News Continues to Drive
by Jerome "Mel" Hickerson
Prior to Friday’s open, the Commerce Department reported that Retail Sales fell in the month of May by -1.2%. This was well below the consensus for an increase of +0.2%. When you strip out the sales of autos, sales were down by -1.1%, which was also below the consensus for an increase of +0.1%. And when you take out autos and gasoline, sales declined by -0.8%, which was below the +0.2% consensus and below April’s revised reading of +0.6%. Futures took a large plunge when this data was released.
The regular session opened with a ten point gap down but the SPX quickly found a bottom setting the low of the day just six minutes into the session. The index bounced viciously until just after 10am then retraced most of the bounce. From shortly after 11am until shortly after 2pm the index was very choppy while really going nowhere. But about 2:30 the index began rallying. The final 90 minutes of the week were an almost steady ascent as the session closed at the highs and the week closed at the highs.
Before we look at some technicals I feel it’s important to make a point here. Our current market environment is not driven by technicals; it is driven by news. And the news creates fear; the fear of missing a rally or the fear of being left with huge losses when the market retreats. This is not a particularly healthy way for the market to be responding.
I had someone ask me to examine the technicals and just give a judgment on which way the market was headed; my thought was, just tell me tomorrow’s news and I’ll tell you the market direction. Friday’s session was a great example. Disappointing retail sales data before the session caused a ten point SPX drop before better than expected consumer sentiment data caused a sharp rebound.
Our economic recovery is likely to be lengthy and choppy; the market response is also likely to remain erratic. During such times it’s vital to trade what you see and not what you think.
Now, regarding some technicals, there were some interesting developments Friday. The first thing I notice is that the ES Mini closed above the 20 day moving average for the first time since May 1st. We may look back on this at some point as a significant event.
For the SPX, Friday was the fourth day with a higher high and a higher low. But there are many layers of significant resistance just ahead, not the least of which is the 200 day moving average. I’d be surprised to see the index get above the 1103 area without a significant pullback first. Bulls can be happy that they closed the week at the highs, away from the abyss. But this market remains at a fragile point.
I still see us remaining range bound, between 1070 and 1100, with touches outside the range to 1055 and 1110. Similar to last November, I am once again suggesting to swing traders to trade the range. Short the market around 1100 and buy the market around 1070, using the 1055 area and the 1110 area as stops. Until this fails, I believe there is money to be made this way.
Day Trade Systems Update: (Signals today)
* SSO at: 9:51
* GDX Short at: 10:29
* GDX Long at: 11:02
* GDX Long at: 11:21
* SSO at: 11:25
* GDX Short at: 12:20
* SSO at: 12:42
* GDX Short at: 1:13
* GDX Long at: 2:43
Our trade systems were busy and productive again Friday. It was a tougher day to trade but there was still money to be made as we focused on ProShares Ultra S&P500 ETF (SSO) and Market Vectors Gold Miners (GDX).
SPX Summary for Friday, June 11, 2010
324 Advancers/166 Decliners
419 Advancers/72 Decliners for the week
Today's SPX component winners and losers:
- Largest one day loser is BIIB with -4.01%
- Largest three day loser is WAG with -3.59%
- Largest five day loser is APC with -7.29%
- Largest ten day loser is TLAB with -24.86%
- Largest one day winner is APC with 6.90%
- Largest three day winner is PLL with 13.93%
- Largest five day winner is GCI with 16.97%
- Largest ten day winner is SWN with 16.20%
*** SPX Technical Summary ***
The lowest 14 day RSI component is TLAB; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 52.
The average five day momentum of all 500 components is 2.75.
12.20% of the SPX components are giving a crossover Buy signal; 61.20% of the SPX components are giving a Sell signal. This is a 5.0 to 1 ratio of Sell signals over Buy signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 49 components.
- From Buy to Neutral: 0 components.
- From Neutral to Sell: 3 components.
- From Neutral to Buy: 26 components.
The moving averages:
Close 1091.60
9 EMA 1093.06 Rising
5 DMA 1069.32 Rising
10 DMA 1077.28 Falling
20 DMA 1087.95 Falling
50 DMA 1146.56 Falling
100 DMA 1133.10 Falling
200 DMA 1107.93 Rising
10 Wk MA 1137.44 Rising
NYSE Summary
On the NYSE 3202 issues were traded with 2277 advancing issues and 822 retreating issues, a ratio of 2.77 to 1 advancing. There were 43 new highs and 13 new lows.
Advancing volume was higher at a ratio of 2.08 to 1. The closing TRIN was 1.33 and the final tick was 530.
Evidence of trend:
Relative to the previous 30 session average, volume was -34.81% below 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, 14 sessions ended on a positive tick, 6 of last 10.
The 5 day moving average of New Highs is 32 while the 5 day moving average of new lows is 60 and the 10 day moving average of Net Advancing is 72.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line increased from 201848 to 203303. This 0.72% increase came while the SPX was gaining 0.44%. The 10 day moving ratio of positive volume is 0.9 and the 10 day moving Advance/Decline ratio is 1.05. The 10 day moving ratio of positive volume has trended 0.01 over the last three days and the 10 day moving Advance/Decline ratio has trended 0.02 over the last three days.
The NYSE Composite Index gained 0.46% today.
