Positive Market Breadth but Apple Holds back Many Indices
Market Recap:
SPX big winners were Symantec Corp (SYMC) 12.15%, Altera Corp (ALTR) 10.84%, and Juniper Networks (JNPR) 10.53%. SPX big losers were Netflix Inc (NFLX) -31.29%, International Game Technology (IGT) -22.56%, and TripAdvisor (TRIP) -20.18%.
SPX five day big winners are Sandisk Corp (SNDK) 15.97%, Walgreen Co (WAG) 11.88%, and J.C. Penney Company Inc (JCP) 11.62%. SPX five day big losers are Devry Inc (DV) -27.12%, Netflix Inc (NFLX) -25.83%, and Chipotle Mexican Grill (CMG) -25.52%.
New Ten Day Highs: ALTR, BAX, BRCM, CAT, ETN, FTI, GPS, GR, HCP, HES, JNPR, KLAC, LLTC, MAT, MWV, NDAQ, JCP, RF, SYMC, TMO, VXX
New Ten Day Lows: AMD, AES, AET, AFL, ARG, AKS, AKAM, AA, ATI, AGN, AMP, ABC, AIV, ADM, BCR, BBY, BSX, COG, CAH, CBG, CNP, CHRW, CI, CSCO, CTXS, CPWR, COP, CNX, GLW, CVH, DRI, DE, DELL, DTV, RRD, ETFC, EIX, EXPD, FDO, FII, FISV, F, FCX, FTR, GD, GIS, HOG, HAR, HPQ, DHI, HST, HUM, IGT, INTU, IVZ, CLF, KIM, KFT, LLL, LH, LEN, LO, MAS, MCK, WFR, NUE, ODP, OI, PLL, BTU, PM, PBI, PX, PHM, QLGC, RSH, RAI, RHI, SCG, SRE, SIAL, LUV, SPLS, SUN, SVU, SYY, TROW, TE, THC, TMK, TSS, TSN, X, UNH, QLD, KBH, WLP, AAPL
Volume & Breadth Indicators
For the SPX Index there were 260 components advancing and 232 components declining. On the NYSE 3,126 issues were traded with 1,614 advancing issues and 1,410 retreating issues, a ratio of 1.14 to one advancing. There were 94 new highs and 77 new lows. The five day moving average of New Highs is 125 while the five day moving average of New Lows is 66 and the ten day moving average of Net Advancing is -97.
Declining volume was higher at a ratio of 1.02 to one. The closing TRIN was 1.19 and the final tick was -428. The five day average of TRIN is 1.17 and the ten day average of TRIN is 1.15. The NYSE Composite Index gained 0.22% today while the SPX lost -0.03%.
For the NYSE, relative to the previous 30 session average, volume was -1.77% below the average. Of the last 15 sessions 2 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 15 sessions ended on a positive tick, 4 of last 10. For the SPX, the day's volume was 107.8% of the average daily volume for the last year. Volume was 107% of the last 10 day average and 101% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 90,000 and the average tick for the day was 58. There were 51 ticks greater than 600 and 19 ticks more extreme than -600. There were 4 ticks greater than 1000 and 1 ticks more extreme than -1000. The tick action suggests institutional accumulation.
Moving Average and Support/Resistance Indicators:
20.8% of the SPX are above their five day moving average, 23.6% are above their 10 day average, 29.8% are above their 20 day moving average, 44.4% are above their 50 day moving average, and 44.6% are above their 200 day moving average.
There were several significant moving average crossovers today as the SPX, the NYSE Composite Index, the Dow, Russell Technology Index, Germany and China all had their 5 DMA cross below the 20 DMA. Our moving average Power Rating is 29 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Wednesday:
- Basic Materials -- Outperformed the SPX by +3%.
- Energy -- Outperformed the SPX by +10%.
- Financials -- Outperformed the SPX by +41%.
- Industrials -- Outperformed the SPX by +37%.
- Health Care -- Outperformed the SPX by +61%.
Sectors weaker than the SPX for Wednesday:
- Technology -- Underperformed the SPX by -37%.
