Indices Crawl Higher On Negative Breadth
by Jerome "Mel" Hickerson
There was no economic data to review before the opening bell this morning. The big event of today was going to be after the close with the kick off of earnings season with Alcoa. Futures were climbing higher in the hours before the open.
The week began with a quick little move downward that was quickly bought, rising to the high of the day at 9:46. The SPX then spent most of the next 90 minutes on a downward move to the lows at 11:10. The rest of the session was tight range choppy trade with an upward bias as traders appeared to be waiting for the earnings reports to begin.
The entire day’s trading range was just over ten points for the SPX; barely a fraction more than Friday’s range. But the real story on Monday was that the indices were out of whack with the market breadth; something was lying. It is unusual to see so many green indices - and all the major indices and exchanges reporting negative breadth.
We know that Price is the ultimate indicator and the only thing that matters; but Price usually follows breadth and today was a day that suggests that Price was playing games with us.
The pattern of high volatility and high volume on down days and low volume on up days is consistent with a downtrend. I think we will make a reasonably quick retest of 1040. What happens there will tell us a lot and I'll remain open minded until I see the market reaction.
Day Trade Systems Update: (Signals today)
* SSO at: 10:38
* SSO at: 11:15
* GDX at: 11:19
* SDS at: 12:47
* GDX at: 1:13
* SDS at: 1:42
As is typical on a tight range day, today was not an easy day to trade. We accomplished little more than spinning our wheels and maybe some pizza money. But no damage was done, either.
Tuesday, July 13
Economics
08:30 Trade Balance -$40.3bn cons.
2:00 Treasury Budget -$72.0bn cons.
05:00 Japan Consumer Confidence
08:30 Great Britain CPI
08:30 Great Britain Core CPI
Earnings
Before: FAST, INFY
After: AIR, ADTN, INTC, YUM
Auctions
1:00 10-yr Treasury Notes
The trade balance, due in the morning from the Commerce Department, is expected to have narrowed to $39.5 billion in May from $40.3 billion in April, according to a consensus of economists surveyed. The June Treasury budget is also due in the afternoon, but is not usually a big market mover.
Mel’s Missives from the Matrix:
- Total tick for the day was 58,000 and the average tick for the day was 38. There were 138 ticks greater than 600 and 102 ticks more extreme than -600. There were 16 ticks greater than 1000 and 11 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 10.33 points. The intraday trading range - 9:35to the close - was 8.53. The 5 DMA of daily range is 16.44.
- Evidence of the intraday trend: At 10am volume was 54.16% of the 10 day average. By noon the volume was 69.81% of the 10 day average, and by 2pm volume was 72.61% of the 10 day average.
- The day's volume was 70.3% of the average daily volume for the last year. Volume was 71.6% of the last 10 day average and 97.5% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 12:45 and 1:00 when relative volume increased 179.1% while the SPX was dropping -0.13%. The largest drop in relative volume came between 1:00 and 1:15 when relative volume dropped -135.6% while the SPX was rising 0.09%.
- 26% of the SPX stocks closed with two day RSI above 90. 36% closed with RSI above 80. 3% closed with RSI below 20 and 1% closed with RSI below 10.
- 85.6% of the SPX are above their five day moving average, 86.2% are above their 10 day average, 49.4% are above their 20 day moving average, 33.2% are above their 50 day moving average, 28% are above their 100 day moving average, and 35.8% are above their 150 day moving average.
- 23% of the SPX closed above their most recent previous high.
- 15% of the SPX stocks closed below their most recent previous lows.
- 198 SPX issues advanced and 282 issues declined, a net SPX advance/decline of -84.
- Evidence of the intraday trend: At 10am, 71.4% of the SPX components were in the top half of the range. By noon, 25.2% were in the top half of the range, and by 2pm, 65.2% were in the top half of the range.
- 55.8% of stocks closed in the top half of the day's range. (44% closed in bottom half.)
- 9% of stocks closed in the top 10% of the day's range. 22% of stocks closed in the top 20% of the day's range.
- 1.6% of stocks closed in the bottom 10% of the day's range. 6.8% of stocks closed in the bottom 20% of the day's range.
- 4.8% of stocks closed within 2% of their 52 week high. 11.8% of stocks closed within 5% of their 52 week high.
- 67.6% of stocks closed within 50% of their 52 week low. 37.2% of stocks closed within 25% of their 52 week low.
- 16.4% of stocks closed within ¼% of their high for the day.
- 3.2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 43.2% of the SPX components were up since the open. By noon, 21.6% were up since the open, and by 2pm, 45.8% were up since the open.
- 40.8% of the SPX closed up from the previous close; 58.4% closed higher than the open.
- Sectors stronger than the SPX for Monday:
- Financials -- Outperformed the SPX by +7%.
- Technology -- Outperformed the SPX by +40%.
- Consumer Staples -- Outperformed the SPX by +27%.
- Utilities -- Outperformed the SPX by +27%.
- Consumer Discretionary -- Outperformed the SPX by +6%.
- Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -129%.
- Energy -- Underperformed the SPX by -38%.
- Industrials -- Underperformed the SPX by -60%.
- Health Care -- Underperformed the SPX by -24%.
- The $SOX index strength was stronger relative to the SPX Monday by 1.06%.
- The XLF outperformed the SPX by 0.07% Monday.
- The 2 Day RSI of the SPX is 94. The Dow RSI is 96, the NASDAQ is 96 and the Russell is 51.
- Over the last four sessions, the average session closed 92.19% of the range above the low. Monday closed at 94.3% of the daily range.
- Upside momentum moved upward Monday, from Friday’s 4.93 to today’s 5.47. The ratio of SPX components giving a crossover sell signal compared to buy signals moved bullishly to S 2.09 to 1.
- The ISEE Equity 10 day moving average Monday was 173.3. 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.
- 215 SPX components moved upward and 103 components downward during the after hours with 136 million shares traded.
Trade 'em well on Tuesday everyone!
-Mel
