ECB Commissioner Draghi Speaks, Markets Soar
Market Recap:
SPX big winners were Metropcs Communications Inc (PCS) 31.99%, Akamai Technologies Inc (AKAM) 20.3%, and Western Digital Corp (WDC) 17.88%. SPX big losers were Interpublic Gr Of Cos (IPG) -10.7%, Vulcan Materials Co (VMC) -10.29%, and Boston Scientific Corp (BSX) -6.92%.
SPX five day big winners are Metropcs Communications Inc (PCS) 31.15%, Western Digital Corp (WDC) 20.06%, and Sandisk Corp (SNDK) 18.33%. SPX five day big losers are Netflix Inc (NFLX) -31.41%, Devry Inc (DV) -29.27%, and International Game Technology (IGT) -28.73%.
New Ten Day Highs: MMM, AKAM, AEE, APH, ADI, AIZ, T, ADSK, BLL, BAX, BIIB, BA, BRCM, COG, CAM, CBS, CELG, KO, CCE, CL, CPWR, ED, DHR, DPS, DUK, ETN, EMC, EQT, EFX, XOM, FITB, FLIR, FTI, GPS, GE, GR, HAL, HCP, HNZ, HES, HD, HON, IP, KEY, KLAC, LEG, LLTC, LSI, MAT, PCS, MCHP, MCO, MUR, MYL, NDAQ, NOV, NTAP, NYT, GAS, NKE, JWN, NOC, NVDA, PH, PEP, PKI, PEG, PHM, RF, R, SNDK, SLB, SHW, SNA, SO, SWN, S, SWK, HOT, TER, TMO, AEM, VTR, WMT, WAG, WAT, WPI, WDC
New Ten Day Lows: AKS, ABC, APOL, AN, BCR, BBY, BSX, CAH, CTXS, GLW, CVH, DV, RRD, DOW, DPS, ROST, EFX, EQR, EXPD, F, HUM, IPG, IGT, JNS, CLF, MJN, MCK, WFR, MDP, NUE, ORLY, ODP, OI, BTU, PBI, PCP, RSH, RTN, CRM, SRCL, TLAB, THC, TMK, TSN, UNH, VAR, VMC, WPO, WLP, AMZN
Volume & Breadth Indicators
For the SPX Index there were 441 components advancing and 57 components declining. On the NYSE 3,142 issues were traded with 2,238 advancing issues and 826 retreating issues, a ratio of 2.71 to one advancing. There were 173 new highs and 61 new lows. The five day moving average of New Highs is 121 while the five day moving average of New Lows is 74 and the ten day moving average of Net Advancing is 123.
Advancing volume was higher at a ratio of 4.22 to one. The closing TRIN was 0.73 and the final tick was -135. The five day average of TRIN is 1.1 and the ten day average of TRIN is 1.06. The NYSE Composite Index gained 1.93% today while the SPX gained 1.63%.
For the NYSE, relative to the previous 30 session average, volume was 11.67% above 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, 14 sessions ended on a positive tick, 4 of last 10. For the SPX, the day's volume was 120.5% of the average daily volume for the last year. Volume was 120.8% of the last 10 day average and 111.8% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 86,000 and the average tick for the day was 56. There were 55 ticks greater than 600 and 10 ticks more extreme than -600. There were 15 ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.
Moving Average and Support/Resistance Indicators:
63.8% of the SPX are above their five day moving average, 47.8% are above their 10 day average, 47.2% are above their 20 day moving average, 56.4% are above their 50 day moving average, and 49.4% are above their 200 day moving average.
There were no significant moving average crossovers today. Our moving average Power Rating is 29 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Thursday:
- Energy -- Outperformed the SPX by +127%.
- Consumer Staples -- Outperformed the SPX by +4%.
Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -116%.
- Financials -- Underperformed the SPX by -20%.
- Industrials -- Underperformed the SPX by -25%.
- Technology -- Underperformed the SPX by -28%.
- Utilities -- Underperformed the SPX by -9%.
