Late Session Rip-Your-Face-Off Power Surge
Market Recap:
Futures were pointing to a lower open on a report that JPMorgan's trading loss could reach $9 billion. In addition, China's Shanghai index was lower for a seventh consecutive session. However, the futures did perk up a bit after word that Germany's Finance Minister appeared to suggest that Germany was changing its tune on Euro bonds. Of course, the position was immediately clarified that Germany's stance had not changed. Initial Claims for Unemployment Insurance for the week ending 6/23 were reported at 386K, which was below the consensus estimate for 387K but a bit above last week’s initially reported total of 385k (which was revised up to 392k). Continuing Claims for the week ending 6/16 came in at 3.296M vs. consensus of 3.279M. The government also reported that GDP in the U.S. for Q1 came in at 1.9%, which was in line with the last revision and with consensus expectations.
A wild session began with a significant gap lower. Traders seemed to want to take things higher into the Supreme Court decision on Obamacare. But the Court decision disappointed the market and the SPX surrendered ten points within minutes before attempting to rally but never getting far. The middle hours of the day were dull and traded with a gentle downward bias as internals were building. The market then began to gently rally about 2:30 pm gaining about five points by 3:30 pm. But things really got wild the final half hour as the index jumped eleven points to close very near to breakeven for the session, and significantly higher than the open.
Our Market Leaders Board has all of our leaders with losing sessions but this was a wild one as indices closed far off the session lows. The Russell 2000 jumped almost 1.5% during the final ninety minutes of the day and the Financials jumped even more. Worth noticing is that Technology didn’t participate nearly as much in the late afternoon surge.
SPX big winners were Genworth Financial (GNW) 10.61%, Best Buy Co Inc (BBY) 5.51%, and Tenet Healthcare Corp (THC) 5.47%. SPX big losers were Wellpoint Inc (WLP) -5.23%, F5 Networks Inc (FFIV) -4.59%, and First Solar Inc (FSLR) -3.93%.
SPX five day big winners are Cabot Oil & Gas Corp (COG) 15.73%, QEP Resources (QEP) 13.09%, and Devry Inc (DV) 12.85%. SPX five day big losers are O'reilly Automotive Inc (ORLY) -16.27%, Ryder Systems Inc (R) -14.16%, and Harley-Davidson Inc (HOG) -8.22%.
New Ten Day Highs: AKS, MO, ABC, BIG, KO, CL, CNX, COST, DVA, DE, DV, DTV, RRD, DPS, ETR, EQT, ESRX, FLS, GCI, GE, HUM, IGT, LH, LO, MUR, NSM, NYT, PCL, PWR, DGX, STR, RRC, CVG, SHLD, SE, SVU, THC, TSO, KBH, MBI, VLO, VTR, VMC, WY
New Ten Day Lows: AMD, AET, URBN, A, APD, ARG, AGN, AIG, APH, AIV, AVB, BDX, BMS, BMC, BSX, BRCM, CAH, CAT, CME, CI, CSCO, COH, CTSH, CVH, DHR, XRAY, DOV, DOW, ROST, ETFC, ETN, EMC, EMR, EFX, EL, EXPE, EXPD, FDO, FAST, FII, F, GNW, HOG, HAS, HNZ, HPQ, HD, HON, HUM, ITW, INTC, IBM, IFF, IP, INTU, IRM, ITT, JNPR, KFT, LUK, LLY, LTD, LSI, M, MAT, MCD, MET, MOLX, MWW, MYL, NWL, NEM, NKE, PH, PAYX, PBCT, RL, PCP, RSG, ROK, SNDK, SNI, SEE, SJM, SNA, SO, HOT, STT, SYMC, TLAB, TDC, TER, TXN, TJX, TSS, TSN, UTX, UNH, QLD, JASO, AEM, VFC, WAT, WLP, WDC, AAPL, C
Volume & Breadth Indicators
For the SPX Index there were 263 components advancing and 231 components declining. On the NYSE 3,150 issues were traded with 1,715 advancing issues and 1,320 retreating issues, a ratio of 1.3 to one advancing. There were 93 new highs and 41 new lows. The five day moving average of New Highs is 78 while the five day moving average of New Lows is 55 and the ten day moving average of Net Advancing is 435. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 1.11 to one. The closing TRIN was 1.17 and the final tick was 173. The five day average of TRIN is 1.29 and the ten day average of TRIN is 1.36. The NYSE Composite Index lost -0.01% today while the SPX lost -0.21%.
