Markets Consolidate
Market Recap:
European markets continued to worry about rising rates in Italy and the potential for new downgrades in places like France while traders in the U.S. were encouraged about the prospects for the shopping season and its impact on Q4 GDP. European markets were mostly higher as our open approached.
The SPX opened with a small gap higher and traded higher for the opening hour, gaining about nine points. But that was the high of the day as the next couple of hours rocked back and forth within a five point range as the SPX seemed intent on a consolidation day after Monday's large gains. The late afternoon stayed within the opening hour's trading range but generally had a downward bias.
Checking our Market Leaders Board we find a mixed finish as the NYSE Composite Index was leading higher and Technology and the Financials were struggling.
SPX big winners were Best Buy Co Inc (BBY) 5.15%, Home Depot Inc (HD) 4.44%, and Denbury Resources Ltd (DNR) 4.09%. SPX big losers were Corning Inc (GLW) -11.72%, Tiffany & Co (TIF) -9.63%, and Hospira Inc (HSP) -9.17%.
SPX five day big winners are Gilead Sciences Inc (GILD) 8.3%, Sunoco Inc (SUN) 8.19%, and Genworth Financial (GNW) 6.23%. SPX five day big losers are Sears Holding Corp (SHLD) -10.24%, Regions Financial Corp (RF) -9.57%, and Netflix Inc (NFLX) -9.27%.
New Ten Day Highs: MO, APOL, BF/B, CL, DVA, EP, LOW, MJN, PM, PSA, PHM, RAI, SUN, SYY, MBI, WPI, WDC
New Ten Day Lows: AIV, BAC, BRCM, GLW, GR, HSP, K, RF, TIF, TWC, DRYS, WHR
Volume & Breadth Indicators
For the SPX Index there were 240 components advancing and 231 components declining. On the NYSE 3,140 issues were traded with 1,487 advancing issues and 1,555 retreating issues, a ratio of 1.05 to one declining. There were 42 new highs and 60 new lows. The five day moving average of New Highs is 50 while the five day moving average of New Lows is 101 and the ten day moving average of Net Advancing is -575. The Net Advancing data indicates a bearish trend.
Declining volume was higher at a ratio of 1.02 to one. The closing TRIN was 1.03 and the final tick was -55. The five day average of TRIN is 1.5 and the ten day average of TRIN is 1.74. The NYSE Composite Index gained 0.41% today while the SPX gained 0.22%.
Notice that the broad NYSE Composite Index significantly outperformed the SPX. This is often bullish.
For the NYSE, relative to the previous 30 session average, volume was -4.18% 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, 15 sessions ended on a positive tick, 3 of last 10. For the SPX, the day's volume was 51.% of the average daily volume for the last year. Volume was 61.6% of the last 10 day average and 79.9% of the previous day’s volume.
Total tick for the day was 10,000 and the average tick for the day was 7. There were 56 ticks greater than 600 and 62 ticks more extreme than -600. There were 1 ticks greater than 1000 and 7 ticks more extreme than -1000.
The tick data today shows again that there were plenty of sellers using the strength to unwind their positions.
The intraday volume pattern shows the largest spike of relative volume during the early session rally. Looking at the Nightly Breadth Indicators we see that the McClellan Oscillator remains oversold.
Moving Average and Support/Resistance Indicators:
82.4% of the SPX are above their five day moving average, 35.8% are above their 10 day average, 19.2% are above their 20 day moving average, 45% are above their 50 day moving average, and 23% are above their 200 day moving average.
There were no significant moving average crossovers today. Our moving average Power Rating is 37 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Tuesday:
- Energy -- Outperformed the SPX by +136%.
- Consumer Staples -- Outperformed the SPX by +86%.
- Utilities -- Outperformed the SPX by +74%.
- Health Care -- Outperformed the SPX by +7%.
Sectors weaker than the SPX for Tuesday:
- Basic Materials -- Underperformed the SPX by -5%.
- Financials -- Underperformed the SPX by -75%.
- Industrials -- Underperformed the SPX by -11%.
- Technology -- Underperformed the SPX by -82%.
- Consumer Discretionary -- Underperformed the SPX by -5%.
What We Learned from Tuesday's Action:
Tuesday was session 2 to close above the 5 DMA, session 9 to close below the 10 DMA, session 9 to close below the 20 DMA, and session 6 to close below the 50 DMA. This was also session 8 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 6.4 points below the 10 DMA.
The SPX 5 DMA is 1179.25, 10 DMA is 1201.59, 20 DMA is 1225.4, 50 DMA is 1205.51, 100 DMA is 1215.63, and 200 DMA is 1266.29.
On Tuesday the entire session traded within the SPX opening range. 50.2% of the SPX closed up from the previous close; 45.2% closed higher than the open. During Tuesday's session the SPX gained 2.63 points from open to close. The session was an NR7 day (Narrowest Range last 7 days).
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 Wednesday is +7. Greater than three is bullish and less than negative three is bearish. Based solely on the technicals, we are bullish for Wednesday's session.
Today did practically nothing to the technical picture. As we wrote in last night's report: "About the best that bulls should expect would be a narrow range consolidation session." Seems like that is pretty much what we saw today.
Be alert for end of month fund managers buying tomorrow. The last session (and the first session) of the month is often manipulated positively.
Just a hunch, but a morning low followed by something of a rally seems to make sense for tomorrow.
Wednesday, November 30
Economics
07:00 MBA Mortgage Purchase Index
07:30 Challenger Job Cuts
08:15 ADP Employment Change – consensus 130k
08:30 Nonfarm Productivity – consensus 3%
08:30 Unit Labor Costs – consensus -2.2%
09:45 Chicago PMI – consensus 58.5
10:00 Pending Home Sales – consensus 1.2%
02:00 Fed’s Beige Book
11:00 Fed to sell $8b-$8.75b notes in 2 to 3-year range
00:30 AUD Private Sector Credit
01:30 JPY Labor Cash Earnings
05:00 JPY Housing Starts
08:55 EUR German Unemployment Change
10:00 EUR Euro-Zone Unemployment Rate
13:30 CAD GDP
Earnings
Before: AEO, AVNR, CIS, JOSB, SDRL, TFM, UNFI
After: ARO, CWST, CWTR, EXPR, FNSR, GMAN, GES, KKD, LZB, RUE, SMTC, SIGM, SNPS
Trade well!
Thank you for reading. Think on it, trade on it, and be well.
-Mel