Rally Continues on Weak Technicals
Market Recap:
Our Market Leaders Board has all of our leaders closing in the black today with Technology and the small caps leading the way.
SPX big winners were First Solar Inc (FSLR) 11.68%, Best Buy Co Inc (BBY) 10.88%, and Cognizant Tech Sol Cp A (CTSH) 9.92%. SPX big losers were Interpublic Gr Of Cos (IPG) -8.74%, Tyson Foods Inc (TSN) -8.01%, and Aes Corporation (AES) -4.51%.
SPX five day big winners are First Solar Inc (FSLR) 34.13%, US Steel Corp (X) 21.25%, and Frontier Communications Corp (FTR) 19.95%. SPX five day big losers are Abercrombie & Fitch Co (ANF) -15.57%, Sealed Air Corp (SEE) -14.34%, and Genworth Financial (GNW) -13.92%.
New Ten Day Highs: MMM, ADBE, A, APD, ARG, AKAM, ATI, ALL, AIG, AMP, APH, ADI, AMAT, AIZ, BAC, BBY, BIG, XL, BMC, BXP, BRK.B, CAM, CCL, CAT, CBG, CBS, CVX, CTAS, CSCO, CTSH, CMA, CSC, COP, STZ, SAI, CSX, DRI, DFS, RRD, DOV, DPS, ROST, ETFC, EMN, ETN, EMR, ESV, FHN, FSLR, FLS, FLR, FTI, FCX, GE, GPC, HAL, HAR, HRS, HIG, HAS, HNZ, HES, HPQ, HST, ITW, INTC, IBM, IFF, INTU, IVZ, JDSU, JNPR, K, KEY, KLAC, KSS, KFT, KR, LM, LIFE, LTD, LNC, LLTC, MTB, MAR, MCD, MHP, MDT, MET, MU, MSFT, MOLX, MON, MS, NSM, NYT, NEM, NWSA, NUE, NVDA, ORCL, PLL, PEP, PKI, PM, PNC, RL, PFG, PG, PLD, QCOM, PWR, RHT, ROK, R, SWY, CRM, CVG, SCHW, SNI, SIAL, SPG, STJ, SPLS, HOT, SYK, STI, SYMC, TGT, TLAB, TSO, TXN, BK, TMO, TWX, TIE, TMK, TRV, X, UTX, QLD, AEM, VLO, VRSN, VNO, WM, WDC, WHR, AAPL, C, GS, GOOG
New Ten Day Lows: AES, AIV, CAH, CLX, MCK, SUN, TSN, VXX, SH
Volume & Breadth Indicators
For the SPX Index there were 278 components advancing and 214 components declining. On the NYSE 3,138 issues were traded with 1,895 advancing issues and 1,122 retreating issues, a ratio of 1.69 to one advancing. There were 210 new highs and 12 new lows. The five day moving average of New Highs is 186 while the five day moving average of New Lows is 33 and the ten day moving average of Net Advancing is 287. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 1.93 to one. The closing TRIN was 0.86 and the final tick was -36. The five day average of TRIN is 1.32 and the ten day average of TRIN is 1.1. The NYSE Composite Index gained 0.31% today while the SPX gained 0.23%.
For the NYSE, relative to the previous 30 session average, volume was -15.35% below the average. Of the last 15 sessions 7 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 12 sessions ended on a positive tick, 3 of last 10. For the SPX, the day's volume was 89.8% of the average daily volume for the last year. Volume was 83.4% of the last 10 day average and 90.2% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 33,000 and the average tick for the day was 21. There were 16 ticks greater than 600 and 5 ticks more extreme than -600. There were 1 ticks greater than 1000 and no ticks more extreme than -1000.
Moving Average and Support/Resistance Indicators:
79.2% of the SPX are above their five day moving average, 75.2% are above their 10 day average, 68.8% are above their 20 day moving average, 70.2% are above their 50 day moving average, and 57.2% are above their 200 day moving average.