- Consumer Staples -- Underperformed the SPX by -3%.
- Utilities -- Underperformed the SPX by -3%.
- Consumer Discretionary -- Underperformed the SPX by -28%.
Checking the sectors of the SPX tonight: (The sector Buy and Sell signals come from a mechanical trend trading system; there will be some whipsaw but the signal will never be on the wrong side for long.)
The Basic Materials sector advancing issues (12) totaled 359,344 shares traded (29,945 average per stock) and declining issues (17) totaled 616,451 shares traded (36,262 average per stock.) 2 components are on an uptrend (no new uptrends today) and 28 components are on a downtrend (4 new downtrends today.) There were no New Highs and 2 New Lows. The sector is on a Buy signal and closed below the daily pivot. The sector 5-Day average closed .32% above the 20-Day average.
The Energy sector advancing issues (21) totaled 1,000,645 shares traded (47,650 average per stock) and declining issues (22) totaled 1,379,351 shares traded (62,698 average per stock.) 13 components are on an uptrend (4 new uptrends today) and 31 components are on a downtrend (4 new downtrends today.) There were no New Highs and 2 New Lows. The sector is on a Buy signal and closed below the daily pivot. The sector 5-Day average closed 1.87% above the 20-Day average.
The Financials sector advancing issues (41) totaled 3,935,531 shares traded (95,989 average per stock) and declining issues (37) totaled 1,509,114 shares traded (40,787 average per stock.) 13 components are on an uptrend (6 new uptrends today) and 68 components are on a downtrend (no new downtrends today.) There were 1 New Highs and 1 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -.84% below the 20-Day average.
The Industrials sector advancing issues (37) totaled 1,354,995 shares traded (36,621 average per stock) and declining issues (24) totaled 784,217 shares traded (32,676 average per stock.) 18 components are on an uptrend (2 new uptrends today) and 43 components are on a downtrend (2 new downtrends today.) There were 1 New Highs and 2 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed .3% above the 20-Day average.
The four 'risk sectors' totaled 111 advancing issues and 100 declining issues today with 12 new uptrends and 10 new downtrends. 21.3% of Risk Sector components are uptrending.
The Technology sector advancing issues (49) totaled 4,150,649 shares traded (84,707 average per stock) and declining issues (30) totaled 3,755,190 shares traded (125,173 average per stock.) 19 components are on an uptrend (9 new uptrends today) and 60 components are on a downtrend (3 new downtrends today.) There were no New Highs and 5 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed .24% above the 20-Day average.
The Consumer Staples sector advancing issues (17) totaled 703,559 shares traded (41,386 average per stock) and declining issues (23) totaled 705,887 shares traded (30,691 average per stock.) 7 components are on an uptrend (3 new uptrends today) and 34 components are on a downtrend (1 new downtrends today.) There were no New Highs and 1 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed .06% above the 20-Day average.
The Utilities sector advancing issues (11) totaled 260,858 shares traded (23,714 average per stock) and declining issues (20) totaled 413,475 shares traded (20,674 average per stock.) 10 components are on an uptrend (2 new uptrends today) and 21 components are on a downtrend (4 new downtrends today.) There were no New Highs and no New Lows. The sector is on a Buy signal and closed below the daily pivot. The sector 5-Day average closed .68% above the 20-Day average.
The Health Care sector advancing issues (35) totaled 1,098,610 shares traded (31,389 average per stock) and declining issues (17) totaled 1,131,512 shares traded (66,560 average per stock.) 9 components are on an uptrend (7 new uptrends today) and 43 components are on a downtrend (1 new downtrends today.) There were 2 New Highs and 1 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed .16% above the 20-Day average.
The Consumer Discretionary sector advancing issues (37) totaled 1,369,700 shares traded (37,019 average per stock) and declining issues (42) totaled 2,663,836 shares traded (63,425 average per stock.) 20 components are on an uptrend (6 new uptrends today) and 61 components are on a downtrend (7 new downtrends today.) There were 2 New Highs and 5 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -.09% below the 20-Day average.
Based on the SPX sector data, we are on a Sell for the SPX and the Russell 2000.