For the NYSE, relative to the previous 30 session average, volume was 1.46% above the average. Of the last 15 sessions 3 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 18 sessions ended on a positive tick, 6 of last 10. For the SPX, the day's volume was 87.3% of the average daily volume for the last year. Volume was 97.5% of the last 10 day average and 110.1% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 51,000 and the average tick for the day was 33. There were 66 ticks greater than 600 and 45 ticks more extreme than -600. There were 8 ticks greater than 1000 and 10 ticks more extreme than -1000. The tick action suggests institutional accumulation.
Moving Average and Support/Resistance Indicators:
63.2% of the SPX are above their five day moving average, 45% are above their 10 day average, 56.4% are above their 20 day moving average, 35.6% are above their 50 day moving average, and 46.4% are above their 200 day moving average.
There was one significant moving average crossover today as the Sox 5 DMA crossed below the 20 DMA. Our moving average Power Rating is 28 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Thursday:
- Basic Materials -- Outperformed the SPX by +26%.
- Energy -- Outperformed the SPX by +103%.
- Financials -- Outperformed the SPX by +6%.
- Industrials -- Outperformed the SPX by +14%.
- Consumer Staples -- Outperformed the SPX by +62%.
- Utilities -- Outperformed the SPX by +48%.
Sectors weaker than the SPX for Thursday:
- Technology -- Underperformed the SPX by -62%.
- Health Care -- Underperformed the SPX by -17%.
- Consumer Discretionary -- Underperformed the SPX by -24%.
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 (18) totaled 556,346 shares traded (30,908 average per stock) and declining issues (12) totaled 572,960 shares traded (47,747 average per stock.) 14 components are on an uptrend (2 new uptrends today) and 16 components are on a downtrend (1 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 -.38% below the 20-Day average.
The Energy sector advancing issues (34) totaled 1,814,099 shares traded (53,356 average per stock) and declining issues (10) totaled 896,670 shares traded (89,667 average per stock.) 26 components are on an uptrend (7 new uptrends today) and 18 components are on a downtrend (1 new downtrends today.) There were no New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed -1.25% below the 20-Day average.
The Financials sector advancing issues (57) totaled 2,114,776 shares traded (37,101 average per stock) and declining issues (23) totaled 3,762,531 shares traded (163,588 average per stock.) 62 components are on an uptrend (15 new uptrends today) and 19 components are on a downtrend (no new downtrends today.) There were 1 New Highs and 1 New Lows. The sector is on a Sell signal and closed above the daily pivot. The sector 5-Day average closed .94% above the 20-Day average.
The Industrials sector advancing issues (28) totaled 1,255,781 shares traded (44,849 average per stock) and declining issues (32) totaled 620,917 shares traded (19,404 average per stock.) 27 components are on an uptrend (3 new uptrends today) and 34 components are on a downtrend (1 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 -.35% below the 20-Day average.
The four 'risk sectors' totaled 137 advancing issues and 77 declining issues today with 27 new uptrends and 3 new downtrends. 59.7% of Risk Sector components are uptrending.
The Technology sector advancing issues (15) totaled 1,737,686 shares traded (115,846 average per stock) and declining issues (61) totaled 4,374,368 shares traded (71,711 average per stock.) 24 components are on an uptrend (1 new uptrends today) and 54 components are on a downtrend (15 new downtrends today.) There were no New Highs and 3 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed .03% above the 20-Day average.
The Consumer Staples sector advancing issues (30) totaled 948,570 shares traded (31,619 average per stock) and declining issues (10) totaled 1,600,806 shares traded (160,081 average per stock.) 28 components are on an uptrend (4 new uptrends today) and 13 components are on a downtrend (1 new downtrends today.) There were 3 New Highs and no New Lows. The sector is on a Sell signal and closed above the daily pivot. The sector 5-Day average closed -.09% below the 20-Day average.
The Utilities sector advancing issues (27) totaled 510,595 shares traded (18,911 average per stock) and declining issues (5) totaled 75,776 shares traded (15,155 average per stock.) 27 components are on an uptrend (1 new uptrends today) and 5 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 above the daily pivot. The sector 5-Day average closed -.4% below the 20-Day average.
