On a Mission to Dow 10,000
by Jerome "Mel" Hickerson
There was no economic data to review before the open today. Overnight, overseas markets were mixed with France being the significant gainer. Futures bounced from the overnight lows to point to a flat open.
The session opened flat, moved upward…. And then up and up and up, before climbing steeply into the close during the final hour. The largest pullback of the day came just before noon, providing just about the cleanest entry point to jump onto the long side. It was a wild ride today.
I see signs that this bounce could grab hold and hang on for a while. But I am leery of getting bullish. I believe that we remain entrenched in a down channel and that this bounce simply brings us to the middle of the channel. There’s additional room above to go higher while not violating the top of the channel but my experience is that often the middle of a channel is where the index tops out.
Mr. Market was certainly on a mission to DOW 10,000 today. I was rather surprised to see us reach SPX 1060 inone large move; but 1060 is not a surprise. I wrote on July 1st “A bounce upward into the middle of the channel, possibly the 1060 area seems to make technical sense here.”
The question now is: Can this bounce be sustained and turned into a resumption of the rally? Possibly. With earnings season coming, it is possible that fuel could be provided to continue upward.
Today’s close was certainly impressive. Two things immediately grab my notice: 1) Volume today spiked on the up moves – I can’t recall the last time I saw that. 2) That final tick of 1098. That strongly suggests that computers were buying the close. And not just a little. (The last final tick over 1000 came on April 5th.)
It’s important to keep in mind that some of the sharpest rallies come during bear markets; oversold conditions can react like dry brush when a sparks begins a fire. Then short covering begins and you have a one way rally like today.
My best guess is that the market stumbles around a few days before realizing that the world at the close today was still much like the world last week; things are still a mess, although maybe improving somewhat.
Day Trade Systems Update: (Signals today)
* SSO at: 12:03
* SSO at: 2:43
We were a bit cautious today, reluctant to jump in long side and find the market reversing and yet reluctant to fight the strong trend. But it became pretty clear by 2:30 that we were likely to close at the highs, so SSO worked out pretty well there even though we jumped in while it was just a dime off the highs of the day at the time.
Thursday, July 8
Economics
08:30 Initial Claims
08:30 Continuing Claims
03:00 Consumer Credit -$2.0 bln cons.
02:00 German Merchandise Trade
06:00 German Industrial Production
07:00 Bank of England Announcement
07:45 ECB Announcement
Earnings
Before: COMS, HELE, ISCA
After: INXI, LWSN, NUHC
The weekly jobless claims report from the Department of Labor is due in the morning and will be a market mover after the recent new leg down for the labor market. The nation's chain stores will be reporting June sales for stores open a year or more, also known as same-store sales. Amid worries about the strength of the consumer, the reports will be a test of confidence in the economy. The weekly crude oil inventories report from the government is due in the late morning. The May consumer credit report from the government is due in the afternoon. Credit is expected to have fallen by $2 billion after rising by $1 billion in April.
Mel’s Missives from the Matrix:
- Total tick for the day was 371,000 and the average tick for the day was 241. There were 278 ticks greater than 600 and 9 ticks more extreme than -600. There were 32 ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 32.35 points. The intraday trading range - 9:35to the close - was 30.03. The 5 DMA of daily range is 24.05.
- Evidence of the intraday trend: At 10amvolume was 87.02% of the 10 day average. By noonthe volume was 96.67% of the 10 day average, and by 2pmvolume was 97.42% of the 10 day average.
- The day's volume was 98.8% of the average daily volume for the last year. Volume was 96.6% of the last 10 day average and 101.6% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 1:45 and 2:00 when relative volume increased 47.2% while the SPX was rising 0.17%. The largest drop in relative volume came between 1:30 and 1:45 when relative volume dropped -52.7% while the SPX was dropping -0.15%.
- 22% of the SPX stocks closed with two day RSI above 90. 58% closed with RSI above 80. 2% closed with RSI below 20 and 1% closed with RSI below 10.
- 92.6% of the SPX are above their five day moving average, 56.2% are above their 10 day average, 26.8% are above their 20 day moving average, 21.4% are above their 50 day moving average, 20.2% are above their 100 day moving average, and 29.2% are above their 150 day moving average.
- 63% of the SPX closed above their most recent previous high.
- 2% of the SPX stocks closed below their most recent previous lows.
- 483 SPX issues advanced and 9 issues declined, a net SPX advance/decline of 474.
- Evidence of the intraday trend: At 10am, 78.6% of the SPX components were in the top half of the range. By noon, 75% were in the top half of the range, and by 2pm, 93.6% were in the top half of the range.
- 97.8% of stocks closed in the top half of the day's range. (2% closed in bottom half.)
- 84.8% of stocks closed in the top 10% of the day's range. 92.8% of stocks closed in the top 20% of the day's range.
- 0.2% of stocks closed in the bottom 10% of the day's range. 0.4% of stocks closed in the bottom 20% of the day's range.
- 1.6% of stocks closed within 2% of their 52 week high. 8.6% of stocks closed within 5% of their 52 week high.
- 69.6% of stocks closed within 50% of their 52 week low. 39.4% of stocks closed within 25% of their 52 week low.
- 73.8% of stocks closed within ¼% of their high for the day.
- 0.2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 81.8% of the SPX components were up since the open. By noon, 87.8% were up since the open, and by 2pm, 93.6% were up since the open.
- 97.2% of the SPX closed up from the previous close; 97.4% closed higher than the open.
- Sectors stronger than the SPX for Wednesday:
- Basic Materials -- Outperformed the SPX by +86%.
- Energy -- Outperformed the SPX by +41%.
- Financials -- Outperformed the SPX by +126%.
- Industrials -- Outperformed the SPX by +38%.
- Technology -- Outperformed the SPX by +5%.
- Sectors weaker than the SPX for Wednesday:
- Consumer Staples -- Underperformed the SPX by -121%.
- Utilities -- Underperformed the SPX by -0%.
- Health Care -- Underperformed the SPX by -117%.
- Consumer Discretionary -- Underperformed the SPX by -31%.
- The $SOX index strength was stronger relative to the SPX Wednesday by 1.92%.
- The XLF outperformed the SPX by 1.26% Wednesday.
- The 2 Day RSI of the SPX is 91. The Dow RSI is 90, the NASDAQ is 89 and the Russell is 73.
- Over the last four sessions, the average session closed 62.49% of the range above the low. Wednesday closed at 97.7% of the daily range.
- Upside momentum moved upward Wednesday, from Tuesday’s -3.86 to today’s 1.6. The ratio of SPX components giving a crossover sell signal compared to buy signals moved positively to S 19.64 to 1.
- The ISEE Equity 10 day moving average Wednesday was 167.3. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 280 SPX components moved upward and 143 components downward during the after hours with 214 million shares traded.
Trade 'em well on Thursday everyone!
-Mel
