Market Continues Bullish Characteristics
Market Recap:
Although the pro-bailout New Democracy party won in Greece and it appears that a government will be formed (New Democracy leader Antonis Samaras will now have three days to form a government), U.S. stock futures were pointing to a soft open on Wall Street.
The week began with a small gap lower but quickly put the low of the day on the chart in the opening moments. The SPX spent the next ninety minutes grinding higher before a pullback around 11:00 am. But the SPX once again began grinding upward putting highs on the chart at 2:25 pm before giving back about four points prior to the close.
Our Market Leaders Board is mixed this evening with the Financials and the Dow the weakest while Technology and the Sox were strongest.
SPX big winners were Tenet Healthcare Corp (THC) 4.79%, Ebay Inc (EBAY) 4.47%, and Saint Jude Medical Inc (STJ) 4.19%. SPX big losers were Alpha Natural Resources (ANR) -4.41%, Metropcs Communications Inc (PCS) -3.55%, and Fossil Inc (FOSL) -3.41%.
SPX five day big winners are First Solar Inc (FSLR) 17.36%, Cabot Oil & Gas Corp (COG) 14.95%, and Edwards Life Sciences (EW) 14.39%. SPX five day big losers are Devry Inc (DV) -6.01%, Nike Inc Cl B (NKE) -5.64%, and Sara Lee Corp (SLE) -4.31%.
New Ten Day Highs: ABT, ADBE, AKAM, AGN, AEE, AMT, ABC, AMGN, APH, AIV, AMAT, ADSK, ADP, BAC, BCR, BBT, BBBY, BIIB, BMC, BRCM, CA, COG, CPB, COF, CAH, CFN, CCL, CNP, CTL, CHRW, CME, XEL, CTAS, CSCO, CTXS, CMS, KO, CMCSA, ED, STZ, COST, CSX, DVA, DF, XRAY, DTV, D, DOW, DUK, DD, ROST, EBAY, EMC, EQT, EQR, EXPE, FII, FDX, FIS, FHN, FE, FISV, FLS, FTR, GPS, GD, GIS, GILD, GR, GT, HRS, HCP, HCN, HNZ, HSY, HRL, DHI, HSP, HST, HBAN, TEG, INTC, IBM, INTU, ISRG, IRM, JNJ, JPM, K, KEY, KIM, KLAC, KFT, LLL, LH, LIFE, LLTC, LMT, L, LO, LOW, MTB, MAS, MA, MJN, MKC, MCK, MWV, MCHP, MOLX, TAP, MWW, MS, NWSA, GAS, NSC, NU, NOC, ORLY, PDCO, PAYX, PEP, PM, PNW, PBI, PCL, PPL, PCP, PGN, PEG, PSA, PHM, PWR, DGX, RTN, RHT, RF, RAI, RHI, SNDK, SRE, SIAL, SLM, SNA, SO, SRCL, SYK, STI, SYY, TROW, TE, THC, TDC, BK, TWC, TWX, TJX, TMK, TSS, TRV, UNP, UPS, QLD, JASO, KBH, MBI, USB, VAR, VTR, VRSN, VMC, WAG, WPO, WAT, WLP, WFC, WY, AMZN, ICE
New Ten Day Lows: AVP, FLIR, ITT, MMC, PCS, COL, SWY, SLE, TIF, VXX, SH
Volume & Breadth Indicators
For the SPX Index there were 298 components advancing and 197 components declining. On the NYSE 3,137 issues were traded with 1,779 advancing issues and 1,263 retreating issues, a ratio of 1.41 to one advancing. There were 94 new highs and 42 new lows. The five day moving average of New Highs is 63 while the five day moving average of New Lows is 49 and the ten day moving average of Net Advancing is 650. The Net Advancing data indicates a bullish trend.