- Health Care -- Underperformed the SPX by -67%.
- Consumer Discretionary -- Underperformed the SPX by -8%.
Checking the sectors of the SPX tonight: (The sector Buy and Sell signals come from a mechanical trend trading system; there will be some whipsaw but the signal will never be on the wrong side for long.)
The Basic Materials sector advancing issues (24) totaled 897,710 shares traded (37,405 average per stock) and declining issues (6) totaled 432,223 shares traded (72,037 average per stock.) 8 components are on an uptrend (6 new uptrends today) and 22 components are on a downtrend (no new downtrends today.) There were no New Highs and 1 New Lows. The sector is on a Buy signal and closed below the daily pivot. The sector 5-Day average closed -.29% below the 20-Day average.
The Energy sector advancing issues (43) totaled 2,405,948 shares traded (55,952 average per stock) and declining issues (1) totaled 174,030 shares traded (174,030 average per stock.) 33 components are on an uptrend (20 new uptrends today) and 11 components are on a downtrend (no new downtrends today.) There were no New Highs and 2 New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed 1.42% above the 20-Day average.
The Financials sector advancing issues (75) totaled 5,282,814 shares traded (70,438 average per stock) and declining issues (5) totaled 82,053 shares traded (16,411 average per stock.) 35 components are on an uptrend (22 new uptrends today) and 45 components are on a downtrend (no new downtrends today.) There were 3 New Highs and no New Lows. The sector is on a Sell signal and closed above the daily pivot. The sector 5-Day average closed -1.13% below the 20-Day average.
The Industrials sector advancing issues (55) totaled 2,149,857 shares traded (39,088 average per stock) and declining issues (6) totaled 137,112 shares traded (22,852 average per stock.) 31 components are on an uptrend (14 new uptrends today) and 30 components are on a downtrend (1 new downtrends today.) There were 4 New Highs and 1 New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed -.02% below the 20-Day average.
The four 'risk sectors' totaled 197 advancing issues and 18 declining issues today with 62 new uptrends and 1 new downtrends. 49.8% of Risk Sector components are uptrending.
The Technology sector advancing issues (72) totaled 9,730,714 shares traded (135,149 average per stock) and declining issues (7) totaled 993,811 shares traded (141,973 average per stock.) 43 components are on an uptrend (24 new uptrends today) and 36 components are on a downtrend (no new downtrends today.) There were 2 New Highs and 3 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -.26% below the 20-Day average.
The Consumer Staples sector advancing issues (39) totaled 1,607,906 shares traded (41,228 average per stock) and declining issues (2) totaled 73,319 shares traded (36,660 average per stock.) 19 components are on an uptrend (12 new uptrends today) and 22 components are on a downtrend (no new downtrends today.) There were 4 New Highs and 1 New Lows. The sector is on a Sell signal and closed above the daily pivot. The sector 5-Day average closed -.2% below the 20-Day average.
The Utilities sector advancing issues (31) totaled 638,083 shares traded (20,583 average per stock) and declining issues (no) totaled no shares traded (no average per stock.) 27 components are on an uptrend (17 new uptrends today) and 4 components are on a downtrend (no new downtrends today.) There were 2 New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed .55% above the 20-Day average.
The Health Care sector advancing issues (39) totaled 1,731,808 shares traded (44,405 average per stock) and declining issues (13) totaled 1,263,501 shares traded (97,192 average per stock.) 18 components are on an uptrend (9 new uptrends today) and 34 components are on a downtrend (no new downtrends today.) There were 3 New Highs and 2 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -.32% below the 20-Day average.
The Consumer Discretionary sector advancing issues (63) totaled 2,961,416 shares traded (47,007 average per stock) and declining issues (17) totaled 1,584,734 shares traded (93,220 average per stock.) 37 components are on an uptrend (21 new uptrends today) and 44 components are on a downtrend (4 new downtrends today.) There were 3 New Highs and 7 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -.55% below the 20-Day average.
