Market Breadth Remains Weak
Market Recap:
SPX big winners were Coventry Health Care Inc (CVH) 17.15%, First Solar Inc (FSLR) 5.64%, and Aetna Inc (AET) 5.39%. SPX big losers were Best Buy Co Inc (BBY) -11.11%, Lowe's Companies Inc (LOW) -6.15%, and Sears Holding Corp (SHLD) -3.65%.
SPX five day big winners are Coventry Health Care Inc (CVH) 30.15%, Monster Beverage Corporation (MNST) 13.42%, and Abercrombie & Fitch Co (ANF) 11.64%. SPX five day big losers are Staples Inc (SPLS) -15.94%, Agilent Technologies Inc (A) -9.16%, and Alpha Natural Resources (ANR) -8.71%.
New Ten Day Highs: ANF, ADBE, AET, URBN, AFL, APA, ADM, ADP, AVY, BAC, BDX, HRB, BSX, CA, CAM, CAT, CF, CHRW, CME, CB, CI, CINF, CVH, CSX, DELL, DO, ROST, EBAY, EMR, EXPD, FIS, FITB, FSLR, GME, GCI, GD, GIS, GNW, GT, HRS, HIG, HES, HPQ, HON, HUM, HBAN, IPG, JBL, JEC, K, LH, LUK, LXK, LMT, MAT, MKC, MDT, PCS, MOLX, MS, NWL, NEM, NOC, NYX, PDCO, JCP, PM, PCP, PRU, QLGC, DGX, RRC, RTN, RF, RHI, SJM, LUV, STI, TSO, BK, TWX, TJX, TRV, UTX, QLD, AEM, MBI, VLO, VAR, WPO, WU, AAPL, C, GOOG
New Ten Day Lows: A, AEE, ADSK, BBY, BMY, CNP, XEL, CMCSA, ED, SAI, DUK, EXPE, FII, FLIR, FTI, GILD, TEG, INTC, CLF, KFT, LLL, MJN, MDP, MCO, NWSA, NI, NU, POM, PNW, PEG, PSA, STR, RSG, SCG, SEE, SRE, SO, SUN, VZ, WMT, WM, WPI
Volume & Breadth Indicators
For the SPX Index there were 191 components advancing and 296 components declining. On the NYSE 3,128 issues were traded with 1,339 advancing issues and 1,677 retreating issues, a ratio of 1.25 to one declining. There were 144 new highs and 10 new lows. The five day moving average of New Highs is 142 while the five day moving average of New Lows is 14 and the ten day moving average of Net Advancing is 320. The Net Advancing data indicates a bullish trend.
Declining volume was higher at a ratio of 1.09 to one. The closing TRIN was 0.8 and the final tick was 304. The five day average of TRIN is .94 and the ten day average of TRIN is .86. The NYSE Composite Index lost -0.1% today while the SPX lost 0.03%.
For the NYSE, relative to the previous 30 session average, volume was -23.30% below 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, 14 sessions ended on a positive tick, 7 of last 10. For the SPX, the day's volume was 70.5% of the average daily volume for the last year. Volume was 91.6% of the last 10 day average and 97.7% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 17,000 and the average tick for the day was 11. There were 9 ticks greater than 600 and 7 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000.
Moving Average and Support/Resistance Indicators:
70.6% of the SPX are above their five day moving average, 75.6% are above their 10 day average, 81.8% are above their 20 day moving average, 79.2% are above their 50 day moving average, and 64.8% are above their 200 day moving average.
There were two significant moving average crossovers today as the NYSE Composite Index 50 DMA crossed above the 200 DMA (the Golden Cross) and Emerging Markets 20 DMA crossed above the 100 DMA. Our moving average Power Rating is 89 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Financials -- Outperformed the SPX by +27%.
- Technology -- Outperformed the SPX by +10%.
- Consumer Staples -- Outperformed the SPX by +1%.
- Utilities -- Outperformed the SPX by +11%.
- Health Care -- Outperformed the SPX by +21%.
Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -21%.
- Energy -- Underperformed the SPX by -23%.
- Industrials -- Underperformed the SPX by -21%.
- Consumer Discretionary -- Underperformed the SPX by -41%.
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 (12) totaled 413,357 shares traded (34,446 average per stock) and declining issues (16) totaled 257,887 shares traded (16,118 average per stock.) 27 components are on an uptrend (no new uptrends today) and 3 components are on a downtrend (2 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 1.76% above the 20-Day average.
The Energy sector advancing issues (20) totaled 878,062 shares traded (43,903 average per stock) and declining issues (24) totaled 610,868 shares traded (25,453 average per stock.) 33 components are on an uptrend (3 new uptrends today) and 12 components are on a downtrend (3 new downtrends today.) There were 3 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 2.44% above the 20-Day average.
