Friday's Job Data Impacts Markets; SPX Holds Support
Market Recap:
Despite the fact that most major markets around the world were closed for Easter Monday, there was little doubt that stocks would open deeply in the red this morning. The bottom line is the jobs report was shockingly weak and pokes somewhat of a hole the bulls' thesis for the year.
The holiday weekend came to a conclusion for U.S. markets with a large gap down. But the low of the day was just 21 minutes into trading as traders began to buy the dip. The lows were tested successfully a bit after 11:00 am and then an oversold bounce began in earnest. The SPX worked its way nine points off the lows before giving back several points during the last hour to close near where the day began.
Our Market Leaders Board has all of our leaders getting blown back today with the Russell 2000 small caps getting the worst of it and Technology relatively strongest.
SPX big winners were D.R. Horton Inc (DHI) 4.71%, Supervalu Inc (SVU) 3.74%, and Ebay Inc (EBAY) 1.91%. SPX big losers were Saint Jude Medical Inc (STJ) -5.1%, Genworth Financial (GNW) -4.6%, and Frontier Communications Corp (FTR) -4.47%.
SPX five day big winners are Avon Products Inc (AVP) 17.2%, Bed Bath & Beyond Inc (BBBY) 8.01%, and priceline.com Inc (PCLN) 6.59%. SPX five day big losers are First Solar Inc (FSLR) -19.4%, Saint Jude Medical Inc (STJ) -12.19%, and Sandisk Corp (SNDK) -11.88%.
New Ten Day Highs: HD, LO, MA, MCD, SRE, VXX, SH, AAPL
New Ten Day Lows: MMM, ANF, ADBE, AES, AFL, APD, AKS, AKAM, AA, ATI, ALTR, AEP, AXP, AMP, ABC, APC, ADI, APA, APOL, AMAT, ADM, AIZ, T, ADP, AN, BAC, BAX, BBT, BBY, BA, BXP, BSX, BRCM, CA, COF, CAH, CCL, CAT, CBG, CHRW, CHK, CVX, CME, CINF, CTAS, CSCO, CTXS, COH, CTSH, CMCSA, CMA, CSC, CPWR, STZ, SAI, GLW, COST, CMI, CVS, DRI, DVA, DF, DE, DELL, DV, DO, DFS, RRD, DOV, DOW, DUK, DNB, DD, ETFC, ETN, EMC, EMR, ETR, EOG, EFX, EXC, XOM, FAST, FII, FDX, FIS, FHN, FSLR, FISV, FLIR, FLR, F, GME, GCI, GD, GE, GNW, GT, HOG, HAR, HRS, HIG, HCP, HCN, HSY, HES, HPQ, HON, HRL, DHI, HSP, HCBK, ITW, TEG, INTC, IPG, IBM, IP, IVZ, ITT, JBL, JEC, JNS, JDSU, JCI, JPM, JNPR, CLF, KEY, KIM, KFT, KR, LLL, LM, LUK, LXK, LIFE, LTD, LNC, LLTC, LMT, LSI, MRO, MAR, MMC, MAS, MAT, MDT, WFR, MDP, MET, PCS, MCHP, MU, MSFT, MOLX, TAP, MON, MWW, MS, MUR, MYL, NBR, NTAP, NYT, NWL, NWSA, GAS, NBL, NTRS, NOC, NVLS, NUE, NVDA, NYX, OXY, ODP, OMC, OI, PCAR, PLL, PH, BTU, JCP, PBCT, POM, PEP, PKI, PCG, PNW, PBI, PCL, PPL, PCP, PFG, PRU, PEG, PSA, PHM, QLGC, QCOM, RSH, RRC, RTN, RF, RHI, ROK, COL, R, SWY, SNDK, SLE, CVG, SLB, SCHW, SNI, SEE, SHLD, SIAL, SLM, SNA, SWN, SE, S, STJ, SWK, SPLS, HOT, STT, SYK, SVU, SYMC, SYY, TROW, TGT, TE, TLAB, TDC, TER, TSO, TXN, BK, TMO, TIF, TWC, TIE, TMK, TSS, TRV, TSN, X, UTX, DRYS, AEM, KBH, UNM, USB, VLO, VAR, VTR, VZ, VNO, WAG, DIS, WAT, WFC, WDC, WY, WHR, AMZN, C, GS, GOOG
Volume & Breadth Indicators
For the SPX Index there were 27 components advancing and 442 components declining. On the NYSE 3,139 issues were traded with 636 advancing issues and 2,420 retreating issues, a ratio of 3.81 to one declining. There were 20 new highs and 60 new lows. The five day moving average of New Highs is 81 while the five day moving average of New Lows is 36 and the ten day moving average of Net Advancing is -326. The Net Advancing data indicates a bearish trend.