What We Learned from Wednesday's Action:
Wednesday was session 4 to close below the 5 DMA, session 3 to close below the 10 DMA, session 3 to close below the 20 DMA, and session 18 to close above the 50 DMA. This was also session 1 for the 5 DMA to close below the 20 DMA. One early sign of a sustainable rally or pullback is often a close above or below the 10 DMA. The SPX closed 16.86 points below the 10 DMA.
The SPX 5 DMA is 1353.18, 10 DMA is 1354.75, 20 DMA is 1353.39, 50 DMA is 1332.69, 100 DMA is 1358.89, and 200 DMA is 1316.11.
On Wednesday the SPX traded below the opening range but did not trade above the opening range. 47.8% of the SPX closed up from the previous close; 35.8% closed higher than the open. During Wednesday's session the SPX lost -.46 points from open to close. The SPX intraday trading range was 12.46 points. The 5-Day average intraday trading range is 13.14 points, the 10-Day average is 13.86 points, and the 20-Day average is 12.99 points. The trading range is contracting. The daily bar painted an Inside day. The 5-Day SPX gain is -2.54%, the 10-Day gain is -0.27%, and the 15-Day gain is -2.63%.
Note: The Opening Range Breakout is one of the simplest day trading set-ups to understand. The first hour of the trading day is the most volatile. Bears and bulls are battling it out in the stock market, trying to show you who’s going to be in charge for the day. If we break out of that trading range, it's telling us that new buying or selling is impacting traders' assessments of value. Looking back at today’s breakouts also helps us grasp sentiment going forward because when a clear trend is established it often carries through for several sessions.
Looking Ahead:
The Market Environment for Thursday is -1. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be lower. Mel's 5-Day Oscillator is 10 and Mel's 10-Day Oscillator is 33 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bearish for Thursday's session.
Every session this week has been characterized by morning highs followed by a rush to the exits. This is a characteristic of a bearish trend. We have been counter trend trading on the long side and been nimble enough to take early gains, taking $1.41 on each of two entries and another $1 gain on another entry today. While we are carrying some TNA currently above breakeven and some underwater, the gains taken so far this week have exceeded our potential (so far) losses so we are in positive ground on the trades.
The action of the indices today, holding up well despite AAPL's poor earnings, was mildly impressive. We see the potential for further downside but believe SPX 1311 will hold. Still, there is no desire to ride the long-side anywhere near that area; we are monitoring the Market Internals closely. Risk for lower the next couple of days seems to at least equal the likelihood of higher. While we are continuing to buy dips and sell rallies, we are not ignoring this risk.
Thursday, July 26
Economics
08:30 Initial Jobless Claims – consensus 380K, prior 386K
08:30 Continuing Claims – consensus 3300K, prior 3314K
08:30 Durable Goods – consensus 0.3%, prior 1.3%
08:30 Durable Goods Ex Transport – consensus 0.0%, prior 0.7%
08:30 Cap Goods Orders Nondef Ex Air – consensus -0.5%, prior 1.6%
10:00 Pending Home Sales MoM– consensus 0.9%, prior 5.9%
11:00 Kansas City Fed – consensus 3, prior 3
11:00 Fed to purchase $1.5b-2.b in 25 to 30-year bonds
1:00 U.S. to sell $29b in 7-yr notes
06:00 EUR German GfK Consumer Confidence
23:30 JPY CPI
23:50 JPY Retail Trade
Earnings
Before:
Dunkin Brands (DNKN) EPS 33c
Dow Chemical (DOW) EPS 64c
Exxon-Mobil (XOM) EPS $1.95
McGraw-Hill (MHP) EPS 76c
After:
CA (CA) EPS 60c
Amazon (AMZN) EPS 2c
Starbucks (SBUX) EPS 45c
Expedia (EXPE) EPS 72c
3M (MMM) EPS $1.65
Facebook (FB) EPS 11c
New home sales were 350,000, less than the expected 370,000. Oil inventories rose 2.7 million barrels. Last week they retreated by 800,000 barrels.
Thank you for reading. Think on it, trade on it, and be well.
-Mel