Based on the SPX sector data, we are Neutral for the SPX and the Russell 2000.
What We Learned from Thursday's Action:
Thursday was session 1 to close above the 5 DMA, session 1 to close above the 10 DMA, session 1 to close above the 20 DMA, and session 10 to close above the 50 DMA. This was also session 2 for the 5 DMA to close below the 20 DMA. One early sign of a sustainable rally or pullback is often a close above or below the 10 DMA. The SPX closed 2.74 points above the 10 DMA.
The SPX 5 DMA is 1349.88, 10 DMA is 1357.28, 20 DMA is 1354.8, 50 DMA is 1333.72, 100 DMA is 1359.07, and 200 DMA is 1317.05.
On Thursday the SPX traded both below and above the opening range. 82.2% of the SPX closed up from the previous close; 53.8% closed higher than the open. During Thursday's session the SPX gained 21.85 points from open to close. The SPX intraday trading range was 11.6 points. The 5-Day average intraday trading range is 13.65 points, the 10-Day average is 13.85 points, and the 20-Day average is 13.03 points. The trading range is contracting. The 5-Day SPX gain is -1.20%, the 10-Day gain is 1.89%, and the 15-Day gain is -0.55%.
Note: The Opening Range Breakout is one of the simplest day trading set-ups to understand. The first hour of the trading day is the most volatile. Bears and bulls are battling it out in the stock market, trying to show you who’s going to be in charge for the day. If we break out of that trading range, it's telling us that new buying or selling is impacting traders' assessments of value. Looking back at today’s breakouts also helps us grasp sentiment going forward because when a clear trend is established it often carries through for several sessions.
Looking Ahead:
The Market Environment for Friday is +1. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be higher. Mel's 5-Day Oscillator is 16 and Mel's 10-Day Oscillator is 41 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bullish for Friday's session.
We intend to be brief this evening as the near paralysis of our arms, very sore finger tips due to a medical side effect, and extreme insomnia this week have us struggling to type.
At first glance, today's action was all about the ECB Commissioner's comments. This is true. But as we reported here earlier this week, this was almost inevitable. The powder was all over the floor just waiting for a spark and today we got it. The real question now, are the flames hot enough to keep burning or do we fizzle?
Facts: Market breadth continues to outpace the indices. Many indices closed today above key levels of resistance. The SPX managed to burst out of the recent trading range. Our Market Internals data has moved clearly into Neutral with the key "risk" sectors closing slightly above their Pivots. All this while the Russell 2000 lags badly, so nothing is yet clear. But our experience says that the Russell is more likely to play catch-up than to drag the other indices down.
We have done very well this week on the contra trend trading by selling TNA early in the morning and then judiciously adding back later in the day. But tomorrow we are thinking of a morning low followed by buying rather than selling, so we are looking to buy the dip if we see one.
Friday, July 27
Economics
08:30 2Q GDP 1st Estimate (Annualized) – consensus 1.4%, prior 1.9%
08:30 Personal Consumption – consensus 1.4%, prior 2.5%
08:30 GDP Price Index – consensus 1.6%, prior 2.0%
08:30 Core PCE – consensus 1.9%, prior 2.3%
09:55 University of Michigan Confidence Statement – consensus 72.5, prior 72.0
11:00 Fed to sell $7b-$8b notes in 3-year range
01:30 CNY Industrial Profits
07:00 CHF KOF Swiss Leading Indicator
12:00 EUR German CPI
11:00 Italy to sell bills
11:10 UK to sell bills
Earnings
Before:
Merck (MRK) EPS $1.01
Newmont Mining (NEM) EPS 96c
Legg-Mason (LM) EPS 18c
Chevron (CVX) EPS $3.22
Orders for durable goods were up 1.6%, better than the expected 0.6%. Initial claims were 353,000, less than the consensus 380,000. Pending home sales were down 1.4%. The expectation was for a rise of 0.9%. On Friday we will get GDP and consumer sentiment.
Thank you for reading. Think on it, trade on it, and be well.
-Mel