Dow Winning Streak Reached Seven
by Jerome "Mel" Hickerson
In many ways, today’s session was more interesting than many recent sessions. Intraday volatility was a bit higher than recent days and that is a good sign for day traders.
Overnight, the overseas markets were higher across the board. Stock futures were modestly higher at the open. The regular session opened with a small gap upward, moved upward in three micro waves for 30 minutes, followed by a few hours of consolidation with an upward bias; slow drift trading until about 1:30 when buyers once again showed their presence. The index popped upward, leveled off for an hour, and then gave the pop back as quickly as it had gained it. Sellers ruled the tape until 3:20 when buyers bought the dip and took the index moving upward into the close to finish well into the upper half of the intraday trading range.
Internal indicators remain extremely overbought, as they have been for quite awhile. RSI(2) on the SPX has been over 95 for eleven straight days. Since 1928, the only other instance of such a streak is mid August 1972 (which was followed by two months of downturn - but don’t draw any conclusions from one example.)
The Dow and the NYSE Composite today broke above their January highs although volume is still not supporting a general breakout. But the small and mid-cap stocks as the NASDAQ, the Russell 2000 and the SPX MidCap 400 Index have also all hit new highs.
I have heard traders remark that the low volume doesn’t matter; that we’ve “had low volume since July.” Let’s step back and take a look at the volume for two previous breakout levels during 2009. The levels I have chosen to examine are at 944, breaking above the January 2009 highs which happened on June 1st, as well as the break above the level of the “post-crash” high of 1007 from November, 2008 broken above on August 6th.
The June 1st breakout was with volume of 118% of the yearly average (an average which was much higher than we have currently.) Volume for the next couple days exceeded our current volume by almost 50%. Another thing to notice is that on June 1st, the five day average daily range was over 23 points. This breakout was clearly supported by higher volume and range.
The August 6th breakout was with 125% volume, almost 7 Billion shares, and 75% higher than our current volume. The following six sessions never fell below 5.4 Billion shares. Average daily trading range was over 15 points. Again, this breakout was confirmed by the volume.
Both breakouts were meaningful breakouts; volume supported the breakout and the breakout was sustained. Our current volume in the SPX is having a good day when it breaks above 4.2 Billion shares – and that happens with Citi trading near 1 Billion shares daily.
For comparison, the failed January 14th breakout above 1150 came on volume of less than 4 Billion shares and a daily range of less than seven points. The index clearly rejected the new highs in the following days.
It may be true that the volume doesn’t matter here; but it is not true to say that it hasn’t mattered since July. Volume now is suggesting that danger flags are flying with the chance of a reversal down getting greater with each new high.
Our current breakout puts us in historic territory with few precedents; you have to go back 38 years to find even one example of a continuous ramp upward like this and 82 years back to find another. All historic patterns fail at times, just as with any chart patterns. Bulls continue to control this tape; bears need a catalyst that is currently lacking in this unidirectional market. This is truly uncharted waters.
SPX Summary for Wednesday, March 17, 2010
362 Advancers/127 Decliners
Today's SPX component winners and losers:
• Largest one day loser is CTXS with -3.13%
• Largest three day loser is BSX with -11.04%
• Largest five day loser is CNX with -9.60%
• Largest ten day loser is BSX with -12.39%
• Largest one day winner is LSI with 9.71%
• Largest three day winner is LSI with 13.64%
• Largest five day winner is ZION with 13.12%
• Largest ten day winner is AIG with 38.60%
*** SPX Technical Summary ***
The lowest 14 day RSI component is PBG; the highest 14 day RSI component is FO. The average 14 day RSI of all 500 components is 74.
The greatest positive five day momentum component is ZION; the greatest negative five day momentum component is CNX. The average five day momentum of all 500 components is 2.04.
78.00% of the SPX components are giving a crossover Buy signal; 4.40% of the SPX components are giving a Sell signal. This is a 17.7 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 4 components.
• From Buy to Neutral: 17 components.
• From Neutral to Sell: 3 components.
• From Neutral to Buy: 24 components.
NYSE Summary
On the NYSE 3186 issues were traded with 2175 advancing issues and 908 retreating issues, a ratio of 2.40 to 1 advancing. There were 601 new highs and 2 new lows.
The number of NYSE new 52-week highs is greater than 600. That's only occurred three other times: December 2003, October 1982, and October 1997.
Advancing volume was higher at a ratio of 2.08 to 1. The closing TRIN was 1.15 and the final tick was 351.