The Health Care sector advancing issues (20) totaled 1,325,950 shares traded (66,298 average per stock) and declining issues (32) totaled 1,425,974 shares traded (44,562 average per stock.) 31 components are on an uptrend (no new uptrends today) and 21 components are on a downtrend (8 new downtrends today.) There were 1 New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed 1.24% above the 20-Day average.
The Consumer Discretionary sector advancing issues (34) totaled 1,684,283 shares traded (49,538 average per stock) and declining issues (46) totaled 2,101,916 shares traded (45,694 average per stock.) 30 components are on an uptrend (5 new uptrends today) and 51 components are on a downtrend (4 new downtrends today.) There were no New Highs and no New Lows. The sector is on a Buy signal and closed below the daily pivot. The sector 5-Day average closed .1% above the 20-Day average.
Based on the SPX sector data, we are on a Buy for the SPX and the Russell 2000.
What We Learned from Thursday's Action:
Thursday was session 2 to close above the 5 DMA, session 4 to close below the 10 DMA, session 3 to close above the 20 DMA, and session 6 to close below the 50 DMA. This was also session 13 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 6.6 points below the 10 DMA.
The SPX 5 DMA is 1325.92, 10 DMA is 1335.64, 20 DMA is 1321.55, 50 DMA is 1340.23, 100 DMA is 1359.28, and 200 DMA is 1298.64.
On Thursday the SPX traded both below and above the opening range. 53% of the SPX closed up from the previous close; 72.6% closed higher than the open. During Thursday's session the SPX lost -2.48 points from open to close. The SPX intraday trading range was 16.12 points. The 5-Day average intraday trading range is 12.33 points, the 10-Day average is 14.52 points, and the 20-Day average is 16.11 points. The trading range is contracting. The 5-Day SPX gain is 0.27%, the 10-Day gain is 0.00%, and the 15-Day gain is 1.07%.
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 +2. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be sideways. Mel's 10 Day Oscillator is 46 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bullish for Friday's session.
Notice that the NYSE had almost 400 more stocks advancing today than declining. This, in a market where the leaders closed lower than yesterday’s close. When market breadth is outperforming the indices, the indices most often will eventually follow. This is a bullish setup.
This was certainly one very wild session; but these are the fun ones to trade. As pointed out through Twitter posts about 2:30 pm today, Market Internals were building and the tick was strongly suggesting that sentiment was nowhere near as negative and the indices appeared. We were in “buy the dip” mode and positioned long so the afternoon wildness was especially fun.
Checking our Market Internals data tonight, the internals are even more bullish tonight than we have seen recently. The risk sectors are showing greater strength than the rest of the SPX and that is a bullish sign. But history also suggests that late day reversals such as we witnessed today have a mixed record of follow-through. Weakness Friday will not be surprising.
SPX levels to watch include 1329; a close above is bullish and a close below is bearish. For the Russell 2000, keep an eye on the 770 level.
Continue to trade lively and take profits quickly.
Friday, June 29
Economics
8:30 am: Personal Income, consensus 0.2%, prior 0.2%
8:30 am: Personal Spending, consensus 0.0%, prior 0.3%
8:30 am: PCE Deflator M/m, consensus -0.1%, prior 0.0%
8:30 am: PCE Core M/m, consensus 0.2%, prior 0.1%
9:45 am: Chicago Purchasing Manager, consensus 53.7, prior 52.7
9:55 am: University of Michigan consumer sentiment, consensus 74.4, prior 74.1
11:00 am: Fed to purchase $4.25b-$5.25b notes in 6 to 8-year range
1:30 CNY Industrial Profits
1:30 AUD Private Sector Credit
2:30 CNY HSBC Manufacturing PMI
5:00 JPY Annualized Housing Starts
7:00 CHF KOF Swiss Leading Indicator
9:00 EUR Euro-Zone Consumer Price Index
12:30 CAD GDP
Earnings
Before:
KB Home (KBH) EPS -0.33c, revs 295M
GDP rose 1.9%, in line with expectations. Jobless claims were 386,000, slightly more than the expected 385,000. On Friday we will get personal income, Chicago PMI and consumer sentiment.
Thank you for reading. Think on it, trade on it, and be well.
-Mel