Declining volume was higher at a ratio of 9.36 to one. The closing TRIN was 2.08 and the final tick was -239. The five day average of TRIN is 1.42 and the ten day average of TRIN is 1.26. The NYSE Composite Index lost -1.1% today while the SPX lost -1.15%.
For the NYSE, relative to the previous 30 session average, volume was -10.57% below the average. Of the last 15 sessions 5 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 17 sessions ended on a positive tick, 4 of last 10. For the SPX, the day's volume was 76.4% of the average daily volume for the last year. Volume was 86.5% of the last 10 day average and 96% of the previous day’s volume.
Strong negative breadth and even stronger negative volume. New Lows exceeded New Highs three-to-one.
Looking at the NYSE 15-second tick data, the total tick for the day was 116,000 and the average tick for the day was 75. There were 30 ticks greater than 600 and 15 ticks more extreme than -600. There were no ticks greater than 1000 and 2 ticks more extreme than -1000. The tick action suggests institutional accumulation.
Looking at the one-minute tick data, there were 59 ticks greater than 500 and 39 ticks more extreme than -500. 58.4% one-minute ticks were positive. There were 6 ticks greater than 900 and 1 ticks more extreme than -900. The tick action suggests institutional accumulation.
The tick data today reflects that after the opening minutes buyers were in control. There was no evidence of panic selling today.
The intraday volume pattern shows a large spike of relative volume associated with the morning move higher on the SPX while the rest of the session showed diminishing volume. The Nightly Breadth Indicators are bearish looking while the McClellan Oscillator is oversold.
Moving Average and Support/Resistance Indicators:
9.2% of the SPX are above their five day moving average, 12.6% are above their 10 day average, 20.8% are above their 20 day moving average, 42.8% are above their 50 day moving average, and 73.8% are above their 200 day moving average.
There were two significant moving average crossovers today as both the Dow and the Financials had their 5 DMA cross below the 20 DMA. This is a chart that strongly resembles what the chart looks like as corrections begin. Our moving average Power Rating is 67 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Technology -- Outperformed the SPX by +43%.
- Consumer Staples -- Outperformed the SPX by +22%.
- Utilities -- Outperformed the SPX by +63%.
- Consumer Discretionary -- Outperformed the SPX by +8%.
Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -33%.
- Energy -- Underperformed the SPX by -14%.
- Financials -- Underperformed the SPX by -40%.
- Industrials -- Underperformed the SPX by -57%.
- Health Care -- Underperformed the SPX by -13%.
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 (2) totaled 92,818 shares traded (46,409 average per stock) and declining issues (28) totaled 1,170,348 shares traded (41,798 average per stock.) 5 components are on an uptrend (no new uptrends today) and 25 components are on a downtrend (5 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 -.49% below the 20-Day average.
The Energy sector advancing issues (2) totaled 45,990 shares traded (22,995 average per stock) and declining issues (41) totaled 1,635,544 shares traded (39,891 average per stock.) 2 components are on an uptrend (no new uptrends today) and 41 components are on a downtrend (3 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 -2.17% below the 20-Day average.
The Financials sector advancing issues (1) totaled 26,517 shares traded (26,517 average per stock) and declining issues (80) totaled 5,596,609 shares traded (69,958 average per stock.) 4 components are on an uptrend (no new uptrends today) and 77 components are on a downtrend (19 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 .03% above the 20-Day average.
The Industrials sector advancing issues (2) totaled 55,958 shares traded (27,979 average per stock) and declining issues (58) totaled 1,551,475 shares traded (26,750 average per stock.) 2 components are on an uptrend (no new uptrends today) and 59 components are on a downtrend (10 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 -.78% below the 20-Day average.
The four 'risk sectors' totaled 7 advancing issues and 207 declining issues today with 0 new uptrends and 37 new downtrends.
The Technology sector advancing issues (8) totaled 707,175 shares traded (88,397 average per stock) and declining issues (71) totaled 4,419,629 shares traded (62,248 average per stock.) 9 components are on an uptrend (1 new uptrends today) and 70 components are on a downtrend (11 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 .34% above the 20-Day average.