There were two significant moving average crossovers today as the Dow 20 DMA crossed above the 100 DMA and China's 20 DMA crossed above the 50 DMA. Our moving average Power Rating is 68 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Basic Materials -- Outperformed the SPX by +67%.
- Energy -- Outperformed the SPX by +4%.
- Financials -- Outperformed the SPX by +10%.
- Technology -- Outperformed the SPX by +43%.
- Consumer Discretionary -- Outperformed the SPX by +12%.
Sectors weaker than the SPX for Monday:
- Industrials -- Underperformed the SPX by -24%.
- Consumer Staples -- Underperformed the SPX by -35%.
- Utilities -- Underperformed the SPX by -48%.
- Health Care -- Underperformed the SPX by -21%.
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 (24) totaled 863,447 shares traded (35,977 average per stock) and declining issues (6) totaled 92,122 shares traded (15,354 average per stock.) 22 components are on an uptrend (2 new uptrends today) and 8 components are on a downtrend (2 new downtrends today.) There were 1 New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed .71% above the 20-Day average.
The Energy sector advancing issues (26) totaled 926,097 shares traded (35,619 average per stock) and declining issues (18) totaled 882,965 shares traded (49,054 average per stock.) 34 components are on an uptrend (2 new uptrends today) and 10 components are on a downtrend (1 new downtrends today.) There were 3 New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed 2.78% above the 20-Day average.
The Financials sector advancing issues (33) totaled 3,485,469 shares traded (105,620 average per stock) and declining issues (46) totaled 1,170,919 shares traded (25,455 average per stock.) 56 components are on an uptrend (2 new uptrends today) and 25 components are on a downtrend (9 new downtrends today.) There were 5 New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed 1.14% above the 20-Day average.
The Industrials sector advancing issues (31) totaled 923,578 shares traded (29,793 average per stock) and declining issues (28) totaled 435,306 shares traded (15,547 average per stock.) 46 components are on an uptrend (1 new uptrends today) and 14 components are on a downtrend (3 new downtrends today.) There were 6 New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed 2.09% above the 20-Day average.
The four 'risk sectors' totaled 114 advancing issues and 98 declining issues today with 7 new uptrends and 15 new downtrends. 73.5% of Risk Sector components are uptrending.
The Technology sector advancing issues (59) totaled 4,213,368 shares traded (71,413 average per stock) and declining issues (20) totaled 957,211 shares traded (47,861 average per stock.) 67 components are on an uptrend (3 new uptrends today) and 12 components are on a downtrend (1 new downtrends today.) There were 2 New Highs and no New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed 2.39% above the 20-Day average.
The Consumer Staples sector advancing issues (13) totaled 719,485 shares traded (55,345 average per stock) and declining issues (28) totaled 781,195 shares traded (27,900 average per stock.) 23 components are on an uptrend (3 new uptrends today) and 18 components are on a downtrend (6 new downtrends today.) There were 6 New Highs and 1 New Lows. The sector is on a Buy signal and closed above the daily pivot. The sector 5-Day average closed 1.05% above the 20-Day average.
The Utilities sector advancing issues (13) totaled 208,142 shares traded (16,011 average per stock) and declining issues (17) totaled 396,753 shares traded (23,338 average per stock.) 17 components are on an uptrend (no new uptrends today) and 14 components are on a downtrend (2 new downtrends today.) There were no New Highs and no New Lows. The sector is on a Sell signal and closed above the daily pivot. The sector 5-Day average closed .81% above the 20-Day average.
The Health Care sector advancing issues (24) totaled 512,096 shares traded (21,337 average per stock) and declining issues (28) totaled 1,266,387 shares traded (45,228 average per stock.) 23 components are on an uptrend (1 new uptrends today) and 29 components are on a downtrend (4 new downtrends today.) There were 1 New Highs and no New Lows. The sector is on a Sell signal and closed above the daily pivot. The sector 5-Day average closed .82% above the 20-Day average.