Declining volume was higher at a ratio of 1.01 to one. The closing TRIN was 1.49 and the final tick was 571. The five day average of TRIN is .88 and the ten day average of TRIN is 1.06. The NYSE Composite Index lost -0.03% today while the SPX gained 0.14%.
For the NYSE, relative to the previous 30 session average, volume was -18.75% below the average. Of the last 15 sessions 4 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, 7 of last 10. For the SPX, the day's volume was 106.2% of the average daily volume for the last year. Volume was 116.1% of the last 10 day average and 100.3% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 81,000 and the average tick for the day was 52. There were 60 ticks greater than 600 and 39 ticks more extreme than -600. There were 1 ticks greater than 1000 and 3 ticks more extreme than -1000. The tick action suggests institutional accumulation.
Moving Average and Support/Resistance Indicators:
78.6% of the SPX are above their five day moving average, 72.8% are above their 10 day average, 64.4% are above their 20 day moving average, 36.8% are above their 50 day moving average, and 49.8% are above their 200 day moving average.
There was one significant moving average crossover today as Germany had the 5 DMA cross above the 20 DMA. Our moving average Power Rating is 49 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Basic Materials -- Outperformed the SPX by +38%.
- Industrials -- Outperformed the SPX by +10%.
- Technology -- Outperformed the SPX by +60%.
- Consumer Staples -- Outperformed the SPX by +9%.
- Utilities -- Outperformed the SPX by +13%.
- Health Care -- Outperformed the SPX by +53%.
- Consumer Discretionary -- Outperformed the SPX by +57%.
Sectors weaker than the SPX for Monday:
- Energy -- Underperformed the SPX by -105%.
- Financials -- Underperformed the SPX by -64%.
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 317,907 shares traded (17,662 average per stock) and declining issues (12) totaled 477,423 shares traded (39,785 average per stock.) 21 components are on an uptrend (3 new uptrends today) and 9 components are on a downtrend (no 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 1.19% above the 20-Day average.
The Energy sector advancing issues (7) totaled 279,881 shares traded (39,983 average per stock) and declining issues (36) totaled 1,967,682 shares traded (54,658 average per stock.) 17 components are on an uptrend (4 new uptrends today) and 27 components are on a downtrend (6 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 .43% above the 20-Day average.
The Financials sector advancing issues (33) totaled 1,303,939 shares traded (39,513 average per stock) and declining issues (46) totaled 3,861,796 shares traded (83,952 average per stock.) 60 components are on an uptrend (3 new uptrends today) and 21 components are on a downtrend (10 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 1.38% above the 20-Day average.
The Industrials sector advancing issues (36) totaled 683,238 shares traded (18,979 average per stock) and declining issues (25) totaled 870,822 shares traded (34,833 average per stock.) 36 components are on an uptrend (2 new uptrends today) and 25 components are on a downtrend (no new downtrends today.) There were 2 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 .56% above the 20-Day average.
The four 'risk sectors' totaled 94 advancing issues and 119 declining issues today with 12 new uptrends and 16 new downtrends. 62.% of Risk Sector components are uptrending.
The Technology sector advancing issues (54) totaled 3,477,545 shares traded (64,399 average per stock) and declining issues (24) totaled 2,861,621 shares traded (119,234 average per stock.) 62 components are on an uptrend (5 new uptrends today) and 16 components are on a downtrend (1 new downtrends today.) There were 4 New Highs and 2 New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed .88% above the 20-Day average.
The Consumer Staples sector advancing issues (33) totaled 812,205 shares traded (24,612 average per stock) and declining issues (7) totaled 454,353 shares traded (64,908 average per stock.) 33 components are on an uptrend (4 new uptrends today) and 8 components are on a downtrend (1 new downtrends today.) There were 5 New Highs and 1 New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed 1.18% above the 20-Day average.
