Late Day Rally
Market Recap:
SPX big winners were Expedia Inc (EXPE) 6.8%, Netflix Inc (NFLX) 6.22%, and TripAdvisor (TRIP) 5.97%. SPX big losers were Dell Inc (DELL) -20.12%, Juniper Networks (JNPR) -4.31%, and Red Hat Inc (RHT) -3.42%.
SPX five day big winners are Cooper Industries Inc (CBE) 22.27%, Sears Holding Corp (SHLD) 11.72%, and Newmont Mining Corp (NEM) 11.63%. SPX five day big losers are Dell Inc (DELL) -16.84%, Western Digital Corp (WDC) -11.73%, and Avon Products Inc (AVP) -11.19%.
New Ten Day Highs: AN, HRB, XEL, CPWR, GLW, EXPE, GR, HRL, TEG, MDP, NEM, SRCL, TSS, AEM, WMT
New Ten Day Lows: MMM, ANF, AMD, AFL, AKS, AA, AGN, ALL, AXP, AMT, AMGN, APC, ADI, ADM, AIZ, AZO, BDX, BIG, XL, BSX, BMY, CAH, CFN, CVX, CME, CI, CCE, CL, STZ, SAI, GLW, DELL, DNR, DVN, DV, DO, EMC, ESV, EQT, EFX, EL, EXC, XOM, FII, FITB, FE, FLR, FTI, FRX, BEN, FCX, GCI, GIS, HNZ, HSY, HPQ, HSP, HBAN, INTC, IBM, IGT, IVZ, IRM, ITT, JEC, JNS, JNJ, K, KMB, KLAC, KFT, LLL, LUK, LXK, LTD, LLTC, LMT, LOW, LSI, MRO, MJN, MCK, MDT, WFR, MRK, PCS, MSFT, TAP, MS, MUR, NDAQ, NTAP, NYT, NTRS, NOC, NVLS, NVDA, NYX, OXY, OI, PFE, PNC, PPL, PG, PGR, PRU, PEG, PSA, RTN, RHT, RHI, SLE, SEE, SRE, SWN, STT, SVU, TXN, BK, TMO, TWX, TIE, TSN, UPS, X, UNM, VAR, VMC, WAG, WAT, AMZN
Volume & Breadth Indicators
For the SPX Index there were 304 components advancing and 191 components declining. On the NYSE 3,145 issues were traded with 1,851 advancing issues and 1,193 retreating issues, a ratio of 1.55 to one advancing. There were 14 new highs and 114 new lows. The five day moving average of New Highs is 19 while the five day moving average of New Lows is 138 and the ten day moving average of Net Advancing is -482. The Net Advancing data indicates a bearish trend.
Advancing volume was higher at a ratio of 1.64 to one. The closing TRIN was 0.88 and the final tick was 215. The five day average of TRIN is 1.09 and the ten day average of TRIN is 1.27. The NYSE Composite Index lost -0.02% today while the SPX gained 0.17%.
For the NYSE, relative to the previous 30 session average, volume was 4.40% above the average. Of the last 15 sessions 11 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 17 sessions ended on a positive tick, 4 of last 10. For the SPX, the day's volume was 108.3% of the average daily volume for the last year. Volume was 109.8% of the last 10 day average and 109.3% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 103,000 and the average tick for the day was 67. There were 153 ticks greater than 600 and 82 ticks more extreme than -600. There were 13 ticks greater than 1000 and 8 ticks more extreme than -1000. The tick action suggests institutional accumulation.
Moving Average and Support/Resistance Indicators:
84.2% of the SPX are above their five day moving average, 37.8% are above their 10 day average, 14.8% are above their 20 day moving average, 19.2% are above their 50 day moving average, and 51.2% are above their 200 day moving average.
There was one significant moving average crossover today as the Doe 20 DMA crossed below the 100 DMA. Our moving average Power Rating is 24 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Wednesday:
- Basic Materials -- Outperformed the SPX by +104%.
- Energy -- Outperformed the SPX by +24%.
- Financials -- Outperformed the SPX by +19%.
- Industrials -- Outperformed the SPX by +38%.
- Consumer Discretionary -- Outperformed the SPX by +35%.
Sectors weaker than the SPX for Wednesday:
- Technology -- Underperformed the SPX by -6%.
- Consumer Staples -- Underperformed the SPX by -29%.
- Utilities -- Underperformed the SPX by -73%.
- Health Care -- Underperformed the SPX by -72%.
Checking the sectors of the SPX tonight: (The sector Buy and Sell signals come from a mechanical trend trading system; there will be some whipsaw but the signal will never be on the wrong side for long.)
The Basic Materials sector advancing issues (24) totaled 1,278,157 shares traded (53,257 average per stock) and declining issues (6) totaled 77,744 shares traded (12,957 average per stock.) 4 components are on an uptrend (1 new uptrends today) and 26 components are on a downtrend (no new downtrends today.) There were no New Highs and 2 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -5.76% below the 20-Day average.
The Energy sector advancing issues (36) totaled 2,159,632 shares traded (59,990 average per stock) and declining issues (8) totaled 521,940 shares traded (65,243 average per stock.) 6 components are on an uptrend (3 new uptrends today) and 38 components are on a downtrend (no new downtrends today.) There were no New Highs and no New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -4.68% below the 20-Day average.
The Financials sector advancing issues (57) totaled 6,058,327 shares traded (106,286 average per stock) and declining issues (24) totaled 1,160,557 shares traded (48,357 average per stock.) 6 components are on an uptrend (4 new uptrends today) and 75 components are on a downtrend (no new downtrends today.) There were no New Highs and no New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -6.39% below the 20-Day average.
