Mired in the Trading Range
by Jerome "Mel" Hickerson
The session opened this morning with flat futures. The index moved upward bullishly until just before 10:00. At 10am Bernanke cleared his throat and the housing data came in abysmally and the SPX responded with a quick eight point downward move setting the low of the session at 10:21. For the next 40 minutes the market bounced upward rapidly, gaining almost ten points coming within a fraction of setting the high of the day. The rest of the session was choppy sideways trading with the only significant move being to the downside around 2:30, followed by 75 minutes of bullishly climbing into the close.
This was not an easy session to trade; if you were long at 10am, you likely got stopped out in the rapid downward move. And if you were short and didn’t take profit quickly, the rapid upward move before 11am likely stripped you of any profit. The rest of the day was really just choppy and sideways. We had two very weak intraday signals, both pullback alerts; one at 10:52 and the other at 1:24.
From a technical viewpoint, the market is currently at an interesting crossroads. We are mired right near the middle of our 1084-1114 trading range. Many intermediate term indicators are overbought while the shortest term indicators are coming off an oversold condition from Tuesday. This environment results in a quandary of mixed signals, suggesting even more choppy and sideways trade.
To my way of thinking, any trade above 1110 looks like an opportunity to get short while trade below 1090 looks tempting to take the long side. I intend to stay with that plan for now, day trading bounces and pullbacks intraday until we tag 1110 or 1090. This can result in a frustrating lack of opportunities but until I see something that looks like a pitch down the middle, I am not going to take any wild swings.
SPX Summary for Wednesday, February 24, 2010
402 Advancers/92 Decliners
Today's SPX component winners and losers:
• Largest one day loser is HRB with -12.17%
• Largest three day loser is HRB with -17.99%
• Largest five day loser is HRB with -17.64%
• Largest ten day loser is HRB with -17.88%
• Largest one day winner is ADSK with 8.65%
• Largest three day winner is MIL with 31.47%
• Largest five day winner is MIL with 33.87%
• Largest ten day winner is MIL with 35.75%
*** SPX Technical Summary ***
The lowest 14 day RSI component is HRB; the highest 14 day RSI component is ARG. The average 14 day RSI of all 500 components is 53.
The greatest positive five day momentum component is MIL; the greatest negative five day momentum component is HRB. The average five day momentum of all 500 components is 0.59.
66.40% of the SPX components are giving a crossover Buy signal; 6.60% of the SPX components are giving a Sell signal. This is a 10.1 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 11 components.
• From Buy to Neutral: 15 components.
• From Neutral to Sell: 10 components.
• From Neutral to Buy: 42 components.
Thursday, February 25
Economics
8:30 Initial Claims 465k cons.
8:30 Continuing Claims
8:30 Durable Orders 1.5% cons.
10:00 FHFA Housing Price Index
Earnings
Before: CRMT, BX, CVC, DT, FIG, FTO, HNX, H, KBR, DPS, CVC, NRG, ZEUS, OMG, REV, SWY, NEM, THI, ZLC, SHOO,
After: CROX, DECK, DRYS, FLR, MHK, RST, BID, VLCM, WYNN,
Events
11:00 3-month bill announcement
1:00 7-yr note auction
12:30 James Bullard speaks
4:30 Fed Balance sheet and Money supply
A busy day for economic news begins with the government's weekly jobless claims report. Around 460,000 Americans are expected to file new claims for unemployment, down from 472,000 in the previous week. Continuing claims is expected to have risen to 4.570 million from 4.563 million in the previous week. The January durable goods orders index is expected to have risen 1.5% after rising 0.3% in the previous month. The Federal Housing Finance Agency (FHFA) housing price index is also due in the morning. In Washington, President Obama holds a bi-partisan health-care summit. The House Financial Services Committee holds a hearing on financial-industry executive compensation.
Mel’s Random Hits:
• Total tick for the day was +258,000. Amazingly, the downward plunge just after 10am did not result in a negative period. The only negative period came shortly after 2pm today. Overall, this was a very positive session.
• The day's range was 10.92 points. Once again, virtually the entire range came before 11am.
• The day's volume was 77.3% of the average daily volume for the last year. Volume was 87.8% of the last 10 day average and 95% of Tuesday’s volume.
• 10% of the SPX stocks closed with two day RSI above 90. 16% closed with RSI above 80. 19% closed with RSI below 20 and 10% closed with RSI below 10.
• 53.4% of the SPX are above their five day moving average, 73.2% are above their 10 day average, and 77.4% are above their 20 day moving average.
• 11% of the SPX stocks closed below their most recent previous lows.
• 25% of the SPX closed above their most recent previous high.
• 73.4% of stocks closed in the top half of the day's range. (26.6% closed in bottom half.)
• 3.2% of stocks closed in the bottom 20% of the day's range.
• 22.8% of stocks closed in the top 10% of the day's range.
• 11.6% of stocks closed within 2% of their 52 week high. 30.0% of stocks closed within 5% of their 52 week high.
• 27.2% of stocks closed within 50% of their 52 week low. 8.6% of stocks closed within 25% of their 52 week low.
• 32.8% of stocks closed within ¼% of their high for the day.
• 1.8% of stocks closed within ¼% of their low for the day.
• 81.4% of the SPX closed up from the previous close; 72.0% closed higher than the open.
• Sectors weaker than the SPX for the day: Energy, Basic Materials, Consumer Staples, Health Care, and Utilities.
• Sectors stronger than the SPX for the day: Industrials, Technology, Financials, and Consumer Discretionary.
• The $SOX index strength was stronger than the SPX today.
• The 2 Day RSI of the SPX is 63. The Dow RSI is 65, NASDAQ is 63 and Russell 65. Comparative strength among all major indices.
• Over the last four sessions, the average session closed 53.5% of the range above the low.
• Upside momentum inched upward from yesterday’s 0.16 to today’s 0.59. The ratio of SPX components giving a crossover buy signal compared to sell signals has increased slightly to 10 to 1.
• 238 SPX components moved upward and 113 components downward during the after hours with 78 million shares traded. Volume was light.
Good trading Thursday everyone!
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"Mel"
ETF’s we trade:
Ultra S&P500 ProShares (NYSE: SSO)
Ultra Dow30 ProShares (NYSE: DDM)
Ultra QQQ ProShares (NYSE: QLD)
PS UTLRSHRT QQQ (NYSE: QID)
UltraShort S&P500 ProShares (NYSE: SDS)
UltraShort Dow30 ProShares (NYSE: DXD)
PowerShares QQQ Trust (NASDAQ: QQQQ)
Direxion Daily Small Cp Bear 3X (NYSE:TZA)
Direxion Daily Small Cp Bull 3X (NYSE:TNA)
