Month Ends on a High Note as SPX Gains 2.95% for February
With oil prices moving lower stock markets around the globe were improving and the futures here in the U.S. were pointing to a strong start. Personal Incomes rose by +1.0% in January, which was above the consensus expectations for an increase of +0.5%. The December level was unchanged at +0.4%. Consumption for the month rose by just +0.2%, which was below the expectations of +0.3% and the December’s revised reading of +0.5%. The Core PCE came in up +0.1%, which was below expectations for +0.1%.
Under buying pressure from the futures the session began the week with a gap higher. The SPX quickly moved higher and put the high of the day on the chart just before the end of the first hour, right at a significant resistance level. After turning at resistance the index traded lower, filling most of the morning's gap before bouncing. The final hour seemed to have traders front-running tomorrows anticipated gap higher and getting in today as the index moved up near the highs of the session to close in the upper quarter of the intraday range.
Checking in with our Market Leaders board this evening we have a mixed board with everyone closing higher except for the chip makers (SOX). The big winners today were overseas while the Dow led the way for the U.S.markets.
SPX big winners were Interpublic Gr Of Cos (IPG) 4.97%, Dell Inc (DELL) 4.61%, and Noble Energy Inc (NBL) 3.87%. SPX big losers were Memc Electronic Material (WFR) -6.22%, First Solar Inc (FSLR) -5.42%, and Akamai Technologies Inc (AKAM) -4.9%.
SPX five day big winners are Chesapeake Energy Corp (CHK) 17.02%, Range Resources Corp (RRC) 12.4%, and Cabot Oil & Gas Corp (COG) 11.72%. SPX five day big losers are Expeditors International of Washington Inc (EXPD) -12.82%, First Solar Inc (FSLR) -12.38%, and Netflix Inc (NFLX) -12.25%.
New Ten Day Highs: ABT, URBN, ALTR, MO, ABC, APA, AIV, ADP, AVB, BHI, BIIB, BMY, BF/B, BRK.B, CBS, CELG, CHK, CME, XEL, CMCSA, CPWR, CAG, CNX, CVS, DELL, DNR, XRAY, DVN, DO, D, DTE, EIX, EP, ESV, EQT, EQR, FIS, GIS, HCP, HCN, HNZ, HSY, HES, HON, IPG, JNJ, KIM, LH, MI, MKC, PCS, MCO, NBR, GAS, NKE, NI, NBL, NSC, NU, NVLS, OMC, PM, PNW, PXD, PPL, PX, PGR, PLD, PSA, QCOM, RRC, SPG, SJM, SWN, SE, SYK, TE, THC, TWX, TSN, VTR, VZ, VNO, WAG, WU
New Ten Day Lows: AKAM, AIG, BCR, EK, EIX, EXPE, FSLR, FE, LMT, LO, MA, NOVL, PHM, CRM, SRE, JASO, VTR, WDC, AMZN
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report we had several sectors move from Neutral to Buy today but even the sectors which did not change signals came close to changing. Our Nine Sectors signal changes from Neutral to Buy as a result.
Tuesday is the first day of the month and fourteen of the last sixteen months have started out with a gain, including the last seven, with each of the last three with a gap open and jumping more than 1%. Since the start of December, there have been five days which the SPX was up more than 1%, and three of those came on the first trading day of the month.
Technicals are somewhat bearish here but we won't step in front a train and short this market prior to getting the first of the month out of the way. Certainly, Tuesday could be a down day. But we play the odds and don't like the odds either way for tomorrow.
As we wrote Saturday, the outlook this week is unclear, surely to be driven by overseas news and economic data releases here at home. We believe that last Thursday's intraday low below 1300 will hold at least for this week and likely into next week.
Yet we want to emphasize that if tomorrow's session is a down day it would strongly suggest that the character of the market has changed. It would unquestionably be a significant difference from the last seven months.
Volume & Breadth Indicators
For the SPX Index there were 322 components advancing and 158 components declining. On the NYSE 3,151 issues were traded with 2,080 advancing issues and 986 retreating issues, a ratio of 2.11 to one advancing. There were 259 new highs and 15 new lows. The five day moving average of New Highs is 229 while the five day moving average of New Lows is 17 and the ten day moving average of Net Advancing is 229. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 1.96 to one. The closing TRIN was 1.07 and the final tick was 407. The five day average of TRIN is 1.15 and the ten day average of TRIN is 1.07. The NYSE Composite Index gained 0.72% today while the SPX gained 0.55%.
For the NYSE, relative to the previous 30 session average, volume was 17.37% above the average. Of the last 15 sessions 6 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 21 sessions ended on a positive tick, 6 of last 10. For the SPX, the day's volume was 85.5% of the average daily volume for the last year. Volume was 85% of the last 10 day average and 100.3% of the previous day’s volume.
Breadth was solid today. The ten day Net Advancing remains above 200 thus suggesting a bullish trend.
Total tick for the day was 149,000 and the average tick for the day was 96. There were 31 ticks greater than 600 and 32 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000.
Volume continued to be light today so intraday volume patterns should be treated with suspicion. But there was a volume spike on the afternoon decline. Looking at our Nightly Breadth Indicators, most are taking on a bullish look. McClellan's Oscillator made a significant move higher today while the New High/New Low ratios have also turned higher.
Moving Average and Support/Resistance Indicators:
79.8% of the SPX are above their five day moving average, 48.2% are above their 10 day average, 58% are above their 20 day moving average, 72.8% are above their 50 day moving average, and 89.2% are above their 200 day moving average.
The moving average crossovers is where the action is tonight as the SPX 5 DMA crossed below the 20 DMA, the NYA 5 DMA crossed below the 20 DMA, and the DOW 5 DMA crossed below the 20 DMA. Of the indices we track, only the Russell 2000 remains with its 5 DMA above the 20 DMA. As you can see from our chart we now have plenty of red flowing in from the left of the chart. This will often continue into the center as the pullback continues. But interestingly, the 9 EMAs of the indices have begun to rise so there are conflicts within the data this evening. It is a good time to be cautious and let the market clarify its intentions.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Basic Materials -- Outperformed the SPX by +49%.
- Energy -- Outperformed the SPX by +1%.
- Utilities -- Outperformed the SPX by +85%.
- Health Care -- Outperformed the SPX by +59%.
- Consumer Discretionary -- Outperformed the SPX by +18%.
Sectors weaker than the SPX for Monday:
- Financials -- Underperformed the SPX by -5%.
- Industrials -- Underperformed the SPX by -9%.
- Technology -- Underperformed the SPX by -24%.
- Consumer Staples -- Underperformed the SPX by -0%.
In Late Trading:
143 SPX components moved upward and 209 components downward during the after hours with 227 million shares traded.
10:00 Construction Spending: -2.5% prior.
10:00 ISM Index: 60.8 prior.
China PMI Mfg
Canada bank rate decision
Treasury Coupon Purchase: 08/15/2028-02/15/2041: $1.5-2.5 bln
Before: ARES, AZO, BYD, BPI, CNP, CEDC, DRH, FIG, FDP, HSFT, IVR, BABY, PNM, SGMS, SODA, TECD
After: BGS, BTUI, CAP, CCG, CWST, STV, CHDN, FIX, DNDN, DY, MAKO, MATK, MBI, MDR, MITL, QLIK, TIVO, PAY
The Institute for Supply Management will release its manufacturing index at 10 am. It's expected to fall slightly to 60.5. Pizza chain Domino's (DPZ) is expected to earn profit of 40 cents a share before the bell, and the major auto makers will release their February sales figures starting at around 11 am.
Good luck on Tuesday.