European Worries Again, Markets Close off Lows
Market Recap:
Our Market Leaders Board shows that markets were nailed hard today with the Russell 20000 getting the worst of it and the Dow and the SPX getting off relatively lightest.
SPX big winners were NRG Energy Inc (NRG) 7.35%, Dean Foods Company (DF) 4.08%, and Eaton Corp (ETN) 3.93%. SPX big losers were JDS Uniphase Corp (JDSU) -5.9%, Denbury Resources Ltd (DNR) -4.71%, and Harman Internat Ind Inc (HAR) -4.53%.
SPX five day big winners are Sandisk Corp (SNDK) 21.55%, Baker Hughes Inc (BHI) 17.1%, and Ebay Inc (EBAY) 14.61%. SPX five day big losers are Chipotle Mexican Grill (CMG) -22.4%, Advanced Micro Devices (AMD) -14.08%, and Tenet Healthcare Corp (THC) -11.31%.
New Ten Day Highs: ETN, EXC, HAL, HAS, ITW, MUR, ROK, WHR, GOOG
New Ten Day Lows: ABT, AMD, AES, AET, AFL, A, AKS, AKAM, AA, ATI, AGN, AXP, AIG, AMP, ABC, AIV, APOL, AMAT, ADM, AIZ, ADP, BAC, BCR, BDX, BBBY, BBY, BIIB, XL, BMC, BA, BSX, BF/B, CA, COG, CFN, CCL, CAT, CBS, CHRW, CHK, CME, CB, CI, CINF, CSCO, CLX, CL, CSC, CAG, SAI, GLW, CSX, CMI, CVS, DVA, DF, DELL, XRAY, DV, DTV, D, DPS, DNB, ETFC, EMN, ECL, EXPD, FDO, FII, FDX, FIS, FHN, FISV, F, FRX, BEN, FTR, GME, GD, GIS, GNW, GT, HOG, HRS, HIG, HSY, HPQ, HD, HRL, HST, HCBK, HUM, HBAN, IGT, ISRG, IVZ, IRM, JEC, JNS, JCI, JPM, CLF, K, KR, LLL, LH, LM, LXK, LNC, LOW, MAR, MMC, MA, MKC, MCD, MET, PCS, MU, MWW, MCO, MS, NYT, NEM, NWSA, NTRS, NUE, ODP, PCAR, PLL, PDCO, PBCT, PEP, PKI, PM, PNC, PX, PFG, PLD, PRU, QLGC, PWR, DGX, RSH, RF, RHI, CVG, SCHW, SNI, SHLD, SIAL, SPG, LUV, SPLS, SBUX, STT, SRCL, SYK, STI, SVU, SYMC, SYY, TROW, TLAB, THC, BK, TMO, TWX, TMK, TRV, TSN, UPS, X, DRYS, QLD, JASO, UNM, VAR, VRSN, VZ, VNO, WAT, AAPL, C, GS, ICE
Volume & Breadth Indicators
For the SPX Index there were 58 components advancing and 440 components declining. On the NYSE 3,145 issues were traded with 728 advancing issues and 2,332 retreating issues, a ratio of 3.2 to one declining. There were 100 new highs and 94 new lows. The five day moving average of New Highs is 183 while the five day moving average of New Lows is 44 and the ten day moving average of Net Advancing is -52.
Declining volume was higher at a ratio of 2.76 to one. The closing TRIN was 0.63 and the final tick was 98. The five day average of TRIN is 1.08 and the ten day average of TRIN is 1.23. The NYSE Composite Index lost -1.15% today while the SPX lost -0.9%.
For the NYSE, relative to the previous 30 session average, volume was -6.33% below the average. Of the last 15 sessions 1 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 15 sessions ended on a positive tick, 4 of last 10. For the SPX, the day's volume was 104.8% of the average daily volume for the last year. Volume was 108.7% of the last 10 day average and 94.9% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 119,000 and the average tick for the day was 77. There were 52 ticks greater than 600 and 31 ticks more extreme than -600. There were 4 ticks greater than 1000 and 5 ticks more extreme than -1000. The tick action suggests institutional accumulation.
