Market Sells on Mideast Unrest and Oil Fears
Market Recap:
It was all about oil this morning as the violence in Libya took center stage. Global markets were lower over the holiday lengthened weekend and the futures in the U.S. suggested a more than 1% drop at the open. On the economic calendar for today were the Case-Shiller numbers on home prices and the update on Consumer Confidence.
The holiday shortened week began with a nasty gap lower. An early low was painted just six minutes into the session and dip buyers quickly mounted a charge. Within forty minutes the SPX had recovered more than ten points, certainly bringing to mind all of the disappointments that bears have experienced for months. But this day was different. The bears recovered control and the index began to sell off. After ninety minutes the lows of the day were once again at hand. And then the bears showed some muscle and pushed us into a rare low after the first hour of the day. From 1:30 pm through 3:00 pm was consolidation near the lows before the final hour of the session saw the index break through support. The SPX 1315 area was tested at least four times today before eventually going lower but coming back to close there.
The late session news that Qaddafi ordered the destruction of oil pipelines certainly could drive the price of oil upward even further and thus bring inflation fears to the forefront and cause the SPX to sell even further.
Checking our Market Leaders board after today's sell-off we find total agreement amongst the leaders; everyone got whacked. The big losers were the SOX, China, Emerging Markets and the Financials (XLF). This truly appears to have been a widespread sell-off affecting all sectors.
SPX big winners were Vf Corp (VFC) 7.16%, Chesapeake Energy Corp (CHK) 4.95%, and Humana Inc (HUM) 3.93%. SPX big losers were Expeditors International of Washington Inc (EXPD) -10.86%, NVIDIA Corporation (NVDA) -9.77%, and Carnival Corp (CCL) -8.37%.
SPX five day big winners are Family Dollar Stores Inc (FDO) 16.47%, Vf Corp (VFC) 11.04%, and Williams Companies Inc (WMB) 10.63%. SPX five day big losers are Netapp Inc (NTAP) -13.05%, CF Industries Holdings Inc (CF) -13.03%, and JDS Uniphase Corp (JDSU) -12.05%.
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report this evening, as might be expected after a day such as this, we have several changes. Energy, Consumer Staples, and Health Care all shifted from Buy to Neutral, while Financials, Industrials and Consumer Staples all moved from Neutral to Sell.
Looking ahead, we suspect we see at least an attempt to bounce on Wednesday. A move higher tomorrow followed by more work to the downside seems to make sense here. The rising costs of oil and energy seem likely to shake the confidence in the bullishness of the market.
Volume & Breadth Indicators
For the SPX Index there were 35 components advancing and 449 components declining. On the NYSE 3,162 issues were traded with 356 advancing issues and 2,751 retreating issues, a ratio of 7.73 to one declining. There were 133 new highs and 14 new lows. The five day moving average of New Highs is 272 while the five day moving average of New Lows is 11 and the ten day moving average of Net Advancing is 175.
Declining volume was higher at a ratio of 10.52 to one. The closing TRIN was 1.36 and the final tick was -700. The five day average of TRIN is 1.08 and the ten day average of TRIN is 1.06. The NYSE Composite Index lost -2.14% today while the SPX lost -2.1%.
For the NYSE, relative to the previous 30 session average, volume was 27.78% above the average. Of the last 15 sessions 5 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 23 sessions ended on a positive tick, 8 of last 10. For the SPX, the day's volume was 125.7% of the average daily volume for the last year. Volume was 136.2% of the last 10 day average and 143.2% of the previous day’s volume.
There can be little doubt; breadth today was strongly bearish. Yet the ten day Net Advancing remains in positive territory quite close to 200. We’ll need to see another day close negatively before we get too excited on the bearish side.
Total tick for the day was -377,000 and the average tick for the day was -244. There were 13 ticks greater than 600 and 239 ticks more extreme than -600. There were no ticks greater than 1000 and 34 ticks more extreme than -1000. The tick action suggests institutional distribution.
Volume was heavy today; the heaviest of the year. Intraday, the largest spike of volume came with the break of the lows just after 1:00 pm. Looking at our Nightly Breadth Indicators is a bit interesting as several of the indicators are up tonight but overall, the most responsive indicators are showing the impact of today's selling. Still, we will need to see follow-through on the selling. Bears have had their face rubbed in the dirt too often lately and the bulls are well trained to buy the dip. Until that cycle is broken, painfully for the bulls, it must be respected.
Moving Average and Support/Resistance Indicators:
16.2% of the SPX are above their five day moving average, 29.4% are above their 10 day average, 54.8% are above their 20 day moving average, 71.4% are above their 50 day moving average, and 88.2% are above their 200 day moving average.
There were no significant moving average crossovers today. But it is interesting to notice how quickly the short term moving averages turned from green to red.
Sectors on the Move:
Sectors stronger than the SPX for Tuesday:
- Energy -- Outperformed the SPX by +181%.
- Consumer Staples -- Outperformed the SPX by +135%.
- Utilities -- Outperformed the SPX by +162%.
- Health Care -- Outperformed the SPX by +52%.
Sectors weaker than the SPX for Tuesday:
- Basic Materials -- Underperformed the SPX by -128%.
- Financials -- Underperformed the SPX by -95%.
- Industrials -- Underperformed the SPX by -88%.
- Technology -- Underperformed the SPX by -53%.
- Consumer Discretionary -- Underperformed the SPX by -37%.
In Late Trading:
165 SPX components moved upward and 223 components downward during the after hours with 138 million shares traded.
Wednesday, February 23
Economics
07:00 MBA Mortgage Purchase Index
10:00 Existing Home Sales
Bank of England Minutes
Great Britain Loans for House Purchase
POMO Schedule
Treasury Coupon Purchase: 8/15/2028-2/15/20241: $1.5-2.5 bln
Earnings
Before: AFAM, AMT, CLH, DTV, FLR, GRMN, WOLF, KKR, LAMR, LOW, LL, PKD, SKS, THI, TJX, TOL, VNO, ZLC
After: AEL, ARII, WTF, AXTI, BITA, CBOU, DRYS, CXO, CLR, EXM, FLS, GMR, GSS, GVA, HNSN, HLX, IPI, PCLN, JACK, UNTD, PRTS, WBMD, WES, AUY
Before the open, Home Depot rival Lowe's (LOW), luxury home builder Toll Brothers (TOL) and department store Saks (SKS) are scheduled to report. Next the spotlight turns to real estate, as the National Association of Realtors releases existing home sales numbers for January at 10 am. Existing home sales are expected to slip slightly, to 5.23 million units on an annualized basis.
Have a great Wednesday!
-Mel