Indices Bounce Weakly
by Jerome "Mel" Hickerson
In spite of a downgrade of Ireland's debt by Moody's and the announcement that the EU/IMF pulled funding from Hungary things were looking up before the bell. Most of Asia closed red while Europe was green this morning. Our futures were off their nightly highs and sloping downward slightly into the open.
The week began with a quick move upward of about six points. The morning high was quickly put on the chart just before 10am. But at 10am housing data was released that disappointed traders and the SPX quickly moved down ten points to set the low of the day at 10:51. From there, the session drifted upwards with a couple of sudden moves but overall the session seemed sluggish.
Today’s market action did nothing to persuade me that we are headed higher, at least not before further work to the downside. Today’s miniature rally was not unexpected yet was rather feeble in light of Friday’s sell off.
I have my eyes on a couple of things: The XLF and Russell small caps. The Russell 2000 advance/decline shows strong downtrend continuation; odds favor the downside as long as this continues. As long as both of the XLF and Russell continue to underperform the SPX, I’ll remain short. It’s usually a safe bet that either the XLF or Russell will begin to bounce before the SPX has any lasting move higher.
Our trade systems struggled today. While we finished the day in positive territory, it seemed like we were on the wrong side of the trade all day long. Every system struggles at times; they key is to manage losses on those days of struggle.
Tuesday, July 20
Economics
08:30 Building Permits 555k cons.
08:30 Housing Starts 563k cons.
02:00 German PPI
09:00 Bank of Canada Announcement
Earnings
Before: AOS, BK, BIIB, CRUS, DPZ, FRX, GS, HOG, JNJ, ITW, MTG, MICC, BTU, PEP, STT, AMTD, USG, WFT, WHR
After: ALGT, MDRX, AAPL, AMX, BSX, CNH, CYT, GILD, JNPR, SYK, URI, VMW, YHOO
June's building permits and housing starts will hit the Street on Tuesday.
Mel’s Missives from the Matrix:
- Total tick for the day was 165,000 and the average tick for the day was 107. There were 259 ticks greater than 600 and 91 ticks more extreme than -600. There were 25 ticks greater than 1000 and 4 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 13.59 points. The intraday trading range - 9:35 to the close - was 13.59. The 5 DMA of daily range is 18.41.
- Evidence of the intraday trend: At 10am volume was 87.62% of the 10 day average. By noon the volume was 94.96% of the 10 day average, and by 2pm volume was 97.17% of the 10 day average.
- The day's volume was 80.3% of the average daily volume for the last year. Volume was 96.6% of the last 10 day average and 75.4% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 12:00 and 12:15 when relative volume increased 37.5% while the SPX was dropping -0.24%. The largest drop in relative volume came between 11:00 and 11:15 when relative volume dropped -44.0% while the SPX was rising 0.17%.
- 2% of the SPX stocks closed with two day RSI above 90. 4% closed with RSI above 80. 33% closed with RSI below 20 and 18% closed with RSI below 10.
- 20.8% of the SPX are above their five day moving average, 46.2% are above their 10 day average, 48.2% are above their 20 day moving average, 36.8% are above their 50 day moving average, 26.2% are above their 100 day moving average, and 33.8% are above their 150 day moving average.
- 8% of the SPX closed above their most recent previous high.
- 21% of the SPX stocks closed below their most recent previous lows.
- 380 SPX issues advanced and 108 issues declined, a net SPX advance/decline of 272.
- Evidence of the intraday trend: At 10am, 58.8% of the SPX components were in the top half of the range. By noon, 50.6% were in the top half of the range, and by 2pm, 38.8% were in the top half of the range.
- 74.2% of stocks closed in the top half of the day's range. (25.6% closed in bottom half.)
- 8.2% of stocks closed in the top 10% of the day's range. 26.8% of stocks closed in the top 20% of the day's range.
- 1.4% of stocks closed in the bottom 10% of the day's range. 3.6% of stocks closed in the bottom 20% of the day's range.
- 4.2% of stocks closed within 2% of their 52 week high. 12.8% of stocks closed within 5% of their 52 week high.
- 77% of stocks closed within 50% of their 52 week low. 47.4% of stocks closed within 25% of their 52 week low.
- 11.4% of stocks closed within ¼% of their high for the day.
- 2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 85.4% of the SPX components were up since the open. By noon, 61% were up since the open, and by 2pm, 53.6% were up since the open.
- 75.8% of the SPX closed up from the previous close; 61.4% closed higher than the open.
- Sectors stronger than the SPX for Monday:
- Energy -- Outperformed the SPX by +19%.
- Technology -- Outperformed the SPX by +35%.
- Utilities -- Outperformed the SPX by +63%.
- Consumer Discretionary -- Outperformed the SPX by +5%.
- Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -82%.
- Financials -- Underperformed the SPX by -75%.
- Industrials -- Underperformed the SPX by -23%.
- Consumer Staples -- Underperformed the SPX by -69%.
- Health Care -- Underperformed the SPX by -30%.
- The $SOX index strength was stronger relative to the SPX Monday by 1.89%.
- The XLF underperformed the SPX by -0.75% Monday.
- The 2 Day RSI of the SPX is 33. The Dow RSI is 34, the NASDAQ is 40 and the Russell is 23.
- Over the last four sessions, the average session closed 58.35% of the range above the low. Monday closed at 76% of the daily range.
- Upside momentum increased Monday, from Friday’s -1.5 to today’s -0.57. The ratio of SPX components giving a crossover sell signal compared to buy signals moved downward to B 4.68 to 1.
- The ISEE Equity 10 day moving average Monday was 169.5. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 153 SPX components moved upward and 215 components downward during the after hours with 134 million shares traded.
Trade 'em well on Tuesday everyone!
-Mel
