Market Gets Greeced, Again
Market Recap:
U.S. stock index futures were sharply lower Monday, as Greece's failure to form a coalition government increased fears that the nation would leave the euro zone. In Europe, Greece's socialist leader Venizelos said efforts to form a coalition government have failed. And with new elections in June becoming increasingly likely, traders believe that the debt-ridden nation may eventually be forced out of the euro zone.
Monday began with a significant gap lower before traders tried to take things higher, surrendered, and put the low of the day on the chart during the opening hour. The next ninety minutes saw the SPX rally off the lows before trading sideways and then repeating the recent pattern of selling into the close.
Our Market Leaders Board shows all of our leaders getting whacked today with the Financials getting the worst of it and Technology and the Dow getting off the lightest.
SPX big winners were Bmc Software Inc (BMC) 8.37%, Chesapeake Energy Corp (CHK) 4.57%, and Avon Products Inc (AVP) 3.63%. SPX big losers were Akamai Technologies Inc (AKAM) -4.91%, Pitney Bowes Inc (PBI) -4.67%, and Metropcs Communications Inc (PCS) -4.46%.
SPX five day big winners are Dean Foods Company (DF) 17.69%, Bmc Software Inc (BMC) 9.64%, and Cognizant Tech Sol Cp A (CTSH) 6.64%. SPX five day big losers are Fossil Inc (FOSL) -38.59%, Pitney Bowes Inc (PBI) -15.19%, and Windstream Corp (WIN) -15.09%.
New Ten Day Highs: BIIB, BMC, CPB, XEL, EIX, GILD, HNZ, HSY, NSM, PEP, VXX, SH, DYN
New Ten Day Lows: MMM, AET, URBN, AFL, A, APD, AKAM, AA, ATI, MO, AXP, AMP, APH, APC, APA, AMAT, AZO, AVB, AVY, BAC, BAX, BMS, BBY, BA, BMY, BF/B, CA, COF, CFN, CAT, CBG, CBS, CF, CVX, CI, CINF, CTAS, CSCO, COH, CMCSA, CMA, CSC, ED, STZ, SAI, GLW, CVH, CSX, DVA, DE, DELL, DNR, DV, DO, RRD, DOV, DOW, DD, EMN, ETN, EP, EMR, ESV, EL, EXPD, XOM, FSLR, FLIR, FLR, F, BEN, FCX, GME, GCI, GPS, GD, GE, GPC, GR, GWW, HAL, HOG, HRS, HIG, HAS, HES, HPQ, HD, HON, HSP, HST, HCBK, HUM, HBAN, IBM, IFF, IP, INTU, ITT, JBL, JDSU, JNJ, JPM, JNPR, CLF, KEY, KSS, KFT, KR, LLL, LH, LM, LEG, LUK, LXK, LIFE, LLY, LLTC, LMT, L, LOW, M, MRO, MMC, MA, MJN, MCD, MHP, WFR, MRK, MCHP, MOLX, MON, MCO, MS, MUR, NBR, NDAQ, NOV, NBL, JWN, NSC, NTRS, NOC, NUE, ORLY, OXY, ODP, ORCL, OI, BTU, PKI, PM, PXD, PBI, PCL, PNC, PPG, PX, PCP, PFG, PLD, PRU, PSA, DGX, RTN, RHT, RSG, ROK, COL, RDC, R, SWY, SLE, SLB, SHLD, SNA, LUV, SWK, HOT, STT, SRCL, SYK, SYMC, SYY, TGT, TXT, BK, TMO, TIF, TWC, TIE, TJX, TMK, TSS, UNP, UPS, UTX, DRYS, QLD, AEM, VTR, VRSN, VFC, VMC, WAG, WPO, WM, WFC, WU, AAPL, C, GS, ICE
Volume & Breadth Indicators
For the SPX Index there were 63 components advancing and 404 components declining. On the NYSE 3,165 issues were traded with 481 advancing issues and 2,607 retreating issues, a ratio of 5.42 to one declining. There were 33 new highs and 97 new lows. The five day moving average of New Highs is 57 while the five day moving average of New Lows is 64 and the ten day moving average of Net Advancing is -569. The Net Advancing data indicates a bearish trend.
