Markets Close Higher for the Week on the Back of Monday's Surge
by Jerome "Mel" Hickerson
Overnight futures drifted slightly higher ahead of the jobs report but took a nasty 11 point plunge when the data was released as the jobs missed expectations.
The session began with a ten point downward gap, continued downward for a few minutes then bounced sharply from the 1115 area. But the bounce was short lived and reached a top at 10am that was the intraday high. The next hour was heavy selling putting the low of the day on the chart at 11:05. The SPX traded within a tight five point range for the next three and a half hours before exploding 12 points higher in the last 90 minutes to finish the week near the intraday highs and just seven points under the weekly high.
In some ways, this past week stands out. The weekly range was under 2%, fairly unusual. The last such week was April 5th and this was only the fifth such week this year. Volume was also extremely light; the last non-holiday volume this light was more than two years ago. To put the volume in perspective, the same week last hear had more than double the volume. So the light volume is more than just seasonal.
It is also interesting to note that one third of the weekly gain was the weekend Monday gap. This large of a percentage (comparing Friday’s close to the previous Friday’s close and comparing Friday’s close to Monday’s open) last occurred the week of May 10th and was followed by a next week of 50 points down.
Looking ahead here is difficult; many possible outcomes are visible. The weekly chart shows five successive weeks of higher highs. But the irony is that seven weeks ago, just before that weekly pattern began, the high was 1131. So while we appear to be stair-stepping higher, we have yet to put a new high on the chart. So the weekly chart can be read two ways, at least for now.
The same can also be said of the daily chart. One view is that Friday’s dragon fly doji at the top of a trend higher is a bearish daily candle. We have seen such a candle at market peaks over the last few months.
An alternate view of the same daily chart shows that Friday’s bounce was a perfect touch of an upward trend line suggesting yet higher to come.
So you make the call. The extremely low volume and the small weekly range are the tiebreaker for me and I’ll opt for the bearish viewpoint, at least for now.
Monday Gap Statistics
31 weeks into the year, Monday has gapped up 22 times and down nine times. The average gap has been +1.2 points. Throwing out the largest and smallest gaps each way, the average Monday gap is one point upward.
Looking at the Nine Sectors Report shows three more negative moves, still suggesting that we see a downturn. The only sector still showing a Buy signal is the Health Care sector.
But I must confess to some concern. The Nine Sectors Report has been quite accurate in signaling short term market trend changes but it has done so with quick turns. While this current market still appears to be forming a topping pattern, the “turn” here has been quite slow. Our current Sell signal has been on for nine days and the market has moved upward six points during that time. This does not match well with previous signals.
Our trade systems fair well Friday morning but suffered Friday afternoon. Honestly, it was not a great week as we struggled on Monday and Friday and the middle of the week sessions were very tight range and non-volatile trading sessions. We made money for the week but it was a lot of work and it was like trading with our feet nailed to the floor. Every system struggles and we’ll be back at it next week looking for better to come.
Mel’s Missives from the Matrix:
- Total tick for the day was 131,000 and the average tick for the day was 85. There were 146 ticks greater than 600 and 61 ticks more extreme than -600. There were 22 ticks greater than 1000 and 4 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 15.89 points. The intraday trading range - 9:35 to the close - was 15.72. The 5 DMA of daily range is 10.4.
- Evidence of the intraday trend: At 10am volume was 87.05% of the 10 day average. By noon the volume was 96.36% of the 10 day average, and by 2pm volume was 91.7% of the 10 day average.
- The day's volume was 78.5% of the average daily volume for the last year. Volume was 92.9% of the last 10 day average and 113.7% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 2:45 and 3:00 when relative volume increased 95.7% while the SPX was rising 0.46%. The largest drop in relative volume came between 3:00 and 3:15 when relative volume dropped -71.3% while the SPX was dropping -0.09%.
- 9% of the SPX stocks closed with two day RSI above 90. 17% closed with RSI above 80. 25% closed with RSI below 20 and 9% closed with RSI below 10.
- 43.8% of the SPX are above their five day moving average, 56.6% are above their 10 day average, 69.2% are above their 20 day moving average, 68.4% are above their 50 day moving average, 51.4% are above their 100 day moving average, and 54.2% are above their 150 day moving average.
- 15% of the SPX closed above their most recent previous high.
- 27% of the SPX stocks closed below their most recent previous lows.
- 169 SPX issues advanced and 313 issues declined, a net SPX advance/decline of -144.
- Evidence of the intraday trend: At 10am, 91.2% of the SPX components were in the top half of the range. By noon, 15.8% were in the top half of the range, and by 2pm, 24.4% were in the top half of the range.
- 81% of stocks closed in the top half of the day's range. (18.8% closed in bottom half.)
- 26.8% of stocks closed in the top 10% of the day's range. 47% of stocks closed in the top 20% of the day's range.
- 1.4% of stocks closed in the bottom 10% of the day's range. 3.8% of stocks closed in the bottom 20% of the day's range.
- 9.6% of stocks closed within 2% of their 52 week high. 22% of stocks closed within 5% of their 52 week high.
- 80.8% of stocks closed within 50% of their 52 week low. 47% of stocks closed within 25% of their 52 week low.
- 33% of stocks closed within ¼% of their high for the day.
- 1.6% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 36.2% of the SPX components were up since the open. By noon, 7.8% were up since the open, and by 2pm, 9.6% were up since the open.
- 32.6% of the SPX closed up from the previous close; 71.8% closed higher than the open.
- Sectors stronger than the SPX for Friday:
- Technology -- Outperformed the SPX by +11%.
- Consumer Staples -- Outperformed the SPX by +57%.
- Utilities -- Outperformed the SPX by +64%.
- Health Care -- Outperformed the SPX by +52%.
- Sectors weaker than the SPX for Friday:
- Basic Materials -- Underperformed the SPX by -39%.
- Energy -- Underperformed the SPX by -55%.
- Financials -- Underperformed the SPX by -43%.
- Industrials -- Underperformed the SPX by -20%.
- Consumer Discretionary -- Underperformed the SPX by -62%.
- The $SOX index strength was stronger relative to the SPX Friday by 0.18%.
- The XLF underperformed the SPX by -0.43% Friday.
- The 2 Day RSI of the SPX is 36. The Dow RSI is 45, the NASDAQ is 39 and the Russell is 21.
- Over the last four sessions, the average session closed 76.94% of the range above the low. Friday closed at 90.3% of the daily range.
- Upside momentum decreased Friday, from Thursday’s 2.09 to today’s 1.34. The ratio of SPX components giving a crossover sell signal compared to buy signals increased very slightly to B 4.67 to 1.
- The ISEE Equity 10 day moving average Friday was 160.2. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10 and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 250 SPX components moved upward and 124 components downward during the after hours with 83 million shares traded.
Have a great weekend everyone!
-Mel