NYSE Statistics:
Absolute Breadth Index: 53.31 up from previous day of 50.23
Cumulative Volume Index: 46,783.21 up from previous day of 45,281.17
High Low Logic Index: 0.44 down from previous day of 0.50
McClellan Oscillator: 137.86 up from previous day of 69.20
McClellan 10 DMA: (65.47) up from previous day of (85.56)
McClellan Summation Index: (1,983.24) up from previous day of (2,121.10)
% Stocks Above 200 DMA: 52.46 up from previous day of 50.44
% Stocks Above 40 DMA: 24.61 up from previous day of 22.74
New High / New Low Ratio: 86.36 up from previous day of 66.67
26wk New High/Low Ratio: 70.53 up from previous day of 53.61
13wk New High/Low Ratio: 61.52 up from previous day of 51.11
4wk New High/Low Ratio: 76.30 up from previous day of 67.90
Cumulative 4-Week New Hi-Low: 435,359 up from previous day of 435,251
Nasdaq Adv/Decline: 1,445 up from previous day of 1,404
Russell 1000 Advance/ Decline Line: 2,389 up from previous day of 2,336
Russell 2000 Advance/ Decline Line: (1,881) up from previous day of (1,940)
Notes:
Absolute Breadth Index: Low numbers suggest a topping process and high numbers suggest a bottoming process.
Cumulative Volume Index: If this begins to trend down while the averages are trending up, it is a bearish sign. If this begins to trend up while the averages are trending down, it is a bullish sign.
High Low Logic Index: High readings are bearish; low readings are bullish.
McClellan Oscillator: -100 is oversold and +100 is overbought. Also watch for crosses above and below zero.
McClellan Summation Index: Interpreted as bullish or bearish when it crosses over the zero line.
Cumulative 4-Week New Hi-Low: The difference between the number of issues reaching new highs (during a 4-week period) and the number of issues reaching new lows (during the same 4-week period).
Mel’s Missives from the Matrix:
- Total tick for the day was 154,000 and the average tick for the day was 100. There were 185 ticks greater than 600 and 89 ticks more extreme than -600. There were 44 ticks greater than 1000 and 2 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 14.95 points. The intraday trading range - 9:35to the close - was 14.95. The 5 DMA of daily range is 22.67.
- Evidence of the intraday trend: At 10am volume was 78.62% of the 10 day average. By noon the volume was 77.91% of the 10 day average, and by 2pm volume was 75.06% of the 10 day average.
- The day's volume was 81.2% of the average daily volume for the last year. Volume was 71.1% of the last 10 day average and 70% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 1:00 and 1:15 when relative volume increased 23.4% while the SPX was rising 0.27%. The largest drop in relative volume came between 10:15 and 10:30 when relative volume dropped -29.5% while the SPX was rising 0.05%.
- 32% of the SPX stocks closed with two day RSI above 90. 68% closed with RSI above 80. 1% closed with RSI below 20 and 0% closed with RSI below 10.
- 95.2% of the SPX are above their five day moving average, 77.6% are above their 10 day average, 56.2% are above their 20 day moving average, 20% are above their 50 day moving average, and 34% are above their 100 day moving average.
- 67% of the SPX closed above their most recent previous high.
- 1% of the SPX stocks closed below their most recent previous lows.
- 324 SPX issues advanced and 166 issues declined, a net SPX advance/decline of 158.
- Evidence of the intraday trend: At 10am, 87.8% of the SPX components were in the top half of the range. By noon, 70.2% were in the top half of the range, and by 2pm, 62% were in the top half of the range.
- 92.2% of stocks closed in the top half of the day's range. (7.6% closed in bottom half.)
- 32.6% of stocks closed in the top 10% of the day's range. 61.6% of stocks closed in the top 20% of the day's range.
- 0.4% of stocks closed in the bottom 10% of the day's range. 1.6% of stocks closed in the bottom 20% of the day's range.
- 4% of stocks closed within 2% of their 52 week high. 12.2% of stocks closed within 5% of their 52 week high.
- 61.4% of stocks closed within 50% of their 52 week low. 31% of stocks closed within 25% of their 52 week low.
- 34% of stocks closed within ¼% of their high for the day.
- 0.6% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 35.4% of the SPX components were up since the open. By noon, 38.8% were up since the open, and by 2pm, 34.4% were up since the open.
- 65.6% of the SPX closed up from the previous close; 91.8% closed higher than the open.
- Sectors stronger than the SPX for Friday:
- Basic Materials -- Outperformed the SPX by +69%.
- Energy -- Outperformed the SPX by +14%.
- Technology -- Outperformed the SPX by +68%.
- Health Care -- Outperformed the SPX by +39%.
- Sectors weaker than the SPX for Friday:
- Financials -- Underperformed the SPX by -37%.
- Industrials -- Underperformed the SPX by -10%.
- Consumer Staples -- Underperformed the SPX by -127%.
- Utilities -- Underperformed the SPX by -37%.
- Consumer Discretionary -- Underperformed the SPX by -54%.
- The $SOX index strength was stronger relative to the SPX Friday by 0.98%.
- The XLF underperformed the SPX by -0.37% Friday.
- The 2 Day RSI of the SPX is 85. The Dow RSI is 87, the NASDAQ is 85 and the Russell is 88.
- Over the last four sessions, the average session closed 75.06% of the range above the low. Friday closed at 97.1% of the daily range.
- Upside momentum moved upward Friday, from Thursday’s -1.74 to today’s 2.75. The ratio of SPX components giving a crossover sell signal compared to buy signals moved positively to S 5.02 to 1.
- The ISEE Equity 10 day moving average Friday was 144.5. The lowest 10 day average in the last 52 weeks was 141.5 on 06/29/09and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 304 SPX components moved upward and 95 components downward during the after hours with 154 million shares traded.
Have a great weekend everyone!
-Mel