Declining volume was higher at a ratio of 7.35 to one. The closing TRIN was 1.26 and the final tick was -370. The five day average of TRIN is 1.36 and the ten day average of TRIN is 1.39. The NYSE Composite Index lost -1.41% today while the SPX lost -1.12%.
For the NYSE, relative to the previous 30 session average, volume was 0.12% above the average. Of the last 15 sessions 7 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, 4 of last 10. For the SPX, the day's volume was 85.4% of the average daily volume for the last year. Volume was 91.1% of the last 10 day average and 91.5% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was -213,000 and the average tick for the day was -137. There were 19 ticks greater than 600 and 135 ticks more extreme than -600. There were no ticks greater than 1000 and 10 ticks more extreme than -1000. The tick action suggests institutional distribution.
Moving Average and Support/Resistance Indicators:
15.2% of the SPX are above their five day moving average, 12.2% are above their 10 day average, 19.8% are above their 20 day moving average, 25.4% are above their 50 day moving average, and 58.6% are above their 200 day moving average.
There were no significant moving average crossovers today. Our moving average Power Rating is 33 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Technology -- Outperformed the SPX by +27%.
- Consumer Staples -- Outperformed the SPX by +64%.
- Utilities -- Outperformed the SPX by +100%.
- Health Care -- Outperformed the SPX by +79%.
Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -29%.
- Energy -- Underperformed the SPX by -57%.
- Financials -- Underperformed the SPX by -94%.
- Industrials -- Underperformed the SPX by -6%.
- Consumer Discretionary -- Underperformed the SPX by -39%.
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 (1) totaled 7,041 shares traded (7,041 average per stock) and declining issues (29) totaled 681,727 shares traded (23,508 average per stock.) 3 components are on an uptrend (no new uptrends today) and 27 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 -3.07% below the 20-Day average.
The Energy sector advancing issues (2) totaled 778,559 shares traded (389,280 average per stock) and declining issues (42) totaled 1,247,954 shares traded (29,713 average per stock.) 6 components are on an uptrend (no new uptrends today) and 38 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 -2.84% below the 20-Day average.
The Financials sector advancing issues (4) totaled 99,521 shares traded (24,880 average per stock) and declining issues (76) totaled 4,854,987 shares traded (63,881 average per stock.) 18 components are on an uptrend (no new uptrends today) and 63 components are on a downtrend (12 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 -2.32% below the 20-Day average.
The Industrials sector advancing issues (6) totaled 141,452 shares traded (23,575 average per stock) and declining issues (55) totaled 1,125,702 shares traded (20,467 average per stock.) 8 components are on an uptrend (2 new uptrends today) and 53 components are on a downtrend (8 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 -2.37% below the 20-Day average.
The four 'risk sectors' totaled 13 advancing issues and 202 declining issues today with 2 new uptrends and 23 new downtrends. 16.2% of Risk Sector components are uptrending.
The Technology sector advancing issues (15) totaled 1,629,304 shares traded (108,620 average per stock) and declining issues (62) totaled 2,874,137 shares traded (46,357 average per stock.) 11 components are on an uptrend (2 new uptrends today) and 68 components are on a downtrend (2 new downtrends today.) There were no New Highs and 4 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -2.38% below the 20-Day average.
The Consumer Staples sector advancing issues (16) totaled 485,091 shares traded (30,318 average per stock) and declining issues (24) totaled 550,625 shares traded (22,943 average per stock.) 22 components are on an uptrend (3 new uptrends today) and 19 components are on a downtrend (1 new downtrends today.) There were 2 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 -.25% below the 20-Day average.
The Utilities sector advancing issues (11) totaled 157,364 shares traded (14,306 average per stock) and declining issues (21) totaled 313,851 shares traded (14,945 average per stock.) 26 components are on an uptrend (no new uptrends today) and 6 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 .95% above the 20-Day average.
The Health Care sector advancing issues (12) totaled 391,815 shares traded (32,651 average per stock) and declining issues (39) totaled 935,923 shares traded (23,998 average per stock.) 16 components are on an uptrend (no new uptrends today) and 35 components are on a downtrend (5 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 -.73% below the 20-Day average.
