Jobless Claims Rise Unexpectedly, SPX Declines Two Points
The overnight auctions in Spain and Italy were considered successful as Spain raised as much money as they had hoped and the rate increases for both auctions weren't significant. The Labor Department reported the Producer Price Index (an indication of inflation at the wholesale level) for December rose by +1.1%, which was above the consensus estimate for +0.9% and above November’s +0.8% (October: +0.4%). When you strip out food and energy, the so-called Core PPI came in up +0.2%, which was inline with the consensus for +0.2% and below November’s +0.3%. The Labor Department also reported that initial claims for unemployment insurance for the week ending January 8 rose by 35K to 445K. The week’s total was well above the consensus for a reading of 409K. Continuing Claims for unemployment for the week ending January 1 were below consensus at 3.879M vs. expectations for 4.06M and last week’s revised (higher) 4.124M. Futures were modestly negative as the open approached.
The session began without a significant gap and quickly moved lower to put the low of the day on the chart at 10:11 am. But every dip must be bought and this one followed the pattern as the index began crawling higher. Then the index double topped at 11:38 and 12:18 before gently declining much of the afternoon. But this was a tight range session and all moves were tiny. The low of the day was put on the chart at 3:34 and the final half hour was mostly a small bounce higher as dip buyers arrived.
Checking our Market Leaders board this evening we find almost total agreement with only Germany closing higher. But this was another two point down day; we have had four similar days within the last six sessions yet we closed seven points higher today than seven days ago. These two point down days seem to be all the selling we see.
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report we have three changes as Materials moves back to Neutral from Buy, Consumer Staples moves from Neutral to Buy, and Health Care moves from Neutral to Sell. As a result we see the Nine Sectors signal move to Neutral tonight.
Today was the second narrowest range in seven days (NR7) this week. We also saw the third inside day of the last nine. This is not the typical characteristic of a market heading much higher.
This is only the fifth time that the NASDAQ was within 3% of a 52 week high when Intel reported 4Q earnings. The other four times the NASDAQ ended earnings season lower than when Intel reported.
Volume & Breadth Indicators
For the SPX Index there were 220 components advancing and 260 components declining. On the NYSE 3,134 issues were traded with 1,370 advancing issues and 1,651 retreating issues, a ratio of 1.21 to one declining. There were 246 new highs and 108 new lows. The five day moving average of New Highs is 212 while the five day moving average of New Lows is 36 and the ten day moving average of Net Advancing is 220. The Net Advancing data indicates a bullish trend.
Declining volume was higher at a ratio of 1.57 to one. The closing TRIN was 1.31 and the final tick was 734. The five day average of TRIN is 1.02 and the ten day average of TRIN is .95. The NYSE Composite Index lost -0.05% today while the SPX lost -0.17%.
For the NYSE, relative to the previous 30 session average, volume was -1.81% below the average. Of the last 15 sessions 6 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, 9 of last 10. For the SPX, the day's volume was 94.3% of the average daily volume for the last year. Volume was 111.6% of the last 10 day average and 105.5% of the previous day’s volume.
This is another of those days that looks like a minus 1% day rather than minus 0.17%. 108 New Lows today. But the persistency of the advance has set a new 82-year record.
Total tick for the day was -75,000 and the average tick for the day was -49. There were 15 ticks greater than 600 and 48 ticks more extreme than -600. There were no ticks greater than 1000 and 3 ticks more extreme than -1000. The tick action suggests institutional distribution.
The intraday volume's largest spikes today came on the down moves. But in such a tight range of trading it is difficult to draw much from such a pattern. But looking at the Nightly Breadth Indicators is of interest tonight, particularly the spike in the High Low Logic Index. This is by far the largest one day spike we have ever seen in this indicator with yesterday's spike being the largest in two years. So the two day spike is either a clue or a total anomaly. It bears watching over the next few days.
Moving Average and Support/Resistance Indicators:
69.2% of the SPX are above their five day moving average, 66.8% are above their 10 day average, 69.6% are above their 20 day moving average, 79.8% are above their 50 day moving average, and 87.6% are above their 200 day moving average.
There were no significant moving average crossovers today.
Sectors on the Move:
Sectors stronger than the SPX for Thursday:
- Industrials -- Outperformed the SPX by +51%.
- Technology -- Outperformed the SPX by +10%.
- Consumer Staples -- Outperformed the SPX by +38%.
- Utilities -- Outperformed the SPX by +9%.
Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -69%.
- Energy -- Underperformed the SPX by -4%.
- Financials -- Underperformed the SPX by -9%.
- Health Care -- Underperformed the SPX by -38%.
- Consumer Discretionary -- Underperformed the SPX by -4%.
In Late Trading:
225 SPX components moved upward and 103 components downward during the after hours with 118 million shares traded.
Friday, January 14
08:30 CPI 0.3% cons.
08:30 Core CPI 0.1% cons.
08:30 Retail Sales 1.0% cons.
08:30 Retail Sales ex-auto 0.8% cons.
09:15 Industrial Production 0.4% cons.
09:55 Michigan Sentiment 75.5 cons.
10:00 Business Inventories 0.9% cons.
German Consumer Price Index
Britain Producer Price
Euro-Zone Consumer Price
Euro-Zone Trade Balance
Before: JPM, WBS
Another busy day Friday. Before the start of trading, JPMorgan Chase is expected to report a profit of 98 cents per share versus 74 cents a year ago. Revenues at the bank, however, are expected to slip 3%. The Commerce Department releases the Consumer Price Index in the morning. CPI is expected to have increased 0.4% in December after rising 0.1% the previous month. Core CPI is expected to have inched up 0.1%, after rising the same amount in November. The Commerce Department also reports on retail sales before trading starts. Sales are expected to have gained 0.7% in December after having increased the 0.8% in November. Sales excluding volatile autos are expected to have ticked up 0.6% after a 1.2% rise the previous month.
The Federal Reserve reports on manufacturing activity in the morning. Industrial production is expected to have increased 0.4% in December after rising 0.8% in November. Capacity utilization is expected to have risen to 75.5% in December from 75.2% in the previous month. The University of Michigan's consumer sentiment index for January is expected to have risen to 75.0 in early January from 74.5 in late December. November business inventories, due after the start of trading, are expected to edged up 0.7% after rising the same amount the previous month.