Dow Makes it Eight in a Row
Although there did not appear to be any specific catalyst other than sagging foreign markets, stock futures in the U.S. were heading down a bit in the pre-market session. Key happenings today included Mr. Bernanke's testimony in front of the House Budget Committee at 10:00 am and the Treasury's 10-year note auction at 1:00 pm eastern. We didn't have any economic data to review before the open and there were no significant economic releases on the calendar today.
The midweek session began with negative futures and followed through with a small opening gap lower. After some choppy trading the SPX put the high of the day on the chart a bit before 11 am. Then sellers took the index quickly down seven points before stabilizing and trading sideways for an hour followed by an hour long bounce. But about 1:30 sellers again hit the tape once again taking almost seven points off to put the low of the day on the chart at 2:51 pm. The final hour saw dip buyers arrive and bid prices up from the lows.
Today's action may be the start of something more. But every single point the bears push down is fiercely contested as the market retraces the territory time and time again. Yet when the bulls advance the ball, they do it emphatically with unfilled gaps and strong intraday surged. It's like watching a mediocre football team try to grind it out playing against the Greatest Show on Turf with Kurt Warner striking through the air. The bears sometimes manage some small gains but overall, it's not pretty for the bears.
Looking to our Market Leaders board today we see a surprising amount of agreement for such a narrow range close. The Dow yet again managed a positive close but it certainly appears to be an outlier. While Germany closed positively as well, the Emerging Markets and China got crushed. I know we have said this a few times recently, but the data tonight simply looks odd. The SPX lost less than four points but the data looks more like a 1% down day, again.
SPX big winners were Nyse Euronext (NYX) 13.87%, Polo Ralph Lauren Corp (RL) 7.96%, and JDS Uniphase Corp (JDSU) 6.72%. SPX big losers were Computer Sciences Corp (CSC) -15.45%, Ingersoll-rand Ltd Cl A (IR) -6.06%, and Sigma-Aldrich Corp (SIAL) -5.98%.
SPX five day big winners are JDS Uniphase Corp (JDSU) 36.27%, Big Lots Inc (BIG) 25.68%, and Autonation Inc (AN) 18.83%. SPX five day big losers are Computer Sciences Corp (CSC) -11.3%, NVIDIA Corporation (NVDA) -8.95%, and Apartment Invest & Mgmt (AIV) -6.07%.
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report this evening we find three changes, all negative, as Materials moves from Neutral to Sell, the Financials move from Buy to Neutral, and Consumer Discretionary moves from Buy to Neutral. The Nine Sectors signal remains mired in Neutral.
We believe that tomorrow’s session is key. Either the bears successfully turn dip buyers into second dip sellers Thursday or this market will continue to ignore reason and continue the endless march higher. Our money is actually on the bears for tomorrow but these bears haven’t been able to show much for many months. Caution is advised.
Volume & Breadth Indicators
For the SPX Index there were 206 components advancing and 275 components declining. On the NYSE 3,138 issues were traded with 1,141 advancing issues and 1,883 retreating issues, a ratio of 1.65 to one declining. There were 200 new highs and 13 new lows. The five day moving average of New Highs is 234 while the five day moving average of New Lows is 11 and the ten day moving average of Net Advancing is 266. The Net Advancing data indicates a bullish trend.
Declining volume was higher at a ratio of 1.69 to one. The closing TRIN was 1.02 and the final tick was 244. The five day average of TRIN is .87 and the ten day average of TRIN is .98. The NYSE Composite Index lost -0.43% today while the SPX lost -0.28%.
For the NYSE, relative to the previous 30 session average, volume was -4.13% below the average. Of the last 15 sessions 10 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 22 sessions ended on a positive tick, 9 of last 10. For the SPX, the day's volume was 86.6% of the average daily volume for the last year. Volume was 88.9% of the last 10 day average and 105.5% of the previous day’s volume.
Market breadth was weak today. But as always, follow-through tomorrow is the key and the bears have lacked follow-through for six months. But notice that the broad NYSE Composite Index underperformed today.
Total tick for the day was -13,000 and the average tick for the day was -8. There were 25 ticks greater than 600 and 87 ticks more extreme than -600. There were 2 ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional distribution.
Volume picked up a bit today (not much though) and the intraday pattern clearly shows spikes in volume on the downward moves. Looking at the Nightly Breadth Indicators this evening is clearly again showing a mixed bag of indicators suggesting at least another day of choppiness ahead. Worth noticing is that the percentage of stocks above their 40 and 200 day averages continues to fall. As bullish as this market continue to be, this doesn't seem bullish.
Moving Average and Support/Resistance Indicators:
59.2% of the SPX are above their five day moving average, 72% are above their 10 day average, 73.6% are above their 20 day moving average, 77.8% are above their 50 day moving average, and 89.8% are above their 200 day moving average.
The Emerging Markets 20 DMA crossed below the 50 DMA today. Mr. Bernanke doesn’t see inflation in food prices but the market certainly seems to see a threat to the emerging markets.
Sectors on the Move:
Sectors stronger than the SPX for Wednesday:
- Industrials -- Outperformed the SPX by +32%.
- Technology -- Outperformed the SPX by +16%.
- Consumer Staples -- Outperformed the SPX by +45%.
- Utilities -- Outperformed the SPX by +27%.
- Health Care -- Outperformed the SPX by +5%.
- Consumer Discretionary -- Outperformed the SPX by +95%.
Sectors weaker than the SPX for Wednesday:
- Basic Materials -- Underperformed the SPX by -51%.
- Energy -- Underperformed the SPX by -93%.
- Financials -- Underperformed the SPX by -37%.
In Late Trading:
67 SPX components moved upward and 120 components downward during the after hours with 93 million shares traded.
Thursday, February 10
08:30 Initial Claims
08:30 Continuing Claims
10:00 Wholesale Inventories
02:00 Treasury Budget
Australia Employment Change
Great Britain GDP
China Trade Balance
Swiss Consumer Price Index
ECB Monthly Report
Great Britain Industrial Production
Bank of England Rate Decision
Before: ALXN, ARGN, BCRX, BWA, BG, CBOE, ECA, EZCH, FORR, GT, GPI, INCY, IPCC, IRC, IFF, LH, LF, LPX, LUFK, TAP, OZM, PEP, PM, ROLL, S, TKLC, TDC, TRI, TRAD, THS, WWE,
After: ATHR, BEC, BJRI, NILE, CPKI, CATM, CEPH, CAKE, CMG, CPA, DVA, EXPE, ELON, GDI, HOKU, IM, KONA, KFT, LPSN, MOVE, NBIX, PNRA, PNSN, RAX, RNWK, SODA, TTMI, WMGI
Have a good Thursday!