Eurozone Sovereign Debt Issues and Supper Committee Failure Drives Markets Lower
Market Recap:
Ugliness pervaded the overseas markets and the U.S. futures overnight. The apparent failure of the super-committee to agree on even $1.2 trillion in spending cuts over the next ten years and word that France's AAA credit rating may be at risk at Moody's caused traders to hit the sell button early and often overnight. U.S. SPX futures traded in a seventeen point range without ever crossing above breakeven and were trading in the lower quarter of that range as the open approached.
The first session of the holiday-shortened week began with a significant gap lower and traded sideways for the opening hour before heading even lower. The SPX put the low of the session on the chart just before noon and tested that low a couple of times before a rapid move seven points higher just after 2:00 pm. But bulls seemingly had little ammo in their bag and the attempted rally, while holding the bears off the lows, fizzled until reigniting during the middle of the last hour of the day before once again selling into the close. Still, the bears seemed to have the bulls staggering on the ropes and ready for a knockout blow but bears failed to deliver the punch as the SPX closed almost eleven points off the lows.
Checking our Market Leaders Board, our leaders got whacked today. But the majority of this happened overnight as most of the indices closed not far below where they opened.
SPX big winners were NVIDIA Corporation (NVDA) 5.1%, Zions Bancorporation (ZION) 4.46%, and Macy's Inc (M) 2.17%. SPX big losers were Gilead Sciences Inc (GILD) -9.78%, Wynn Resorts Ltd (WYNN) -8.42%, and Genworth Financial (GNW) -5.23%.
SPX five day big winners are Yum! Brands Inc (YUM) 224.62%, Zimmer Holdings (ZMH) 223.12%, and Micron Technology Inc (MU) 13.83%. SPX five day big losers are Zions Bancorporation (ZION) -68.09%, Yahoo! Inc (YHOO) -34.62%, and Abercrombie & Fitch Co (ANF) -18.83%.
New Ten Day Highs: RAI, VXX, SH
New Ten Day Lows: MMM, ABT, ANF, AMD, AES, AET, URBN, AFL, A, APD, ARG, AKS, AKAM, AA, ATI, AGN, ALL, ALTR, AEE, AEP, AXP, AIG, AMT, AMP, ABC, AMGN, APH, APC, ADI, APA, AIV, APOL, AMAT, ADM, AIZ, T, ADSK, ADP, AZO, AVB, AVY, AVP, BHI, BLL, BAC, BCR, BAX, BBT, BDX, BBBY, BMS, BBY, BIG, BIIB, XL, HRB, BMC, BA, BXP, BSX, BMY, BRCM, CA, COG, CAM, COF, CAH, CFN, CAT, CBG, CBS, CELG, CNP, CF, CHRW, CHK, CVX, CB, XEL, CI, CINF, CTXS, CLX, COH, KO, CCE, CTSH, CL, CMCSA, CMA, CSC, CPWR, CAG, COP, CNX, ED, STZ, SAI, COST, CVH, CSX, CMI, DHR, DRI, DF, DE, DELL, DNR, XRAY, DVN, DV, DO, DFS, RRD, DOV, DOW, DTE, DUK, DD, ETFC, EMN, ETN, EBAY, ECL, EIX, ERTS, EMC, EMR, ESV, ETR, EOG, EQT, EFX, EQR, EL, EXC, EXPE, EXPD, ESRX, XOM, FAST, FII, FDX, FIS, FITB, FSLR, FE, FISV, FLIR, FLS, FLR, FMC, F, FRX, BEN, FCX, GCI, GPS, GD, GE, GIS, GPC, GNW, GILD, GT, HAL, HOG, HAR, HRS, HIG, HAS, HCP, HCN, HNZ, HES, HON, HRL, DHI, HSP, HST, HCBK, HUM, HBAN, ITW, TEG, INTC, IPG, IBM, IGT, IP, INTU, ISRG, IVZ, IRM, JNS, JDSU, JNJ, JCI, JPM, JNPR, CLF, KEY, KMB, KIM, KLAC, KSS, KFT, KR, LLL, LH, LM, LEG, LUK, LXK, LIFE, LLY, LTD, LNC, LLTC, LMT, L, LSI, MTB, M, MRO, MAR, MMC, MAS, MA, MAT, MKC, MCD, MCK, MHS, MDT, WFR, MET, PCS, MCHP, MSFT, MOLX, TAP, MON, MWW, MCO, MS, MUR, MYL, NBR, NDAQ, NOV, NTAP, NWL, NEM, NWSA, GAS, NKE, NI, NBL, JWN, NSC, NU, NTRS, NOC, NVLS, NUE, NVDA, ORLY, OXY, ODP, OMC, ORCL, OI, PCAR, PH, PAYX, BTU, JCP, PBCT, PKI, PFE, PCG, PBI, PCL, PNC, RL, PPG, PPL, PX, PCP, PG, PGN, PGR, PLD, PRU, PEG, PHM, QCOM, DGX, STR, RSH, RRC, RTN, RHT, RSG, RHI, COL, RDC, R, SWY, CRM, SNDK, SLE, SCG, SLB, SCHW, SNI, SEE, SRE, SIAL, SPG, SLM, SNA, SO, LUV, SWN, SE, STJ, SWK, SPLS, SBUX, HOT, STT, SYK, SUN, STI, SYMC, SYY, TROW, TE, TLAB, THC, TDC, TER, TSO, TXN, TXT, BK, TMO, TIF, TWC, TWX, TIE, TJX, TMK, TSS, TRV, TSN, UNP, UPS, X, UTX, UNH, DRYS, QLD, JASO, AEM, KBH, MBI, UNM, USB, VLO, VTR, VRSN, VFC, VNO, WAG, WM, WAT, WLP, WFC, WU, WY, WHR, AMZN, AAPL, C, GS, GOOG, ICE
Volume & Breadth Indicators
For the SPX Index there were 29 components advancing and 444 components declining. On the NYSE 3,132 issues were traded with 466 advancing issues and 2,607 retreating issues, a ratio of 5.59 to one declining. There were 34 new highs and 113 new lows. The five day moving average of New Highs is 35 while the five day moving average of New Lows is 55 and the ten day moving average of Net Advancing is -361. The Net Advancing data indicates a bearish trend.
Declining volume was higher at a ratio of 13.82 to one. The closing TRIN was 2.61 and the final tick was -536. The five day average of TRIN is 1.97 and the ten day average of TRIN is 2.05. The NYSE Composite Index lost -2.03% today while the SPX lost -1.9%.
For the NYSE, relative to the previous 30 session average, volume was -4.67% below 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, 19 sessions ended on a positive tick, 4 of last 10. For the SPX, the day's volume was 97.3% of the average daily volume for the last year. Volume was 108.1% of the last 10 day average and 109.2% of the previous day’s volume.
There isn’t a lot that needs to be added to tonight’s breadth data; it was ugly out there today. But most of the damage was done overnight as the news cycle just doesn’t let up.
Total tick for the day was 9,000 and the average tick for the day was 6. There were 75 ticks greater than 600 and 83 ticks more extreme than -600. There were 11 ticks greater than 1000 and 6 ticks more extreme than -1000.
The tick data today is interesting. This is exactly the tick pattern most often seen at a market bottom; the bulls had the advantage on the largest ticks while the bears pretty much controlled everything else. This doesn't mean we bottomed today, but it is a frequent sign of a bottom. News will drive the short term direction but there were buyers of the dip today.
The intraday volume pattern shows two significant volume spikes, one early in the session on the morning down move and another spike later in the afternoon as the indices rallied. Our Nightly Breadth Indicators show that the McClellan Oscillator is quite oversold.
