Dow Recaptures 200 DMA
by Jerome "Mel" Hickerson
Market Recap:
There was no economic data released before Friday’s open. Futures were up slightly in response to some better than anticipated economic data out of France.
The final session of the week began with a three point move higher and quickly surrendered the gains before bouncing sharply higher to put the morning high on the chart at 10:33. The SPX then spent the next 90 minutes working back to test the lows. But shortly after noon the index began to work its way higher to put the high of the day on the chart at 3:33 pm. But the final half hour saw a mild sell as the index closed off the highs by a couple points in a very tight range.
Looking at our Market Leaders board we see a mixed session for Friday. While many indices were up, technology and the SOX were down as SOX continues to drag. China was also down.
Market Trend: Nine Sectors Report
Let’s begin by looking at the week. While only a four day week, it still stands out in several ways. The first thing that jumps out at us is that the average daily volume was the lowest of 2010 by a significant amount. The weekly range was 1.79%, less than 20 points. We last saw such a range in mid-April as the market topped. Low volume and small trading range are frequent characteristics of a topping process.
Not only was the week a tight range, but the daily range is also shrinking: Four of the last eight sessions have been the narrowest range in seven days (NR7). The 5 DMA of range has fallen under ten points; this is a strong confirmation of a topping process. But as mentioned many times, topping process can drag on for quite some time.
A review of our Nine Sectors Report shows that we had two changes from Friday’s action; both were Buy signals moving to Neutral. So we will retain the Sell signal. But this is a good place to be cautious in the market as this topping process could stretch on and 1130 is not out of reach. There is data within the Matrix suggesting an up day on Monday, or at the least that any decline will be difficult to achieve. Still, we like the odds of beginning to enter short positions on any Monday rally.
Volume & Breadth Indicators
For the SPX Index there were 343 Advancers/136 Decliners. On the NYSE 3,121 issues were traded with 1,941 advancing issues and 1,063 retreating issues, a ratio of 1.83 to 1 advancing. There were 183 new highs and 6 new lows. The 5 day moving average of New Highs is 187 while the 5 day moving average of New Lows is 9 and the 10 day moving average of Net Advancing is 748. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 2.22 to 1. The closing TRIN was 0.82 and the final tick was 172. The NYSE Composite Index gained 0.47% today.
For the NYSE, relative to the previous 30 session average, volume was -23.45% 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, 8 of last 10. For the SPX, the day's volume was 64.29% of the average daily volume for the last year. Volume was 84.9% of the last 10 day average and 88.4% of the previous day’s volume.
Advancing volume barely outpaced the advancing issues. Volume was extremely weak and surged on both the up moves and the down moves. The final tick, while positive, was not a ringing endorsement of a bullish Monday. There has been a strong recent tendency for the final tick on Friday to be bullish; seven of last eight have been positive.
Further, total tick for the day was 131,000 and the average tick for the day was 85. There were 82 ticks greater than 600 and 34 ticks more extreme than -600. There were 5 ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.
In such light volume the tick action was skewed bullishly. We have doubts that this is meaningful in such volume. The nightly indicators are more bullish than bearish but we find the action of the Absolute Breadth Index interesting.
Moving Average Indicators:
69.00% of the SPX components are giving a crossover Buy signal; 3.20% of the SPX components are giving a Sell signal. This is a 21.6 to 1 ratio of Buy signals over Sell signals.
69.4% of the SPX are above their five day moving average, 86% are above their 10 day average, 84.6% are above their 20 day moving average, 70.2% are above their 50 day moving average, 52.4% are above their 100 day moving average, and 51% are above their 150 day moving average.
There were no significant moving average crossovers today but the SOX is in jeopardy of the 5 DMA moving back below the 20 DMA if the SOX weakness continues. The percentage of SPX components above their 20 DMA continues to suggest a possible pullback soon.
The DOW has closed above its 200 DMA while the SPX has not. The market is vulnerable until the SPX confirms with a similar close above its 200 DMA.
Sectors on the Move:
Sectors stronger than the SPX for Friday:
- Basic Materials -- Outperformed the SPX by +34%.
- Energy -- Outperformed the SPX by +62%.
- Industrials -- Outperformed the SPX by +41%.
- Health Care -- Outperformed the SPX by +53%.
- Consumer Discretionary -- Outperformed the SPX by +36%.
Sectors weaker than the SPX for Friday:
- Financials -- Underperformed the SPX by -62%.
- Technology -- Underperformed the SPX by -44%.
- Consumer Staples -- Underperformed the SPX by -1%.
- Utilities -- Underperformed the SPX by -106%.
Stocks on the Move:
Today's SPX component winners and losers:
- Largest one day loser is PCG with -7.57%
- Largest three day loser is DPS with -8.82%
- Largest five day loser is DPS with -8.41%
- Largest ten day loser is DPS with -6.09%
- Largest one day winner is MCO with 5.94%
- Largest three day winner is JDSU with 13.08%
- Largest five day winner is JDSU with 16.04%
- Largest ten day winner is RDC with 20.53%
In Late Trading:
119 SPX components moved upward and 226 components downward during the after hours with 53 million shares traded.
Week of September 13 - September 17 Overview
Date/Time Release/Consensus
09/13/10 14:00 Treasury Budget/-$95.0B
09/14/10 8:30 Retail Sales/0.003
09/14/10 8:30 Retail Sales ex-auto/0.003
09/14/1010:00 Business Inventories/0.008
09/15/10 8:30 NY Fed - Empire Manufacturing Survey/5
09/15/10 8:30 Export Prices ex-ag./NA
09/15/10 8:30 Import Prices ex-oil
09/15/10 9:15 Industrial Production/0.003
09/15/10 9:15 Capacity Utilization/75
09/15/10 10:30 Crude Inventories/NA
09/16/10 8:30 Initial Claims/460K
09/16/10 8:30 Continuing Claims/4450K
09/16/10 8:30 PPI/0.003
09/16/10 8:30 Core PPI
09/16/10 8:30 Current Account/-125
09/16/10 9:00 Net Long-Term TIC Flows/NA
09/16/10 10:00 Philadelphia Fed/0
09/17/10 8:30 CPI/0.002
09/17/10 8:30 Core CPI/0.001
09/17/10 9:55 Mich Sentiment/70
Have a great weekend!
-Mel
