Markets Recover from Early Morning Lows
by Jerome "Mel" Hickerson
Market Recap:
Overnight markets had been leaning green until the head of Fitch Ratings came out and said the ECB needs to do more to avoid a collapse of the Euro. In addition, Angela Merkel announced that leveraging the EFSF bailout fund has proved tougher than expected. European markets and the U.S. futures moved a bit lower in response.
The midweek session began with a small gap lower but quickly put the low of the day on the chart at the end of the first half hour of trading. The rest of the day was narrow range with an upward bias as the high of the day was just twenty minutes before the close.
Checking our Market Leaders Board we see a narrow range mixed board with the DOW and NYSE Composite Index closing lower while the Financials were leading higher.
SPX big winners were Sears Holding Corp (SHLD) 7.87%, First Solar Inc (FSLR) 7.68%, and Genworth Financial (GNW) 7.34%. SPX big losers were Urban Outfitters Inc (URBN) -22.41%, Supervalu Inc (SVU) -14.%, and Cabot Oil & Gas Corp (COG) -11.22%.
SPX five day big winners are First Solar Inc (FSLR) 20.46%, Bank Of America Corp (BAC) 18.24%, and Pulte Homes Inc (PHM) 17.74%. SPX five day big losers are Urban Outfitters Inc (URBN) -15.77%, Cabot Oil & Gas Corp (COG) -15.43%, and Supervalu Inc (SVU) -12.83%.
New Ten Day Highs: ADBE, AMD, APD, AKS, AKAM, AGN, ALL, AIG, AMT, AMGN, ADI, AMAT, AZO, BAC, BAX, BBBY, BBY, BIIB, BSX, CA, COF, CCL, CAT, CBG, CBS, CELG, CF, CI, CINF, CTXS, CTSH, CAG, SAI, GLW, CSX, CMI, DHR, DE, DNR, DTV, DFS, DNB, DD, ETFC, EMN, EK, ETN, EBAY, ECL, EFX, FDX, FSLR, FLS, FMC, F, FRX, FCX, GCI, GNW, GR, GWW, HAR, HIG, HAS, DHI, HSP, HST, ITW, INTU, ITT, JBL, JNS, JCI, JPM, CLF, K, KEY, KIM, KLAC, LLL, LM, LEN, LUK, LNC, LOW, M, MAS, MAT, MKC, WFR, MET, MOLX, TAP, MON, MS, MYL, NWL, NEM, NWSA, NSC, NTRS, NVLS, NUE, ODP, PCAR, PH, PDCO, BTU, PKI, PBI, PCL, PFG, PRU, PHM, RF, ROK, CRM, SCHW, SHW, SNA, LUV, HOT, SRCL, SYK, SUN, STI, SYMC, THC, TER, TXN, TXT, BK, TMO, TWX, TSS, X, UTX, JASO, KBH, UNM, VNO, VMC, WLP, WY, WHR, C, GS
New Ten Day Lows: ABT, URBN, AIZ, AVB, BIG, COG, CNP, CHRW, CME, KO, CL, CNX, CEG, D, DUK, ETR, EQT, EQR, EL, EXC, GT, HSY, TEG, ISRG, KR, LEG, MA, NI, JWN, NU, PEP, PM, PPL, PG, PGN, PEG, RRC, RSG, SWY, SWN, SVU, TSN, WAT
Volume & Breadth Indicators
For the SPX Index there were 265 components advancing and 200 components declining. On the NYSE 3,147 issues were traded with 1,697 advancing issues and 1,353 retreating issues, a ratio of 1.25 to one advancing. There were 68 new highs and 14 new lows. The five day moving average of New Highs is 105 while the five day moving average of New Lows is 15 and the ten day moving average of Net Advancing is 461. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 1.63 to one. The closing TRIN was 0.62 and the final tick was 52. The five day average of TRIN is .94 and the ten day average of TRIN is 1.33. The NYSE Composite Index lost -0.09% today while the SPX gained 0.03%.
For the NYSE, relative to the previous 30 session average, volume was -10.38% below the average. Of the last 15 sessions 1 session ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 20 sessions ended on a positive tick, 8 of last 10. For the SPX, the day's volume was 84.9% of the average daily volume for the last year. Volume was 114.6% of the last 10 day average and 95.7% of the previous day’s volume.