Evidence of trend:
Relative to the previous 30 session average, volume was -5.96% below the average. Of the last 15 sessions 2 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 26 sessions ended on a positive tick, 10 of last 10.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line increased from 202778 to 204045. This 0.62% increase came while the SPX was gaining 0.58%.
Thursday, March 18
Economics
08:30 Core CPI 0.1% cons.
08:30 CPI
08:30 Initial Claims
08:30 Continuing Claims
08:30 Current Account Balance
10:00 Leading Indicators 0.2% cons.
10:00 Philadelphia Fed
04:30 Fed Balance Sheet
04:30 Money Supply
Earnings
Before: BKS, CRAI, FDX, GME, LDK, NWY, ROST, SCVL, SMRT, WGO
After: COMS, ADUS, CTAS, ICXT, PALM, NCTY
Speeches
07:30 Elizabeth Duke
Events
TLAB, ADCT, WOOF at CL King West Coast Best Ideas Conference
BJRI, RRGB, IGT at JP Morgan Gaming, Lodging, Restaurant & Leisure Conference
TQNT Analyst Day
GCI Analyst Meeting
FST Analyst Meeting
TREX Analyst Meeting
The Leading Economic Indicators is expected to have risen 0.2% in February after rising 0.3% in January. The weekly jobless claims report is also due in the morning, along with the Philadelphia Fed index, a regional reading on manufacturing. FedEx reports quarterly results before the start of trading and is expected to have earned 72 cents per share after earning 31 cents a year ago.
Mel’s Random Hits:
• Total tick for the day was 292,000. There were 520 ticks greater than 600 and 96 ticks more extreme than -600.
• The day's range was 9.9 points.
• The day's volume was 95.3% of the average daily volume for the last year. Volume was 109.3% of the last 10 day average and 110.2% of the previous day’s volume.
• 38% of the SPX stocks closed with two day RSI above 90. 56% closed with RSI above 80. 6% closed with RSI below 20 and 3% closed with RSI below 10.
• 83.4% of the SPX are above their five day moving average, 86.2% are above their 10 day average, and 91.8% are above their 20 day moving average.
• 55% of the SPX closed above their most recent previous high.
• 6% of the SPX stocks closed below their most recent previous lows.
• 362 SPX issues advanced and 127 issues declined, a net SPX advance/decline of 235.
• 67.2% of stocks closed in the top half of the day's range. (32.8% closed in bottom half.)
• 12.4% of stocks closed in the top 10% of the day's range. 24% of stocks closed in the top 20% of the day's range.
• 1.6% of stocks closed in the bottom 10% of the day's range. 9.2% of stocks closed in the bottom 20% of the day's range.
• 39.6% of stocks closed within 2% of their 52 week high. 61.6% of stocks closed within 5% of their 52 week high.
• 32.8% of stocks closed within 50% of their 52 week low. 8.2% of stocks closed within 25% of their 52 week low.
• 19.8% of stocks closed within ¼% of their high for the day.
• 4.6% of stocks closed within ¼% of their low for the day.
• 73.4% of the SPX closed up from the previous close; 67.2% closed higher than the open.
• Sectors stronger than the SPX for Wednesday:
- Energy
- Financials
• Sectors weaker than the SPX for Wednesday:
- Basic Materials
- Industrials
- Technology
- Consumer Staples
- Utilities
- Health Care
- Consumer Discretionary
• The $SOX index strength was stronger than the SPX Wednesday.
• The 2 Day RSI of the SPX is 99. The Dow RSI is 99, NASDAQ is 93 and Russell 94.
• Over the last four sessions, the average session closed 74.3% of the range above the low. Today closed at 63% of the daily range.
• Upside momentum increased Wednesday, from Tuesday’s 1.85 to today’s 2.04. The ratio of SPX components giving a crossover buy signal compared to sell signals also moved upward to 17.7 to 1.
• 192 SPX components moved upward and 173 components downward during the after hours with 93 million shares traded.
Good trading on Thursday everyone!
-----------
"Mel"
ETF’s we trade:
Ultra S&P500 ProShares (NYSE: SSO)
Ultra Dow30 ProShares (NYSE: DDM)
Ultra QQQ ProShares (NYSE: QLD)
PS UTLRSHRT QQQ (NYSE: QID)
UltraShort S&P500 ProShares (NYSE: SDS)
UltraShort Dow30 ProShares (NYSE: DXD)
PowerShares QQQ Trust (NASDAQ: QQQQ)
Direxion Daily Small Cp Bear 3X (NYSE:TZA)
Direxion Daily Small Cp Bull 3X (NYSE:TNA)
