Indices Remain Range Bound
by Jerome "Mel" Hickerson
INTC blew out expectations and futures were flying overnight but retail sales data this morning disappointed. Renewed worries about the bank stress tests in Europe put a damper on foreign markets and also pulled down the futures here in the U.S. Futures were fading off their highs around 4am. The Commerce Department reported that Retail Sales fell in the month of June by -0.5%. This was below the consensus for a decline of -0.2%.
Today’s session opened with a small gap downward, moved down before trying to recover, then moved back down to set the low at 10:02. The SPX then climbed all morning long until just before noon. From noon until the low of the day at 2:26 the indices were sold but the last 90 minutes climbed back to bring the indices to breakeven for the day. Considering the overbought conditions today seemed rather strong.
But nevertheless, the daily chart bars are suggesting at least some kind of pullback as it certainly appears to be building a topping pattern. Inside day dojis are commonly associated with turns in the indices. But it is also completely possible that we make a move above the 50 DMA, regroup for a few weeks, and then push higher through the fall.
Earnings gaps are not holding and the one thing that will frustrate most traders is a chopfest between the 50DMA and 200DMA as the ongoing clash between worse than expect economic data and better than expected earnings continues. This is a congested zone of moving averages and resistance/support layers.
As mentioned here for several weeks, the indices are range bound, locked between the moving averages overhead and the 1040 area below; we have made excursions outside the range but they have been hastily rejected.
Trading the range is where the money appears to be right now; selling 1100 and buying 1040. Until we break out of the trading range with volume, I’ll continue trading the range.
Day Trade Systems Update: (Signals today)
* SDS overnight hold
* SDS at: 10:38
* SDS at: 11:58
* GDX at: 12:23
* SDS at: 3:28
We had a decent day of trading as the morning began with a nice pullback allowing us to exit the SDS near the morning highs for almost 70 cents profit; a nice start to the day.
Thursday, July 15
Economics
08:30 Initial Claims
08:30 Continuing Claims
08:30 PPI 0.1% cons.
08:30 Core PPI 0.1% cons.
08:30 NY Fed – Empire Manufacturing Index 18.5 cons.
09:15 Industrial Production 0.2% cons.
09:15 Capacity Utilization 74.2 cons.
10:00 Philadelphia Fed 8.6 cons.
06:00 Euro-Zone New Car Registration
22:45 New Zealand CPI
Earnings
Before: CBSH, FCS, JPM, NXY, NVS, PPG, TCB, WWW, GWW
After: AMD, ANGO, CBST, GOOG, PBCT
The Department of Labor releases the weekly jobless claims report in the morning. The number of Americans filing new claims for unemployment last week is expected to have fallen to 449,000 from 454,000 in the previous week. The Producer Price Index is due out from the Commerce Department in the morning. The index is expected to have fallen 0.1% in June after falling 0.3% in May, suggesting inflation is not an issue at the present time. The so-called core PPI, which strips out volatile food and energy prices, is expected to have risen 0.1% after rising 0.2% in the previous month. Reports are also due on industrial production and capacity utilization and manufacturing in the northeast.
Mel’s Missives from the Matrix:
- Total tick for the day was 23,000 and the average tick for the day was 15. There were 87 ticks greater than 600 and 97 ticks more extreme than -600. There were 5 ticks greater than 1000 and 6 ticks more extreme than -1000.
- The day's range was 11.4 points. The intraday trading range - 9:35 to the close - was 11.27. The 5 DMA of daily range is 12.65.
- Evidence of the intraday trend: At 10am volume was 107.23% of the 10 day average. By noon the volume was 92.55% of the 10 day average, and by 2pm volume was 89.11% of the 10 day average.
- The day's volume was 87.1% of the average daily volume for the last year. Volume was 92.1% of the last 10 day average and 93% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 2:00 and 2:15 when relative volume increased 37.2% while the SPX was dropping -0.36%. The largest drop in relative volume came between 2:30 and 2:45 when relative volume dropped -67.5% while the SPX was rising 0.09%.
- 27% of the SPX stocks closed with two day RSI above 90. 41% closed with RSI above 80. 2% closed with RSI below 20 and 1% closed with RSI below 10.
- 82.4% of the SPX are above their five day moving average, 94.2% are above their 10 day average, 69.6% are above their 20 day moving average, 49.2% are above their 50 day moving average, 33.8% are above their 100 day moving average, and 43.6% are above their 150 day moving average.
- 20% of the SPX closed above their most recent previous high.
- 13% of the SPX stocks closed below their most recent previous lows.
- 217 SPX issues advanced and 271 issues declined, a net SPX advance/decline of -54.
- Evidence of the intraday trend: At 10am, 27% of the SPX components were in the top half of the range. By noon, 82.8% were in the top half of the range, and by 2pm, 52% were in the top half of the range.
- 66.4% of stocks closed in the top half of the day's range. (33.4% closed in bottom half.)
- 14.4% of stocks closed in the top 10% of the day's range. 25.2% of stocks closed in the top 20% of the day's range.
- 0.6% of stocks closed in the bottom 10% of the day's range. 3.8% of stocks closed in the bottom 20% of the day's range.
- 6.2% of stocks closed within 2% of their 52 week high. 14.8% of stocks closed within 5% of their 52 week high.
- 69.8% of stocks closed within 50% of their 52 week low. 38.4% of stocks closed within 25% of their 52 week low.
- 19.2% of stocks closed within ¼% of their high for the day.
- 1.2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 18.4% of the SPX components were up since the open. By noon, 54.6% were up since the open, and by 2pm, 33.4% were up since the open.
- 42.4% of the SPX closed up from the previous close; 60.6% closed higher than the open.
- Sectors stronger than the SPX for Wednesday:
- Industrials -- Outperformed the SPX by +22%.
- Technology -- Outperformed the SPX by +61%.
- Consumer Staples -- Outperformed the SPX by +5%.
- Utilities -- Outperformed the SPX by +5%.
- Sectors weaker than the SPX for Wednesday:
- Basic Materials -- Underperformed the SPX by -28%.
- Energy -- Underperformed the SPX by -21%.
- Financials -- Underperformed the SPX by -59%.
- Health Care -- Underperformed the SPX by -19%.
- Consumer Discretionary -- Underperformed the SPX by -63%.
- The $SOX index strength was weaker relative to the SPX Wednesday by -0.25%.
- The XLF underperformed the SPX by -0.59% Wednesday.
- The 2 Day RSI of the SPX is 97. The Dow RSI is 99, the NASDAQ is 99 and the Russell is 72.
- Over the last four sessions, the average session closed 80.54% of the range above the low. Wednesday closed at 66.6% of the daily range.
- Upside momentum decreased slightly Wednesday, from Tuesday’s 7.05 to today’s 3.46. The ratio of SPX components giving a crossover sell signal compared to buy signals moved upward to B 5.21 to 1.
- The ISEE Equity 10 day moving average Wednesday was 177.7. 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.
- 201 SPX components moved upward and 140 components downward during the after hours with 102 million shares traded.
Trade 'em well on Thursday everyone!
-Mel