The Consumer Staples sector advancing issues (1) totaled 99,835 shares traded (99,835 average per stock) and declining issues (41) totaled 1,265,602 shares traded (30,868 average per stock.) 14 components are on an uptrend (no new uptrends today) and 28 components are on a downtrend (7 new downtrends today.) There were 1 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 .66% above the 20-Day average.
The Utilities sector advancing issues (1) totaled 34,323 shares traded (34,323 average per stock) and declining issues (30) totaled 762,172 shares traded (25,406 average per stock.) 8 components are on an uptrend (no new uptrends today) and 24 components are on a downtrend (5 new downtrends today.) There were 1 New Highs and 3 New Lows. The sector is on a Buy signal and closed below the daily pivot. The sector 5-Day average closed .27% above the 20-Day average.
The Health Care sector advancing issues (1) totaled 25,062 shares traded (25,062 average per stock) and declining issues (50) totaled 1,607,524 shares traded (32,150 average per stock.) 12 components are on an uptrend (no new uptrends today) and 39 components are on a downtrend (17 new downtrends today.) There were no New Highs and no New Lows. The sector is on a Buy signal and closed below the daily pivot. The sector 5-Day average closed 1.14% above the 20-Day average.
The Consumer Discretionary sector advancing issues (11) totaled 417,228 shares traded (37,930 average per stock) and declining issues (69) totaled 2,660,368 shares traded (38,556 average per stock.) 26 components are on an uptrend (no new uptrends today) and 55 components are on a downtrend (13 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 .34% above the 20-Day average.
Note: There is a lot of good, tradable information regarding the SPX sectors in the section above. If you have any questions regarding how to use this data, please feel free to email me.
What We Learned from Monday's Action:
Monday was session 3 to close below the 5 DMA, session 3 to close below the 10 DMA, session 3 to close below the 20 DMA, and session 75 to close above the 50 DMA. This was also session 19 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 23.57 points below the 10 DMA.
The SPX 5 DMA is 1402.29, 10 DMA is 1405.77, 20 DMA is 1401.69, 50 DMA is 1371.32, 100 DMA is 1312.61, and 200 DMA is 1270.13.
On Monday the SPX traded above the opening range but did not trade below the opening range. 6.4% of the SPX closed up from the previous close; 50% closed higher than the open. During Monday's session the SPX lost -15.25 points from open to close. The SPX intraday trading range was 9.1 points. The 5-Day average intraday trading range is 11.81 points, the 10-Day average is 11.15 points, and the 20-Day average is 10.47 points. The trading range is expanding. The 5-Day SPX gain is -1.86%, the 10-Day gain is -1.07%, and the 15-Day gain is -1.56%.
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.
The Technical Summary shows data that historically has resulted in a brief bounce but overall the trend remains toward lower prices until the indices begin to close above the pivots.
Looking Ahead:
The Market Environment for Tuesday is +3. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be lower. Mel's 10 Day Oscillator is 28 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bullish for Tuesday's session.
No real surprise from the market today as the gap down from Friday's payroll numbers held through the weekend and then the oversold bounce began. The real question is whether this dose of reality continues or whether buyers continue to buy the dip on Tuesday.
The market is quite oversold. But today's weak intraday bounce followed by the third largest last hour decline of the year suggests that buying the dip may no longer be in vogue. For the first time this year, the SPX (and the NYSE as well) had more New Lows than New Highs, while still within 3% of the 52-week high.
SPX levels to watch include 1404; a close above is bullish and a close below is bearish. For the Russell 2000, keep an eye on the 827 level. But we like odds of fading a gap lower on Tuesday.
Tuesday, April 10
Economics
07:30 NFIB Small Business Optimism – consensus 95
10:00 IBD/TIPP Economic Optimism
10:00 JOLTs Job Openings
10:00 Wholesale Inventories – consensus 0.5%
11:00 Fed to purchase $1.5b-$2b notes in 25 to 30-year range
11:30 U.S. to sell 4-week bills
1:00 U.S. to sell $32b 3-year notes
2:00 Fed to purchase $4.25b-$5b notes in 6 to 8-year range
JPY Bank of Japan Rate Decision
01:30 AUD NAB Business Confidence
05:45 CHF Unemployment Rate
06:00 EUR German Trade Balance
23:50 JPY Machine Orders
9:00 France to sell bills
Earnings
Before: SVU
After: ADTN, AA, HCSG, MFRM, SMSC
On Friday, non farm payrolls added 120,000 jobs. The anticipation was an additional 201,000. There were no significant releases on Monday and there will be none on Tuesday.
Good trading!
Thank you for reading. Think on it, trade on it, and be well.
-Mel