The Financials sector advancing issues (30) totaled 2,495,060 shares traded (83,169 average per stock) and declining issues (48) totaled 1,292,815 shares traded (26,934 average per stock.) 64 components are on an uptrend (no new uptrends today) and 17 components are on a downtrend (3 new downtrends today.) There were 4 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 1.79% above the 20-Day average.
The Industrials sector advancing issues (20) totaled 484,192 shares traded (24,210 average per stock) and declining issues (38) totaled 861,351 shares traded (22,667 average per stock.) 54 components are on an uptrend (3 new uptrends today) and 6 components are on a downtrend (3 new downtrends today.) There were 3 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 2.04% above the 20-Day average.
The four 'risk sectors' totaled 82 advancing issues and 126 declining issues today with 6 new uptrends and 11 new downtrends. 82.4% of Risk Sector components are uptrending.
The Technology sector advancing issues (21) totaled 1,193,815 shares traded (56,848 average per stock) and declining issues (56) totaled 4,091,344 shares traded (73,060 average per stock.) 62 components are on an uptrend (2 new uptrends today) and 17 components are on a downtrend (9 new downtrends today.) There were 6 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 2.87% above the 20-Day average.
The Consumer Staples sector advancing issues (17) totaled 526,345 shares traded (30,961 average per stock) and declining issues (24) totaled 683,518 shares traded (28,480 average per stock.) 28 components are on an uptrend (4 new uptrends today) and 13 components are on a downtrend (4 new downtrends today.) There were 3 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 .85% above the 20-Day average.
The Utilities sector advancing issues (18) totaled 333,835 shares traded (18,546 average per stock) and declining issues (12) totaled 188,839 shares traded (15,737 average per stock.) 4 components are on an uptrend (2 new uptrends today) and 27 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 -.54% below the 20-Day average.
The Health Care sector advancing issues (30) totaled 1,469,835 shares traded (48,995 average per stock) and declining issues (22) totaled 560,415 shares traded (25,473 average per stock.) 33 components are on an uptrend (4 new uptrends today) and 19 components are on a downtrend (3 new downtrends today.) There were 3 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 .71% above the 20-Day average.
The Consumer Discretionary sector advancing issues (23) totaled 829,609 shares traded (36,070 average per stock) and declining issues (56) totaled 2,511,042 shares traded (44,840 average per stock.) 65 components are on an uptrend (no new uptrends today) and 16 components are on a downtrend (3 new downtrends today.) There were 4 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 1.91% 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 Monday's Action:
Monday was session 12 to close above the 5 DMA, session 18 to close above the 10 DMA, session 18 to close above the 20 DMA, and session 27 to close above the 50 DMA. This was also session 16 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 10.37 points above the 10 DMA.
The SPX 5 DMA is 1412.25, 10 DMA is 1407.76, 20 DMA is 1389.5, 50 DMA is 1363.08, 100 DMA is 1359.76, and 200 DMA is 1330.99.
On Monday the SPX traded above the opening range but did not trade below the opening range. 35.6% of the SPX closed up from the previous close; 48.8% closed higher than the open. During Monday's session the SPX gained .28 points from open to close. The SPX intraday trading range was 5.94 points. The 5-Day average intraday trading range is 7.58 points, the 10-Day average is 7.78 points, and the 20-Day average is 10.52 points. The trading range is contracting. The 5-Day SPX gain is 1.00%, the 10-Day gain is 1.71%, and the 15-Day gain is 2.37%.
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 Tuesday is -3. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be sideways. Mel's 5-Day Oscillator is 76 and Mel's 10-Day Oscillator is 68 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bearish for Tuesday's session.
There isn't much that can be said after a session with a -0.03 SPX net loss, especially after eleven consecutive sessions without a 1% net change and a total change during that timeframe of 27 points, averaging less than 2.5 points per day. Eight of the last nine sessions have seen the SPX move three points or less. It is truly the Dog Days of August as the market moves sideways but generally creeping upward on very low volume without institutional involvement.
Technicals simply are not changed by such action. Market breadth remains weak but this market is carried by a handful of large ultra-cap companies. Looking at Tuesday, it becomes difficult to imagine what could make tomorrow different than today; a redux looks probable.
Tuesday, August 21
Economics
No major U.S. economic reports
11:00 Fed selling $7b-8b in 2 to 3-year range
11:30 Treasury selling 4-week bills, $25b in 52-week bills
01:30 AUD RBA Minutes
03:00 NZD Credit Card Spending
04:30 JPY All Industry Activity Index
08:30 GBP Public Sector Net Borrowing
9:30 Spain to sell 12-month,18-month bills
Earnings
Before:
Barnes & Nobles (BKS) EPS -$1.00
Best Buy (BBY) EPS 31c
After:
Dell (DELL) EPS 45c
Williams-Sonoma (WSM) EPS 41c
There were no important economic releases on Monday and there will be none on Tuesday.
Thank you for reading. Think on it, trade on it, and be well.
-Mel