The Consumer Discretionary sector advancing issues (13) totaled 517,566 shares traded (39,813 average per stock) and declining issues (68) totaled 2,012,384 shares traded (29,594 average per stock.) 18 components are on an uptrend (no new uptrends today) and 63 components are on a downtrend (8 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 -1.7% 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 Monday's Action:
Monday was session 8 to close below the 5 DMA, session 7 to close below the 10 DMA, session 7 to close below the 20 DMA, and session 7 to close below the 50 DMA. This was also session 5 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 32.3 points below the 10 DMA.
The SPX 5 DMA is 1353.61, 10 DMA is 1370.65, 20 DMA is 1378.44, 50 DMA is 1385.09, 100 DMA is 1350.99, and 200 DMA is 1277.41.
On Monday the SPX traded above the opening range but did not trade below the opening range. 14.4% of the SPX closed up from the previous close; 46.2% closed higher than the open. During Monday's session the SPX lost -13.58 points from open to close. The SPX intraday trading range was 10.71 points. The 5-Day average intraday trading range is 15.12 points, the 10-Day average is 14.53 points, and the 20-Day average is 12.28 points. The trading range is expanding. The 5-Day SPX gain is -2.28%, the 10-Day gain is -4.26%, and the 15-Day gain is -2.09%.
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 +9. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be lower. 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 Tuesday's session.
There are a ton of economic indicators Tuesday morning -- CPI, Empire State Manufacturing, Retail Sales, Business Inventories, and the NAHB Housing Index. So it may well be a gap down open, or at the very least, volatile.
With eleven consecutive up days in a row, the Dollar index is now tied for its longest winning streak ever. The Technology sector has been down eight days in a row. The last time this happened was in October, 2008. Technology bounced 12.14% on day nine.
Our own Oscillator is at two. The last time this happened was during the October 2008 market plunge. If we are in a similar waterfall decline, all bets are off. But if this is a run-of-the-mill pullback, we are overdue for a tradable bounce.
Looking at our Market Internals, nothing yet hints of a bounce. Honestly, the only thing suggesting a bounce is the oversold conditions. And nothing is more bearish than an oversold market that just keeps selling. Will this keep selling Tuesday? Our hunch is that it will not but we are hard pressed to point out anything except the oversold conditions; the trend is clearly downward.
SPX levels to watch include 1367; a close above is bullish and a close below is bearish. For the Russell 2000, keep an eye on the 795 level.
Trade idea: Wednesday's close should be higher than Tuesday's open.
Tuesday, May 15
Economics
08:30 Consumer Price Index – consensus 0.0%
08:30 CPI Ex Food & Energy – consensus 0.2%
08:30 Empire Manufacturing – consensus 9
08:30 Advance Retail Sales – consensus 0.2%
08:30 Retail Sales Less Autos – consensus 0.2%
08:30 Retail Sales Ex Auto & Gas – consensus 0.3%
09:00 Total Net TIC Flows
09:00 Net Long-Term TIC Flows – consensus $40.0B
10:00 Business Inventories – consensus 0.4%
10:00 NAHB Housing Market Index – consensus 26
11:00 Fed selling $8b-$8.75b notes in 2 year range
11:30 Treasury selling 4-week bills
01:30 AUD Reserve Bank Board May Minutes
05:00 JPY Consumer Confidence
06:00 EUR German GDP
09:00 EUR Eurozone GDP
09:00 EUR German ZEW Economic Sentiment Survey
23:50 JPY Machine Orders
11:00 EFSF to sell EU2b in 5-year notes
Earnings
Before:
Dick’s Sporting Goods (DKS) EPS 38c, revs $1.23B
Home Depot (HD) EPS 64c, revs $17.87B
Saks (SKS) EPS 18c, revs $767.82M
After:
JCPenney (JCP) EPS -6c, revs $3.51B
Pan Am Silver (PAAS) EPS 45c, revs $228.65M
There were no important economic releases on Monday. On Tuesday we will get the CPI, retail sales, Empire State mfg. survey and the housing market index.
Thank you for reading. Think on it, trade on it, and be well.
-Mel