The Consumer Discretionary sector advancing issues (56) totaled 2,619,774 shares traded (46,782 average per stock) and declining issues (23) totaled 857,381 shares traded (37,277 average per stock.) 52 components are on an uptrend (2 new uptrends today) and 29 components are on a downtrend (2 new downtrends today.) There were 5 New Highs and no New Lows. The sector is on a Sell signal and closed above the daily pivot. The sector 5-Day average closed .78% above the 20-Day average.
Based on the SPX sector data, we are on a Buy for the SPX and the Russell 2000.
What We Learned from Monday's Action:
Monday was session 2 to close above the 5 DMA, session 8 to close above the 10 DMA, session 8 to close above the 20 DMA, and session 17 to close above the 50 DMA. This was also session 6 for the 5 DMA to close above 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 23.0 points above the 10 DMA.
The SPX 5 DMA is 1380.97, 10 DMA is 1371.24, 20 DMA is 1363.33, 50 DMA is 1342.52, 100 DMA is 1360.23, and 200 DMA is 1323.27.
On Monday the SPX traded both below and above the opening range. 53% of the SPX closed up from the previous close; 43.2% closed higher than the open. During Monday's session the SPX gained 3.19 points from open to close. The SPX intraday trading range was 5.7 points. The 5-Day average intraday trading range is 10.82 points, the 10-Day average is 13.27 points, and the 20-Day average is 13.59 points. The trading range is contracting. The 5-Day SPX gain is 0.64%, the 10-Day gain is 3.24%, and the 15-Day gain is 3.00%.
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 Tuesday is zero. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be higher. Mel's 5-Day Oscillator is 36 and Mel's 10-Day Oscillator is 44 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, we are neutral on Tuesday's bias.
There are many warning signs. Overbought conditions with declining technicals is for us a strong clue. Breadth continues to lag the indices suggesting that the stocks which make up the indices and the markets are losing the interest of buyers and flatting out at the tops. This close to a 52-week high the New Highs should be booming around 350 per day, not in the low 200's.
Yes, our Market Technicals continue to look bullish. And a trader trading the long side hasn't done too badly, either. But the other shoe could (and we believe it will) drop and we continue to build a short position.
Review: We are in TZA from 18.20 and 17.70, UVXY average 5.94 and SPXU at 43.36.
Tuesday, August 7
Economics
10:00 JOLTS Job Openings - prior 3642
3:00 Consumer Credit – consensus $10.00B, prior $17.12B
11:00 Fed buying $4.25b-5b in 6 to 8-year range
11:30 Treasury selling 4-week bills
1:00 Treasury selling $32b 3-year notes
04:30 AUD RBA Rate Decision
05:45 CHF Unemployment Rate
07:15 CHF CPI
08:30 GBP Industrial Production
09:00 EUR Italian GDP
10:00 EUR German Factory Orders
23:50 JPY Trade Balance
11:00 Greece to sell EU625m 6-month bills
12:00 EFSF to sell EU1.5b 3-month bills
Earnings
Before:
Sirius (SIRI) EPS 2c
MGM (MGM) -15c
CVS Caremark (CVS) EPS 74c
After:
Walt Disney (DIS) EPS 93c
Priceline.com (PCLN) EPS $7.36
Express Scripts (ESRX) EPS 82c
Cablevision (CVC) EPS 19c
There were no important economic releases on Monday and there are none scheduled for Tuesday.
Personal Note: A nasty fall this morning. The sidewalk is instantly in your face when your arms do not work to defend you. The body is failing us. We see this more and more each day. But the spirit will never fail. We are going to take the rare step of posting our picture here with apologies to anyone offended but there is a valuable point we wish to make. When the world knocks you down, you have to keep getting up... again and again and again, as many times as necessary. This morning, we were assisted home (can't get up without help, sad to say.) We cleaned up... and finished our walk.
Thank you for reading. Think on it, trade on it, and be well.
-Mel
