Indices Move Higher as Good Economic Data Continues
by Jerome "Mel" Hickerson
Market Recap:
Weekly jobless claims moved sharply lower, while inflation remained tame and housing starts unexpectedly weakened in December. Weekly unemployment benefit applications dropped to 352,000, the fewest in nearly four years. Housing starts fell in December as the Commerce Department said starts fell 4.1 percent to a seasonally adjusted annual rate of 657,000 units. Economists had forecast housing starts edging down to a 680,000-unit rate in December. Futures were modestly higher as the opened approached.
Thursday’s session began with a small gap higher and quickly traded a bit lower to put the low of the day on the chart during the opening hour. The following two hours steadily crept higher as there was again a constant bid under the market. The rest of the day traded within a narrow range with a somewhat negative bias although the SPX closed near the top of the intraday trading range.
Checking our Market Leaders Board, all of our leaders closed Thursday in positive territory with the chip makers (SOX) leading the way and the DOW relatively weak.
SPX big winners were Sears Holding Corp (SHLD) 9.84%, F5 Networks Inc (FFIV) 9.78%, and Netapp Inc (NTAP) 8.13%. SPX big losers were First Solar Inc (FSLR) -9.91%, Johnson Controls Inc (JCI) -9.47%, and Cabot Oil & Gas Corp (COG) -6.51%.
SPX five day big winners are Sears Holding Corp (SHLD) 31.76%, Amphenol Corp (APH) 14.76%, and Noble Corp (NE) 13.51%. SPX five day big losers are R.R. Donnelley & Sons Company (RRD) -19.0%, Sunoco Inc (SUN) -11.9%, and Alpha Natural Resources (ANR) -11.53%.
New Ten Day Highs: MMM, ADBE, AMD, AES, AFL, A, APD, AA, ATI, ALL, ALTR, AXP, AIG, AMP, ABC, AMGN, APH, ADI, AIV, AMAT, ADSK, ADP, AN, AZO, AVP, BLL, BAC, BCR, BAX, BBT, BDX, BBBY, BBY, BIG, BMC, BSX, BRCM, BF/B, BRK.B, CA, CAM, COF, CAH, CAT, CBS, CTL, CB, CINF, CSCO, CTXS, CLX, COH, CCE, CTSH, CMCSA, CSC, CAG, SAI, GLW, CMI, CVS, DHR, DRI, DVA, DE, DELL, XRAY, DO, DFS, DOW, DNB, DD, ETFC, EMN, ETN, EP, EMC, EMR, ESV, EFX, EL, EXPE, EXPD, ESRX, XOM, FII, FDX, FIS, FHN, FSLR, FISV, FLIR, FLS, FLR, FTI, F, FRX, FCX, GCI, GPS, GD, GE, GPC, GNW, GWW, HAL, HAR, HRS, HIG, HCP, HNZ, HSY, HES, HPQ, HD, HON, HSP, HST, IFF, IP, INTU, ISRG, IVZ, JBL, JEC, JNS, JDSU, JPM, JNPR, CLF, KMB, KIM, KLAC, KSS, KFT, LLL, LH, LM, LEG, LUK, LXK, LTD, LNC, LLTC, LMT, LSI, M, MRO, MAR, MAS, MJN, MKC, MWV, MRK, MET, MCHP, MU, MOLX, MS, MUR, NDAQ, NOV, NTAP, NWL, NWSA, NKE, NOC, NVLS, NUE, ORLY, OXY, ODP, OMC, ORCL, OI, PCAR, PH, PDCO, PAYX, BTU, JCP, PKI, PXD, PBI, PCL, PX, PCP, PFG, PGR, PLD, PRU, PHM, QLGC, QCOM, RTN, RHT, RF, RHI, ROK, COL, RDC, SWY, CRM, SNDK, SLE, SCG, CVG, SLB, SCHW, SNI, SEE, SHLD, SHW, SIAL, SPG, SLM, SJM, SNA, LUV, STJ, SPLS, HOT, SYK, STI, SYMC, TLAB, TDC, TER, TXN, TMO, TWC, TIE, TJX, TMK, TSS, TRV, UNP, UPS, DRYS, QLD, JASO, KBH, UNM, VLO, VTR, VMC, WMT, WPO, WAT, WU, WY, WHR, AMZN, AAPL, GS
New Ten Day Lows: AEE, BMY, COG, CNP, CHK, CMS, DTE, DUK, EIX, EQT, FE, FTR, TEG, LO, MCK, NEM, NU, POM, PGN, PEG, DGX, VXX, SH, DYN
Volume & Breadth Indicators
For the SPX Index there were 319 components advancing and 149 components declining. On the NYSE 3,123 issues were traded with 1,970 advancing issues and 1,043 retreating issues, a ratio of 1.89 to one advancing. There were 179 new highs and 20 new lows. The five day moving average of New Highs is 130 while the five day moving average of New Lows is 20 and the ten day moving average of Net Advancing is 635. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 1.89 to one. The closing TRIN was 0.86 and the final tick was -454. The five day average of TRIN is 1.15 and the ten day average of TRIN is 1.05. The NYSE Composite Index gained 0.68% today while the SPX gained 0.49%.