Moving Average and Support/Resistance Indicators:
1.8% of the SPX are above their five day moving average, 4.2% are above their 10 day average, 8.2% are above their 20 day moving average, 44.8% are above their 50 day moving average, and 21.6% are above their 200 day moving average.
There were no significant moving average crossovers today. Our moving average Power Rating is 39 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Basic Materials -- Outperformed the SPX by +10%.
- Energy -- Outperformed the SPX by +3%.
- Technology -- Outperformed the SPX by +9%.
- Consumer Staples -- Outperformed the SPX by +29%.
- Utilities -- Outperformed the SPX by +60%.
- Health Care -- Outperformed the SPX by +0%.
- Consumer Discretionary -- Outperformed the SPX by +30%.
Sectors weaker than the SPX for Monday:
- Financials -- Underperformed the SPX by -51%.
- Industrials -- Underperformed the SPX by -58%.
In Late Trading:
113 SPX components moved upward and 256 components downward during the after hours with 272.5 million shares traded.
What We Learned from Monday's Action:
Monday was session 4 to close below the 5 DMA, session 4 to close below the 10 DMA, session 4 to close below the 20 DMA, and session 1 to close below the 50 DMA. This was also session 3 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 45.02 points below the 10 DMA.
The SPX 5 DMA is 1223.93, 10 DMA is 1238.01, 20 DMA is 1245.29, 50 DMA is 1207.4, 100 DMA is 1223.81, and 200 DMA is 1269.96.
On Monday the SPX traded below the opening range but did not trade above the opening range. 6.8% of the SPX closed up from the previous close; 35.2% closed higher than the open. During Monday's session the SPX lost -22.63 points from open to close.
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 +7. Greater than three is bullish and less than negative three is bearish. Based solely on the technicals, we are bullish for Tuesday's session.
The powder is on the floor and all the market needs is a spark to set off a rally. But where could such a spark come from? Maybe just some "less bad" news could be enough?
Looking beyond the upcoming likely rally, do you buy into it or simply sell strength? This is a tough call. The seasonal winds are blowing to the north while the news is blowing to the south. We are long the small caps (TNA) but we won't claim to be too comfortable. We also traded in and out of TNA today and did well enough as posted on Twitter.
Trading Suggestions: Buy at Tuesday’s open and sell at Wednesday’s close (or hold until Friday’s close if you are more aggressive.) If you are a longer term trader, we triggered a multi-session buy signal at today's close.
Tuesday, November 22
Economics
08:30 GDP QoQ (Annualized) – consensus 2.5%
08:30 Personal Consumption – consensus 2.4%
08:30 GDP Price Index – consensus 2.5%
08;30 Core PCE QoQ – consensus 2.1%
10:00 Richmond Fed – consensus -2
2:00 FOMC Minutes
11:00 Fed to purchase $4.25b-$5b notes/bonds in 6 to 8-year range
11:30 U.S. to sell 4-week bills
1:00 U.S. to sell $35b 5-year notes
2:00 Fed to purchases $2.25b-$2.75b notes/bonds in 25 to 30-year range
07:00 CHF Trade Balance
09:30 GBP Public Finances
13:30 CAD Retail Sales
15:00 EUR Euro-Zone Consumer Confidence
4:30 Spain to sell 3-month and 6-month bills
Earnings
Before: AMWD, CPB, CSIQ, CHS, CRIC, XNY, CTRN, CBRL, DAKT, DCIX, DSW, EJ, EV, FRED, GCO, H, RL, JASO, LDK, GAGA, LTXC, MDT, PDCO, SIG, STP, VAL
After: STV, NUAN, P, TIVO
Existing home sales came in at 4.97 million, more than the concensus 4.8 million. On Tuesday, the government's latest gross domestic product revision will hit the Street, as well as a report on business activity in the Richmond Fed district. Most notably, though, the Federal Open Market Committee's (FOMC) meeting minutes are slated for release at 2 pm.
Thank you for reading. Think on it, trade on it, and be well.
-Mel