Economic News Continues to Dissapoint
by Jerome "Mel" Hickerson
First time unemployment claims jumped higher than expected and futures took an eight point plunge in response, after moving bullishly all night. Asia closed green across the board but Europe was red. Futures were trying to battle back as the open approached.
The session opened with a small downward gap and didn't let up until the low of the day was put on the chart just before noon. A four point rally followed but the intraday chart put a double bottom on the chart just after 2pm before a second rally gained about eight points. But the final half hour gave back about half that to close the session about four points off the lows.
This was not a pretty session, from start to finish. Economic concerns ruled the day, ignited by the highest unemployment claims in almost a year and fueled by the Philadelphia Fed Index reporting the lowest numbers in over a year and missing expectations.
I am a technical analyst and news is fundamental; I make no attempt to predict the news because I believe it is mostly unpredictable. The reaction to news is often built into the technicals and predicting the reaction is somewhat easier. But today caught me somewhat by surprise. I've been expecting a downward move to the equities; I just didn't expect it here and now.
A couple of technical aspects to be aware of: The SPX made the lowest close today since July 21st. But the NASDAQ made its lowest close since August 13th; this is a bit of non confirmation that may or may not be important; I think we learn tomorrow. The other thing worth noticing is that the NYSE Advance/Decline is the lowest since August 13th as well; not confirming the SPX low. Another non confirmation that we have to keep our eye on.
The Nine Sectors Report showed five positive moves Wednesday and gave all five moves back today. This is technically a Sell signal. But we are going to put the signal in Neutral for tomorrow and see how the market responds to options expiration and the non confirmations mentioned above.
The Matrix has changed to a long term bullish outlook. I am not convinced I agree with the Matrix but its right about 80% of the time on the long-term views; I just post the results. The Dollar continues on a Sell signal so possibly the equities will rebound here.
Our systems continues to struggle. Thankfully these stretches pass quickly and we'll get on track soon. But it certainly makes for a long day when you seem to be on the wrong side.
Friday, August 20
Economics
No US Releases
Bank of Canada CPI
Earnings
Before: ANN, HIBB, HRL, KIRK
No economic reports are on tap for Friday.
Mel’s Missives from the Matrix:
- Total tick for the day was -213,000 and the average tick for the day was -138. There were 60 ticks greater than 600 and 219 ticks more extreme than -600. There were 6 ticks greater than 1000 and 23 ticks more extreme than -1000. The tick action suggests institutional distribution.
- The day's range was 21.78 points. The intraday trading range - 9:35 to the close - was 20.36. The 5 DMA of daily range is 16.98.
- Evidence of the intraday trend: At 10am volume was 119.9% of the 10 day average. By noon the volume was 139.22% of the 10 day average, and by 2pm volume was 133.51% of the 10 day average.
- The day's volume was 88.2% of the average daily volume for the last year. Volume was 125.6% of the last 10 day average and 123.8% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 10:00 and 10:15 when relative volume increased 86.9% while the SPX was dropping -0.48%. The largest drop in relative volume came between 10:15 and 10:30 when relative volume dropped -69.2% while the SPX was dropping -0.14%.
- 3% of the SPX stocks closed with two day RSI above 90. 5% closed with RSI above 80. 35% closed with RSI below 20 and 10% closed with RSI below 10.
- 22.8% of the SPX are above their five day moving average, 14% are above their 10 day average, 15.4% are above their 20 day moving average, 38% are above their 50 day moving average, 29.4% are above their 100 day moving average, and 36.6% are above their 150 day moving average.
- 3% of the SPX closed above their most recent previous high.
- 60% of the SPX stocks closed below their most recent previous lows.
- 17 SPX issues advanced and 474 issues declined, a net SPX advance/decline of -457.
- Evidence of the intraday trend: At 10am, 24.8% of the SPX components were in the top half of the range. By noon, 3.8% were in the top half of the range, and by 2pm, 6.4% were in the top half of the range.
- 15.6% of stocks closed in the top half of the day's range. (84.2% closed in bottom half.)
- 1.2% of stocks closed in the top 10% of the day's range. 2.8% of stocks closed in the top 20% of the day's range.
- 14.6% of stocks closed in the bottom 10% of the day's range. 33.2% of stocks closed in the bottom 20% of the day's range.
- 3.6% of stocks closed within 2% of their 52 week high. 12.6% of stocks closed within 5% of their 52 week high.
- 85.6% of stocks closed within 50% of their 52 week low. 60.2% of stocks closed within 25% of their 52 week low.
- 2.2% of stocks closed within ¼% of their high for the day.
- 14.6% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 14% of the SPX components were up since the open. By noon, 4.4% were up since the open, and by 2pm, 5% were up since the open.
- 3.6% of the SPX closed up from the previous close; 7% closed higher than the open.
- Sectors stronger than the SPX for Thursday:
- Energy -- Outperformed the SPX by +8%.
- Technology -- Outperformed the SPX by +68%.
- Consumer Staples -- Outperformed the SPX by +52%.
- Utilities -- Outperformed the SPX by +28%.
- Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -60%.
- Financials -- Underperformed the SPX by -70%.
- Industrials -- Underperformed the SPX by -41%.
- Health Care -- Underperformed the SPX by -28%.
- Consumer Discretionary -- Underperformed the SPX by -24%.
- The $SOX index strength was weaker relative to the SPX Thursday by -0.01%.
- The XLF underperformed the SPX by -0.7% Thursday.
- The 2 Day RSI of the SPX is 17. The Dow RSI is 16, the NASDAQ is 21 and the Russell is 19.
- Over the last four sessions, the average session closed 54.51% of the range above the low. Thursday closed at 23.8% of the daily range.
- Upside momentum decreased Thursday, from Wednesday’s 0.8 to today’s -0.34. The ratio of SPX components giving a crossover sell signal compared to buy signals increased slightly to S 7.44 to 1.
- The ISEE Equity 10 day moving average Thursday was 174.2. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10 and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 190 SPX components moved upward and 134 components downward during the after hours with 147 million shares traded.
Trade 'em well on Friday everyone!
-Mel