For the NYSE, relative to the previous 30 session average, volume was -0.17% below the average. Of the last 15 sessions one session ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 20 sessions ended on a positive tick, 8 of last 10. For the SPX, the day's volume was 110.3% of the average daily volume for the last year. Volume was 121% of the last 10 day average and 115% of the previous day’s volume.
Total tick for the day was 202,000 and the average tick for the day was 130. There were 36 ticks greater than 600 and 0 ticks more extreme than -600. There were 1 ticks greater than 1000 and no ticks more extreme than -1000. #DIV/0!
The tick data today shows that buyers remained in total control today as sellers remained scarce.
The intraday volume pattern shows that volume waned after the open. The Nightly Breadth Indicators are even more overbought after today’s action.
Moving Average and Support/Resistance Indicators:
84.2% of the SPX are above their five day moving average, 82.6% are above their 10 day average, 84.2% are above their 20 day moving average, 84% are above their 50 day moving average, and 57.4% are above their 200 day moving average.
There were two significant moving average crossovers today as Emerging Markets and China both had their 20 DMA cross above the 50 DMA. Our moving average Power Rating is 79 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Thursday:
- Financials -- Outperformed the SPX by +50%.
- Industrials -- Outperformed the SPX by +50%.
- Technology -- Outperformed the SPX by +22%.
- Consumer Discretionary -- Outperformed the SPX by +45%.
Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -47%.
- Energy -- Underperformed the SPX by -10%.
- Consumer Staples -- Underperformed the SPX by -34%.
- Utilities -- Underperformed the SPX by -133%.
- Health Care -- Underperformed the SPX by -49%.
In Late Trading:
157 SPX components moved upward and 177 components downward during the after hours with 117.6 million shares traded.
What We Learned from Thursday's Action:
Thursday was session 3 to close above the 5 DMA, session 20 to close above the 10 DMA, session 20 to close above the 20 DMA, and session 20 to close above the 50 DMA. This was also session 18 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 22.01 points above the 10 DMA.
The SPX 5 DMA is 1300.16, 10 DMA is 1292.49, 20 DMA is 1275.97, 50 DMA is 1247.47, 100 DMA is 1221.66, and 200 DMA is 1257.51.
On Thursday the SPX traded above the opening range but did not trade below the opening range. 63% of the SPX closed up from the previous close; 60.4% closed higher than the open. During Thursday's session the SPX gained 6.43 points from open to close. The session was an NR7 day (Narrowest Range last 7 days).
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 Friday is -6. Greater than three is bullish and less than negative three is bearish. Based solely on the technicals, we are bearish for Friday's session. Mel's 10 Day Oscillator is 70 (below 35 is oversold and above 65 is overbought.)
The persistent bid under the market continued again today as the market is torn between good momentum and some questionable seasonality and overbought indicator values. The momentum continues to rule, for now. Whether this continues remains to be seen.
After hours today, Google missed expectations while Microsoft, Intel and IBM beat expectations. How this affects Friday’s market is impossible to tell, but we added a tech sector short position (via QID) just before today’s close.
Our proprietary multi-day swing signal indicator signaled Short today, the first signal we have had since late November when the signal turned Long. See our November 22nd report for earlier signals and details. (http://www.advicetrade.com/nightlyreport/Equities-Once-Again-Fail-to-Rally-20111122699.html).
Friday, January 20
Economics
10:00 Existing Home Sales – consensus 4.65M
11:00 Fed to purchase $4.25b-$5b notes in 9 to 10-year range
05:00 JPY Leading Index
07:00 EUR German Producer Prices
09:30 GBP Retail Sales
12:00 CAD CPI
6:00 Iceland to sell bonds
Earnings
Before: CMA, FITB, FHN, GE, PH, PB, SLB, STI
Jobless claims came in at 352,000 less than the expected 383,000. The CPI was flat. The expectation was for a rise of 0.1%. The Philadelphia Fed survey was 7.3, less than the consensus 10.0. Oil inventories dropped 3.4 million, less than the anticipated 5.0. On Friday we will get existing home sales
Good trading!
Thank you for reading. Think on it, trade on it, and be well.
-Mel