Total tick for the day was 57,000 and the average tick for the day was 37. There were 11 ticks greater than 600 and 21 ticks more extreme than -600. There were no ticks greater than 1000 and 3 ticks more extreme than -1000. The tick action suggests institutional distribution.
The tick data today shows general disinterest. While there were ample institutional sellers today the tick numbers are very modest.
The intraday volume pattern yet again shows the morning spike of volume followed by declining interest as the indices crept higher. The Nightly Breadth Indicators continue to suggest short-term overbought conditions but days such as today can serve to diminish those conditions without a significant pullback.
Moving Average and Support/Resistance Indicators:
77% of the SPX are above their five day moving average, 79.6% are above their 10 day average, 84.8% are above their 20 day moving average, 76.2% are above their 50 day moving average, and 49.8% are above their 200 day moving average.
There were no significant moving average crossovers today. Our moving average Power Rating is 64 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Wednesday:
- Basic Materials -- Outperformed the SPX by +97%.
- Financials -- Outperformed the SPX by +107%.
- Industrials -- Outperformed the SPX by +32%.
- Technology -- Outperformed the SPX by +28%.
- Health Care -- Outperformed the SPX by +6%.
- Consumer Discretionary -- Outperformed the SPX by +13%.
Sectors weaker than the SPX for Wednesday:
- Energy -- Underperformed the SPX by -154%.
- Consumer Staples -- Underperformed the SPX by -49%.
- Utilities -- Underperformed the SPX by -45%.
In Late Trading:
188 SPX components moved upward and 176 components downward during the after hours with 87.2 million shares traded.
What We Learned from Wednesday's Action:
Wednesday was session 7 to close above the 5 DMA, session 15 to close above the 10 DMA, session 15 to close above the 20 DMA, and session 15 to close above the 50 DMA. This was also session 13 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 17.6 points above the 10 DMA.
The SPX 5 DMA is 1284.83, 10 DMA is 1274.88, 20 DMA is 1254.85, 50 DMA is 1241.93, 100 DMA is 1214.12, and 200 DMA is 1258.2.
On Wednesday the SPX traded above the opening range but did not trade below the opening range. 54.8% of the SPX closed up from the previous close; 65.4% closed higher than the open. During Wednesday's session the SPX gained .46 points from open to close. The daily bar painted an Inside day.
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 Thursday is +1. Greater than three is bullish and less than negative three is bearish. Based solely on the technicals, our bias is slightly bullish for Thursday's session.
It is difficult to day trade an eight point trading range. Day traders simply need to be patient; wide range days are inevitably closer with each passing day.
The last time the three day trading range was this low was May 3rd, 2011. Today’s session marked the sixth consecutive day that the SPX gained or lost less than 1%. While such stretches are not unusual, the last such stretch was also in May of 2011 as the market topped. This kind of sluggish action is a characteristic of a topping process, but it is important to keep in mind that tops are slow to form and can take weeks.
Thursday, January 12
Economics
08:30 Advance Retail Sales – consensus 0.2%
08:30 Retail Sales Less Autos – consensus 0.3%
08:30 Retail Sales Ex Auto & Gas – consensus 0.3%
08:30 Initial Jobless Claims – consensus 375k
08:30 Continuing Claims
10:00 Business Inventories – consensus 0.4%
2:00 Monthly Treasury Budget Statement – consensus -$79.0B
11:00 Fed to purchase $8b-$8.75b notes in 1 to 2-yr range
1:00 U.S. to sell $13b 30-yr reopened bonds
05:00 JPY Eco Watchers Survey
07:00 EUR German CPI
09:30 GBP Industrial Production
12:00 GBP BoE Asset Purchase Target
12:00 GBP Bank of England Rate Decision
12:45 EUR ECB Rate Decision
15:00 GBP NIESR GDP Estimate
4:30 Spain to sell 4.25% 2016, 3.25% 2016, 4% 2015 bonds
5:00 Italy to sell bills
Earnings
Before: INFY, SJR
After: ZZ
Good trading!
Thank you for reading. Think on it, trade on it, and be well.
-Mel
