It's All About Oil
Market Recap:
This morning looked as though the bulls were going to try and keep things going on the back of solid manufacturing data (PMI's) out of Europe. However, with oil prices rising and word that Saudi Arabia is sending tanks to Bahrain(note that Saudi Arabia's stock market fell -7%), the early enthusiasm was waning a bit as the open approached. We didn't have any big economic data to review before the open but we received reports on Construction Spending and the U.S. ISM Manufacturing Index at 10:00 am.
The session began with a significant gap higher but quickly put the high of the day on the chart just three minutes after the opening bell. There were significant bounces around 10:30 and 12:30 but the tape this day belonged to the bears as buyers just never showed up to rescue the tape.
Since February 22nd we've seen a character change within the market. Five of those six sessions had an early morning high followed by lows in the afternoon. This is markedly different than the weeks prior when the lows were in the morning and closes were near the highs. The early morning highs are a bearish characteristic just as the late afternoon highs were a bullish characteristic.
Checking in with our Market Leaders board this evening there is total agreement within our leaders. The big loser was the Financials (XLF) while overseas got hit the lightest. Here at home, the Dow fared the best of our leaders.
SPX big winners were Boston Scientific Corp (BSX) 4.77%, Aes Corporation (AES) 2.9%, and Biogen Idec Inc (BIIB) 2.6%. SPX big losers were Range Resources Corp (RRC) -7.65%, Titanium Metals Corp New (TIE) -6.14%, and Carnival Corp (CCL) -6.1%.
SPX five day big winners are Cabot Oil & Gas Corp (COG) 11.62%, Metropcs Communications Inc (PCS) 9.02%, and Consol Energy Inc (CNX) 8.84%. SPX five day big losers are Hewlett-Packard Co (HPQ) -11.03%, First Solar Inc (FSLR) -10.2%, and Frontier Communications Corp (FTR) -8.7%.
New Ten Day Highs: AES, URBN, AFL, MO, ABC, APA, AIV, AMAT, ADP, AZO, AVB, BAX, BIIB, BSX, BMY, CNP, CVX, XEL, KO, CMCSA, CPWR, CAG, CNX, SAI, CSX, CVS, DELL, DVN, DO, D, DPS, ROST, ESV, EQT, FIS, FLIR, FTI, GWW, HES, HON, JNJ, KMB, KIM, L, LO, MRO, MI, MKC, PCS, TAP, NKE, NBL, NSC, NU, NVLS, OMC, PAYX, BTU, PFE, PCG, PM, PNW, PPL, PX, PGR, PLD, QCOM, RAI, SLE, SRE, SIAL, SPG, SJM, SE, SYK, TE, TSS, VNO, WAG, WU
New Ten Day Lows: AKS, AKAM, AIG, AVP, BBT, XL, BA, COF, CCL, CHRW, XEL, STZ, DNB, EK, ETN, EBAY, EMR, EXPE, EXPD, FITB, FSLR, GNW, GR, HOG, HCP, HD, DHI, HSP, HST, HCBK, HBAN, IP, ISRG, ITT, KEY, LLL, LIFE, LLTC, LMT, MTB, MAR, MA, WFR, MSFT, MS, NOV, JWN, NTRS, NVDA, ORCL, PCAR, JCP, PBCT, PCP, PHM, COL, CRM, SNI, SHW, HOT, SUN, STI, SYMC, TROW, TIE, UPS, JASO, KBH, USB, VTR, AMZN, GS, GOOG
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report, most Sectors got hit hard as might be expected on a day such as today. But two of the "defensive" sectors hung in pretty well, Utilities and Health Care. Our Nine Sectors signals quickly flips back into Neutral.
Last night we wrote: "We want to emphasize that if tomorrow's session is a down day it would strongly suggest that the character of the market has changed. It would unquestionably be a significant difference from the last seven months." Today certainly fit that bill. Dip buyers got thoroughly trashed today and traders who bought this morning's gap thinking to ride the first of the month syndrome higher also got smashed. Trades like that work, until they don't. And now they don't; the market has changed.
That does not mean that the first of the month won't continue to be bullish. 94% of the 2010 SPX gains were achieved on the first day of the month; 69% of the SPX gains over the last 20 years have been registered on the first trading day of the month. But it still seems likely that the market has, at least for now, significantly lost some of the bullishness that it had.