Moving Average and Support/Resistance Indicators:
17% of the SPX are above their five day moving average, 37.6% are above their 10 day average, 41.4% are above their 20 day moving average, 50.8% are above their 50 day moving average, and 47.2% are above their 200 day moving average.
There were no significant moving average crossovers today. Our moving average Power Rating is 58 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Financials -- Outperformed the SPX by +3%.
- Industrials -- Outperformed the SPX by +37%.
- Consumer Staples -- Outperformed the SPX by +3%.
- Utilities -- Outperformed the SPX by +22%.
Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -74%.
- Energy -- Underperformed the SPX by -30%.
- Technology -- Underperformed the SPX by -9%.
- Health Care -- Underperformed the SPX by -30%.
- Consumer Discretionary -- Underperformed the SPX by -59%.
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 (no) totaled no shares traded (no average per stock) and declining issues (30) totaled 1,054,741 shares traded (35,158 average per stock.) 9 components are on an uptrend (no new uptrends today) and 20 components are on a downtrend (13 new downtrends today.) There were no New Highs and 2 New Lows. The sector is on a Buy signal and closed below the daily pivot. The sector 5-Day average closed 1.12% above the 20-Day average.
The Energy sector advancing issues (10) totaled 1,093,087 shares traded (109,309 average per stock) and declining issues (34) totaled 1,186,358 shares traded (34,893 average per stock.) 32 components are on an uptrend (no new uptrends today) and 12 components are on a downtrend (8 new downtrends today.) There were no 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 2.89% above the 20-Day average.
The Financials sector advancing issues (8) totaled 2,209,392 shares traded (276,174 average per stock) and declining issues (73) totaled 3,706,300 shares traded (50,771 average per stock.) 9 components are on an uptrend (no new uptrends today) and 72 components are on a downtrend (16 new downtrends today.) There were no 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 .53% above the 20-Day average.
The Industrials sector advancing issues (14) totaled 1,053,286 shares traded (75,235 average per stock) and declining issues (47) totaled 986,484 shares traded (20,989 average per stock.) 23 components are on an uptrend (2 new uptrends today) and 38 components are on a downtrend (20 new downtrends today.) There were no New Highs and 1 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed .56% above the 20-Day average.
The four 'risk sectors' totaled 32 advancing issues and 184 declining issues today with 2 new uptrends and 57 new downtrends. 34.% of Risk Sector components are uptrending.
The Technology sector advancing issues (8) totaled 833,759 shares traded (104,220 average per stock) and declining issues (71) totaled 5,961,087 shares traded (83,959 average per stock.) 21 components are on an uptrend (1 new uptrends today) and 58 components are on a downtrend (23 new downtrends today.) There were no New Highs and 6 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed .58% above the 20-Day average.
The Consumer Staples sector advancing issues (4) totaled 331,110 shares traded (82,778 average per stock) and declining issues (37) totaled 1,290,802 shares traded (34,887 average per stock.) 10 components are on an uptrend (1 new uptrends today) and 31 components are on a downtrend (11 new downtrends today.) There were no 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 1.03% above the 20-Day average.
The Utilities sector advancing issues (1) totaled 220,554 shares traded (220,554 average per stock) and declining issues (29) totaled 459,488 shares traded (15,844 average per stock.) 22 components are on an uptrend (no new uptrends today) and 9 components are on a downtrend (6 new downtrends today.) There were no 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 1.22% above the 20-Day average.
The Health Care sector advancing issues (no) totaled no shares traded (no average per stock) and declining issues (52) totaled 1,605,176 shares traded (30,869 average per stock.) 8 components are on an uptrend (no new uptrends today) and 44 components are on a downtrend (13 new downtrends today.) There were no New Highs and no New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed 1.39% above the 20-Day average.
