Month Ends With Snapback Rally
Market Recap:
With no major negative surprises or developments out of Egypt over the weekend, traders were more upbeat. Economic data was more positive as well. Personal Incomes rose by +0.4% in December, which was below the consensus expectations for an increase of +0.5%. The November level was revised higher to +0.4% from +0.3%. Personal Spending (now called “Consumption”) for the month rose by +0.7%, which was above the expectations of +0.6% and the November reading of +0.4%.
The week started with a small gap higher but the SPX was four points up within a couple of minutes. Trade was choppy and somewhat negative through the rest of the first half hour but at 10am the index painted the trading low of the session and began to climb. Bulls controlled the tape until midway through the noon hour when the high of the day was put on the chart. But sellers took over at that point and began pushing lower until just before 3pm when the market bounced sharply for several points. It was a bit choppy after that but the index managed to close not too far from the highs.
This session appeared to be a normal bounce after a rather ordinary sell-off on Friday. Tomorrow's session, being the first of the month, should continue the bounce.
Checking our Market Leaders board after today's action we find a mixed board but mostly higher as Emerging Markets and Germany were the only losers on our board today.
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report we have a couple of changes as Materials and Energy both move from Sell to Neutral. This results in the Nine Sectors signal remaining Sell.
Keep in mind that Tuesday is the first of the month and the first has frequently been bullish as the last time a first session of the month closed negatively was July and even that session lost only three points. In fact, eleven of the last thirteen first trading days of the month have been positive and eight of those were for more than 1% gains.
Volume & Breadth Indicators
For the SPX Index there were 352 components advancing and 128 components declining. On the NYSE 3,133 issues were traded with 2,111 advancing issues and 909 retreating issues, a ratio of 2.32 to one advancing. There were 125 new highs and 18 new lows. The five day moving average of New Highs is 162 while the five day moving average of New Lows is 15 and the ten day moving average of Net Advancing is 15.
Advancing volume was higher at a ratio of 2.19 to one. The closing TRIN was 1.06 and the final tick was 134. The five day average of TRIN is 1.31 and the ten day average of TRIN is 1.33. The NYSE Composite Index gained 0.95% today while the SPX gained 0.76%.
For the NYSE, relative to the previous 30 session average, volume was 22.17% above the average. Of the last 15 sessions 12 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 19 sessions ended on a positive tick, 5 of last 10. For the SPX, the day's volume was 91.5% of the average daily volume for the last year. Volume was 85.6% of the last 10 day average.
The advancing volume ratio was weaker than the advancing issues ratio but each were strong. There were still quite a few New Lows but the ten day average of Net Advancing managed to move into positive territory. Also, the broad NYSE Composite Index outperformed the SPX.
Total tick for the day was 144,000 and the average tick for the day was 93. There were 90 ticks greater than 600 and 34 ticks more extreme than -600. There were no ticks greater than 1000 and 1 ticks more extreme than -1000. The tick action suggests institutional accumulation.
The intraday volume pattern today shows that volume spiked on both up and down moves; not much can be read into that. Looking at the Nightly Breadth Indicators shows very mixed indicators. But worth mentioning is the McClellan Oscillator which didn't even make it into positive territory despite the gain of almost ten points on the SPX.
Moving Average and Support/Resistance Indicators:
45.6% of the SPX are above their five day moving average, 50.4% are above their 10 day average, 54% are above their 20 day moving average, 68.8% are above their 50 day moving average, and 86.8% are above their 200 day moving average.
There were no significant moving average crossovers today.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Basic Materials -- Outperformed the SPX by +85%.
- Energy -- Outperformed the SPX by +203%.
- Financials -- Outperformed the SPX by +10%.
- Industrials -- Outperformed the SPX by +34%.
Sectors weaker than the SPX for Monday:
- Technology -- Underperformed the SPX by -15%.
- Consumer Staples -- Underperformed the SPX by -128%.
- Utilities -- Underperformed the SPX by -63%.
- Health Care -- Underperformed the SPX by -58%.
- Consumer Discretionary -- Underperformed the SPX by -60%.
In Late Trading:
190 SPX components moved upward and 185 components downward during the after hours with 179 million shares traded.
Tuesday, February 1
Economics
10:00 Construction Spending
10:00 ISM Index
03:00 Auto Sales
03:00 Truck Sales
China PMI Manufacturing
Australia Rate Decision
German Unemployment Change
POMO Schedule
Treasury Coupon Purchase: 4/15/2013-2/15/2040: $1-2 bln
Earnings
Before: AMG, AMSC, AXE, ADM, BIIB, BP, CE, CVLT, CMI, DANG, DHX. EMR, ENR, ENTG, HNT, NFGY, KCI, KLIC, LDR, MHP, MDCP, PFE, SYSS, UPS, WWW
After: APKT, ACTU, ADVS, AFL, BBND, BBOX, BSX, BRCM, CHRW, COGO, ERTS, FORM, HA, JDAS, JLLL, MANH, MNKD, WFR, MWA, POWL, PWAV, TIE, WU
The Institute for Supply Management's index of manufacturing is due after the start of trading. Economists forecast the index to have increased to 58.2 in January from 57.0 in December. Any number above 50 indicates growth in the sector. Construction spending, also due after the opening bell, is forecast to have dropped 0.5% in December, following a rise of 0.4% in November. Auto and truck sales for January are due throughout the day. The Senate Budget Committee kicks off three days of hearings on the economic outlook, tax reform and challenges to the economic recovery.
Be well.
-Mel