Volume & Breadth Indicators
For the SPX Index there were 36 components advancing and 448 components declining. On the NYSE 3,151 issues were traded with 741 advancing issues and 2,339 retreating issues, a ratio of 3.16 to one declining. There were 190 new highs and 17 new lows. The five day moving average of New Highs is 213 while the five day moving average of New Lows is 18 and the ten day moving average of Net Advancing is 37.
Declining volume was higher at a ratio of 8.11 to one. The closing TRIN was 2.57 and the final tick was 40. The five day average of TRIN is 1.4 and the ten day average of TRIN is 1.24. The NYSE Composite Index lost -1.45% today while the SPX lost -1.6%.
For the NYSE, relative to the previous 30 session average, volume was 10.17% above the average. Of the last 15 sessions 7 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 21 sessions ended on a positive tick, 6 of last 10. For the SPX, the day's volume was 107.2% of the average daily volume for the last year. Volume was 107.9% of the last 10 day average and 125.5% of the previous day’s volume.
The negative breadth was stunning. Days such as this often lead to a bounce but this one may go lower before bouncing. A retest of the 1295 seems in the cards.
Total tick for the day was -235,000 and the average tick for the day was -152. There were 31 ticks greater than 600 and 206 ticks more extreme than -600. There were no ticks greater than 1000 and 15 ticks more extreme than -1000. The tick action suggests institutional distribution.
The largest spike in volume came today on the mid-afternoon down move. Rally attempts generated almost nothing of a volume spike. Checking the Nightly Breadth Indicators shows mostly pretty bearish looking indicators. But McClellan's Oscillator has a lot of room to go before reaching oversold, suggesting we could easily have another day of selling before seeing much of a bounce attempt.
Moving Average and Support/Resistance Indicators:
30.2% of the SPX are above their five day moving average, 25% are above their 10 day average, 37.4% are above their 20 day moving average, 62.4% are above their 50 day moving average, and 86.6% are above their 200 day moving average.
Today the Russell 2000 joined the rest of our leaders with the 5 DMA moving below the 20 DMA. So now the left quarter of our chart is solidly red so we'll watch to see if the red continues to flow from left to right.
Sectors on the Move:
Sectors stronger than the SPX for Tuesday:
- Consumer Staples -- Outperformed the SPX by +81%.
- Utilities -- Outperformed the SPX by +57%.
- Health Care -- Outperformed the SPX by +76%.
Sectors weaker than the SPX for Tuesday:
- Basic Materials -- Underperformed the SPX by -91%.
- Energy -- Underperformed the SPX by -30%.
- Financials -- Underperformed the SPX by -49%.
- Industrials -- Underperformed the SPX by -53%.
- Technology -- Underperformed the SPX by -33%.
- Consumer Discretionary -- Underperformed the SPX by -32%.
In Late Trading:
147 SPX components moved upward and 184 components downward during the after hours with 122 million shares traded.
Wednesday, March 2
Economics
07:00MBA Mortgage Purchase Index
07:30Challenger Job Cuts: -46.1% prior.
08:15ADP Employment Change: 187k prior.
10:30 Crude Oil Inventories
02:00 Fed’s Beige Book
Australia GDP
POMO Schedule
Treasury Coupon Purchase: 3/31/2015-8/31/2021: $6-8 bln
Earnings
Before: AH, BJ, COST, CCSC, CYBX, DPZ, FLY, GMAN, JOYG, MFB, SPLS, WTI
After: AIQ, CBEY, CWTR, CVI, DAR, EGLE, DAVE, FNSR, FL, GEF, HOV, ICFI, KCP, KONG, NGS, SIGM, SINA, SUNH
Several retailers will post their results before the bell, including Costco (COST), BJ's Wholesale (BJ) and office supply chain Staples (SPLS). After the bell, investors will get PetSmart's (PETM) results. Investors will also get the first of three jobs-related economic reports on Wednesday. The ADP private-sector jobs report will be out at 8:15 am. The report is often used to predict Friday's more-important Labor Department jobs report. Economists are looking for the ADP report to show that private businesses hired 163,000 new workers last month, down from 187,000 fresh workers in January.
Have a great Wednesday!
-Mel