The Consumer Discretionary sector advancing issues (13) totaled 907,442 shares traded (69,803 average per stock) and declining issues (67) totaled 2,653,656 shares traded (39,607 average per stock.) 36 components are on an uptrend (1 new uptrends today) and 45 components are on a downtrend (13 new downtrends today.) There were no New Highs and 4 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed .68% above the 20-Day average.
Based on the SPX sector data, we are on a Sell for the SPX and the Russell 2000.
What We Learned from Monday's Action:
Monday was session 2 to close below the 5 DMA, session 1 to close below the 10 DMA, session 1 to close below the 20 DMA, and session 16 to close above the 50 DMA. This was also session 5 for the 5 DMA to close above 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 4.9 points below the 10 DMA.
The SPX 5 DMA is 1365.23, 10 DMA is 1355.42, 20 DMA is 1351.26, 50 DMA is 1333.25, 100 DMA is 1359.69, and 200 DMA is 1314.4.
On Monday the SPX traded above the opening range but did not trade below the opening range. 11.4% of the SPX closed up from the previous close; 57.4% closed higher than the open. During Monday's session the SPX lost -11.82 points from open to close. The SPX intraday trading range was 15.65 points. The 5-Day average intraday trading range is 13.56 points, the 10-Day average is 13.91 points, and the 20-Day average is 12.55 points. The trading range is contracting. The 5-Day SPX gain is -0.23%, the 10-Day gain is -0.14%, and the 15-Day gain is -0.85%.
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 Tuesday is +1. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be lower. Mel's 5-Day Oscillator is 40 and Mel's 10-Day Oscillator is 34 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bullish for Tuesday's session.
The sell-off action today began overnight in Europe and U.S. markets were nailed hard at the open. But major indices put their lows of the day on the charts just after the opening minutes and much of the rest of the day crept higher as the SPX actually recovered almost thirteen points before the close. So if you were trading intraday today, the trade was to be buying the morning dip, not piling in on the short-side.
But what of tomorrow and the following days?
We find it interesting that even though the Dow has been down eight consecutive Mondays, the index is still up 4.8% since that streak began. The end of the weeks have more than made up for the Monday losses.
We find it very difficult here to predict the same for this week, yet we do look for something of a bounce going forward. The Technicals today show that the Russell 2000, certainly the hardest hit of the indices lately, still managed to hang on and close above the 50-day average while the SPX managed to close above important support at 1350.
One thing we like to watch is the McClellan Oscillator within the Bollinger Band. The chart below is small and may be difficult to read, but it does show that when the McClellan dips below the lower Bollinger Band, the market is inclined to bounce for at least a few days.
Looking at our Market Internals isn't very bullish though. The Internals suggest that we have begun something of a leg downward; so buying the dips is a bit contrarian at this point.
Tuesday, July 24
Economics
08:58 Markit US PMI – consensus 52.1, prior 52.9
10:00 Richmond Fed Manufacturing – consensus -1, prior -3
10:00 House Price Index – consensus 0.5%, prior 0.8%
11:00 Fed buying $1.5b-2b in 25 to 30-year range
11:30 Treasury selling 4-week, 52-week bills
1:00 Treasury selling $35b 2-yr notes
07:30 EUR German PMI
08:00 EUR Eurozone PMI
12:30 CAD Retail Sales
22:45 NZD Trade Balance
10:30 Spain to sell 3-month, 6-month bills
Earnings
Before:
Lockheed Martin (LMT) EPS $1.91
Du Pont (DD) EPS $1.46
EMC (EMC) EPS 39c
Under Armour (UA) EPS 5c
AT&T (T) EPS 63c
After:
Netflix (NFLX) EPS 5c
Panera Bread (PNRA) EPS $1.43
Aflac (AFL) EPS $1.61
Apple (AAPL) EPS $10.40
Buffalo Wild Wings (BWW) EPS 68c
Broadcom (BRCM) EPS 67c
There were no significant economic releases on Monday and there are none scheduled for Tuesday.
Thank you for reading. Think on it, trade on it, and be well.
-Mel