume is greater on a down day; so this might be interpreted as a mild bullish sign.
Further, total tick for the day was -134,000 and the average tick for the day was -87. There were 65 ticks greater than 600 and 157 ticks more extreme than -600. There were 5 ticks greater than 1000 and 9 ticks more extreme than -1000. The tick action suggests institutional distribution.
Volume today was extraordinarily light. The tick data, total tick as well as the extreme ticks, was relatively mild for a sell-off suggesting that today was an orderly exit with very little panic.
Moving Average Indicators:
6.80% of the SPX components are giving a crossover Buy signal; 78.00% of the SPX components are giving a Sell signal. This is a 11.5 to 1 ratio of Sell signals over Buy signals.There were no significant moving average crossovers today.
31.4% of the SPX are above their five day moving average, 17.2% are above their 10 day average, 12.6% are above their 20 day moving average, 28.2% are above their 50 day moving average, 24.8% are above their 100 day moving average, and 30% are above their 150 day moving average.
For all of the major indices, the 5 DMA remains below the 20 DMA confirming the bearish downward trend. But for both the SOX and the SPX the 5 DMA did inch closer to the 20 DMA despite today’s downward action. So there could be the smallest glimmer of daylight in today’s gloom.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Basic Materials -- Outperformed the SPX by +1%.
- Energy -- Outperformed the SPX by +8%.
- Technology -- Outperformed the SPX by +29%.
- Consumer Staples -- Outperformed the SPX by +62%.
- Health Care -- Outperformed the SPX by +22%.
Sectors weaker than the SPX for Monday:
- Financials -- Underperformed the SPX by -64%.
- Industrials -- Underperformed the SPX by -5%.
- Utilities -- Underperformed the SPX by -3%.
- Consumer Discretionary -- Underperformed the SPX by -28%.
Stocks on the Move:
Today's SPX component winners and losers
Largest one day loser is JWN with -5.15%
Largest three day loser is SNDK with -9.15%
Largest five day loser is SNDK with -15.89%
Largest ten day loser is SNDK with -19.43%
Largest one day winner is GENZ with 3.36%
Largest three day winner is MWW with 8.41%
Largest five day winner is LNC with 7.56%
Largest ten day winner is MFE with 57.10%
In Late Trading:
146 SPX components moved upward and 176 components downward during the after hours with 125 million shares traded.
Tuesday, August 31
Economics
09:00 Case-Shiller 20 City Index
09:45 Chicago PMI 57.5 cons.
10:00 Consumer Confidence 51.3 cons.
02:00 FOMC Minutes
Australia Private Sector Credit 0.2% cons.
Japan Labor Cash Earnings 1.5% cons.
Japan Housing Starts 0.750m
German Unemployment Change 7.60% cons.
Great Britain Net Consumer Credit -0.1B cons.
Canada GDP 6.1% cons.
Earnings
Before: CHOP, DG, DSW, ENER, ISLE, KSP
After: ABM, ARAY, APSG, CCUR, DAC
The Conference Board releases its Consumer Confidence index for August after the start of trading. Economists forecast the index to have edged down to 50 inAugust from 50.4 inJuly. The Chicago PMI is expected to have fallen to 57.5 inAugust from 62.3 inJuly. The Case-Shiller 20-city home price index is expected to have risen 3.5% in June after rising 4.6% in May.
Have a great Tuesday!
-Mel