The Utilities sector advancing issues (23) totaled 494,782 shares traded (21,512 average per stock) and declining issues (8) totaled 184,871 shares traded (23,109 average per stock.) 30 components are on an uptrend (no new uptrends today) and 2 components are on a downtrend (no new downtrends today.) There were 14 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 1.82% above the 20-Day average.
The Health Care sector advancing issues (41) totaled 1,418,994 shares traded (34,610 average per stock) and declining issues (11) totaled 534,804 shares traded (48,619 average per stock.) 41 components are on an uptrend (2 new uptrends today) and 11 components are on a downtrend (2 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 1.27% above the 20-Day average.
The Consumer Discretionary sector advancing issues (53) totaled 1,987,352 shares traded (37,497 average per stock) and declining issues (28) totaled 1,134,202 shares traded (40,507 average per stock.) 50 components are on an uptrend (10 new uptrends today) and 31 components are on a downtrend (3 new downtrends today.) There were 5 New Highs and 1 New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed .49% 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 3 to close above the 5 DMA, session 9 to close above the 10 DMA, session 5 to close above the 20 DMA, and session 31 to close below the 50 DMA. This was also session 5 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 24.18 points above the 10 DMA.
The SPX 5 DMA is 1331.16, 10 DMA is 1320.6, 20 DMA is 1315.51, 50 DMA is 1347.43, 100 DMA is 1358.74, and 200 DMA is 1292.47.
On Monday the SPX traded above the opening range but did not trade below the opening range. 57.4% of the SPX closed up from the previous close; 71% closed higher than the open. During Monday's session the SPX gained 2.36 points from open to close. The SPX intraday trading range was 13.01 points. The 5-Day average intraday trading range is 15.52 points, the 10-Day average is 16.87 points, and the 20-Day average is 17.91 points. The trading range is contracting. The session was an NR7 day (Narrowest Range last 7 days). The 5-Day SPX gain is 2.74%, the 10-Day gain is 5.21%, and the 15-Day gain is 2.05%.
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 +1. 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 53 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bullish for Tuesday's session.
The 50-day average was the area of the struggle today as the SPX tried to break above and then backed off to gather strength and possibly try again tomorrow. Often, the SPX will simply gap above the overhead resistance area and not look back. We’ll see what happens.
Today was yet another day when buying the early morning dip was a quick and easy successful trade. Remember that early morning lows followed by late afternoon highs is a strong characteristic of a bullish market.
Our Market Internals data continues to suggest long-side is the safest way to trade. But the overbought conditions certainly make something of a pullback seem very likely and even the Market Internals data is suggesting that we could see weakness ahead. Only 44% of the risk sector stocks advanced today, thanks mostly to the Energy sector but Financials were also weak. Yet any pullback is likely to provide a buying opportunity.
Tuesday, June 19
Economics
08:30 Housing Starts – consensus 721K, prior 717K
08:30 Building Permits – consensus 729K, prior 723K
11:00 Fed purchasing $1.5b-2b in 6 to 19-year range
11:30 Treasury selling 4-week bills
01:30 AUD Reserve Bank Board June Minutes
05:00 JPY Leading Index
08:30 GBP CPI
08:30 GBP Retail Price Index
09:00 EUR German ZEW Survey
22:45 NZD Current Account Balance
23:50 JPY BOJ to Publish Meeting Minutes
12:30 UK to sell GBP4.75b 5-year bonds
Earnings
Before:
Barnes and Noble (BKS) EPS -95c, revs $1.48B
Carnival (CCL) EPS 7c, revs $3.57B
Discover Financial (DFS) EPS 97c, revs $1.85B
Fedex (FDX) EPS $1.92, revs $11.13B
Jefferies (JEF) EPS 31c, revs $715.05M
After:
Adobe (ADBE) EPS 59c, revs $1.11B
Jabil Circuit (JBL) EPS 65c, revs $4.29B
The home price index was 29, in line with expectations. On Tuesday we will get housing starts.
Thank you for reading. Think on it, trade on it, and be well.
-Mel