The Industrials sector advancing issues (52) totaled 1,523,796 shares traded (29,304 average per stock) and declining issues (7) totaled 89,630 shares traded (12,804 average per stock.) 18 components are on an uptrend (12 new uptrends today) and 43 components are on a downtrend (no new downtrends today.) There were no New Highs and no New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -3.68% below the 20-Day average.
The four 'risk sectors' totaled 169 advancing issues and 45 declining issues today with 20 new uptrends and 0 new downtrends. 15.7% of Risk Sector components are uptrending.
The Technology sector advancing issues (47) totaled 3,260,801 shares traded (69,379 average per stock) and declining issues (29) totaled 5,550,860 shares traded (191,409 average per stock.) 13 components are on an uptrend (8 new uptrends today) and 65 components are on a downtrend (no new downtrends today.) There were no New Highs and 7 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -3.83% below the 20-Day average.
The Consumer Staples sector advancing issues (13) totaled 520,700 shares traded (40,054 average per stock) and declining issues (28) totaled 1,150,592 shares traded (41,093 average per stock.) 9 components are on an uptrend (2 new uptrends today) and 32 components are on a downtrend (2 new downtrends today.) There were 1 New Highs and no New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -1.13% below the 20-Day average.
The Utilities sector advancing issues (2) totaled 47,148 shares traded (23,574 average per stock) and declining issues (30) totaled 844,912 shares traded (28,164 average per stock.) 14 components are on an uptrend (1 new uptrends today) and 18 components are on a downtrend (4 new downtrends today.) There were no New Highs and 1 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -.19% below the 20-Day average.
The Health Care sector advancing issues (14) totaled 193,857 shares traded (13,847 average per stock) and declining issues (37) totaled 1,878,234 shares traded (50,763 average per stock.) 3 components are on an uptrend (1 new uptrends today) and 48 components are on a downtrend (2 new downtrends today.) There were no New Highs and no New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -1.9% below the 20-Day average.
The Consumer Discretionary sector advancing issues (59) totaled 3,192,874 shares traded (54,117 average per stock) and declining issues (22) totaled 1,068,818 shares traded (48,583 average per stock.) 20 components are on an uptrend (10 new uptrends today) and 61 components are on a downtrend (1 new downtrends today.) There were 2 New Highs and 2 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -4.14% below the 20-Day average.
Based on the SPX sector data, we are on a Sell for the SPX and the Russell 2000.
What We Learned from Wednesday's Action:
Wednesday was session 3 to close above the 5 DMA, session 14 to close below the 10 DMA, session 14 to close below the 20 DMA, and session 14 to close below the 50 DMA. This was also session 12 for the 5 DMA to close below 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 6.82 points below the 10 DMA.
The SPX 5 DMA is 1310.31, 10 DMA is 1325.68, 20 DMA is 1355.74, 50 DMA is 1377.95, 100 DMA is 1355.24, and 200 DMA is 1280.38.
On Wednesday the SPX traded both below and above the opening range. 57.6% of the SPX closed up from the previous close; 74.8% closed higher than the open. During Wednesday's session the SPX gained 2.84 points from open to close. The SPX intraday trading range was 24.03 points. The 5-Day average intraday trading range is 20.74 points, the 10-Day average is 17.42 points, and the 20-Day average is 15.59 points. The trading range is expanding. The 5-Day SPX gain is -0.45%, the 10-Day gain is -2.64%, and the 15-Day gain is -5.95%.
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 Thursday is +4. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be higher. Mel's 10 Day Oscillator is 2 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, we are bullish for Thursday's session.
The market internals show evidence of curling upward. We are optimistic that the market bounces higher. Yet less than 16% of the risk sector components are trending higher. This must change soon or we risk more action to the downside.
Thursday, May 24
Economics
08:30 Initial Jobless Claims – consensus 365K
08:30 Continuing Claims – consensus 3220K
08:30 Durable Goods Orders – consensus 0.5%
08:30 Durable Goods ex Transportation – consensus 0.8%
08:30 Cap Goods Orders Nondef Ex Air – consensus 0.5%
08:30 Cap Goods Shipments Nondef Ex Air – consensus -1.0%
11:00 Kansas City Fed Manufacturing – consensus 7
11:00 Fed to purchase $1.5b-$2b bonds in 25-30 year range
1:00 Treasury selling $29b 7-year notes
05:00 JPY Bank of Japan Monthly Economic Report
06:00 EUR German GDP
07:30 EUR German PMI
08:00 EUR Eurozone PMI
08:30 GBP Retail Sales
08:30 GBP GDP
23:30 JPY National CPI
9:30 Spain to sell 3 and 4-year notes
Earnings
Before:
Costco (COST) EPS 87c, revs $22.09B
Heinz (HNZ) EPS -65c, revs $3.04B
Tiffany’s (TIF) EPS 70c, revs $819.06B
After:
Ralcorp Holdings (RAH) EPS 84c, revs $1.05B
New home sales were 343,000, more than the expected 335,000. Oil inventories rose 900,000 barrels. Last week they rose 2.1 million. On Thursday we will get durable goods, initial claims and the Kansas City Fed survey.
Personal Note: Abbreviated report tonight after missing two nights. We remain in a great deal of pain which prevents us from spending a lot of time at the desk. But we have begun to eat again so we are hopeful that we are bouncing back. It has been very difficult since last Friday night.
Thank you for reading. Think on it, trade on it, and be well.
-Mel