SPX Closes Below Short Term Support
by Jerome "Mel" Hickerson
Merger and acquisition activity both at home and overseas helped the mood in the early going. The Chicago Fed reported that their National Activity Index came in at 0.00 in July, which was above the revised June reading of -0.70. The index projects "average" growth going forward. Futures were up overnight reaching a high around before falling almost five points leading to the open.
The week began with a small gap upward, continued almost seven points higher and quickly put the high of the day on the chart just twenty minutes into the session. The next hour was a sharp retreat of about twelve points. From 11am through 2pm was tight range and sideways but after a very brief rally attempt the SPX tried to consolidate before rolling over to close at the lows of the day.
This was a pretty bearish looking day but volume was quite low. If you are bearish, you certainly would have liked to have seen volume at least at the ten day average volume rather than the lowest volume of 2010. There was really very little interest in selling today. Of course, the Ultimate Indicator still pointed downward again and that can't be ignored.
We've seen several of these morning rallies obliterated since the late April highs. (See arrows on chart.) They haven't always led to deeper selling the following day. The bar painted on the chart for today did manage to put a higher high and a higher low than the previous session.
Our Nine Sectors Report had several changes today, somewhat unusual for a day that lost just a few points. Interestingly enough the net change was positive, but not nearly enough to be seen as a trend changer, so we will keep the Neutral signal yet again. But an aggressive swing trader might want to be layering in on the short side. As you look at the above chart, notice predominance of red.
This was not an easy day to trade; sluggish throughout the midday and all the action was clustered into the open and close. But mea culpa. I was overly cautious today and had an SDS trade signal at 10:15am that I ignored because I was in disbelief of the signal.
Tuesday, August 24
Economics
10:00 Existing Home Sales 5.15m cons.
Britain BBA Loan sfor House Purchase
Euro-Zone Industrial New Orders
Canada Retail Sales
Japan Merchandise Trade Balance
Earnings
Before: AMWD, BKS, BIG , DAKT, DSW, MDT, TSL
After: DY, PSUN, RUE, NCTY, PAY
Speeches
Charles Evans
Auction
11:00 2-Yr Note Auction
The July report on existing homes sales from the National Association of Realtors is due during morning trading Tuesday. Sales of existing homes fell 5.1% in June to a 5.37 million-unit pace -- a sign of renewed turbulence in the housing market. Economists are expecting July to show another slowdown in sales, down to 5.14 million.
Mel’s Missives from the Matrix:
- Total tick for the day was 26,000 and the average tick for the day was 17. There were 161 ticks greater than 600 and 142 ticks more extreme than -600. There were 16 ticks greater than 1000 and 14 ticks more extreme than -1000.
- The day's range was 14.5 points. The intraday trading range - 9:35 to the close - was 14.42. The 5 DMA of daily range is 15.5.
- Evidence of the intraday trend: At 10am volume was 79.99% of the 10 day average. By noon the volume was 86.2% of the 10 day average, and by 2pm volume was 85.3% of the 10 day average.
- The day's volume was 66.2% of the average daily volume for the last year. Volume was 84.7% of the last 10 day average and 80.4% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 15:15 and 15:30 when relative volume increased 36.2% while the SPX was dropping -0.23%. The largest drop in relative volume came between 10:45 and 11:00 when relative volume dropped -50.5% while the SPX was rising 0.04%.
- 3% of the SPX stocks closed with two day RSI above 90. 5% closed with RSI above 80. 53% closed with RSI below 20 and 30% closed with RSI below 10.
- 11.8% of the SPX are above their five day moving average, 17.2% are above their 10 day average, 14% are above their 20 day moving average, 34% are above their 50 day moving average, 27.6% are above their 100 day moving average, and 34% are above their 150 day moving average.
- 10% of the SPX closed above their most recent previous high.
- 27% of the SPX stocks closed below their most recent previous lows.
- 152 SPX issues advanced and 332 issues declined, a net SPX advance/decline of -180.
- Evidence of the intraday trend: At 10am, 71.2% of the SPX components were in the top half of the range. By noon, 16.6% were in the top half of the range, and by 2pm, 32.2% were in the top half of the range.
- 10% of stocks closed in the top half of the day's range. (89.8% closed in bottom half.)
- 1.2% of stocks closed in the top 10% of the day's range. 1.6% of stocks closed in the top 20% of the day's range.
- 48.6% of stocks closed in the bottom 10% of the day's range. 65% of stocks closed in the bottom 20% of the day's range.
- 4.4% of stocks closed within 2% of their 52 week high. 12.6% of stocks closed within 5% of their 52 week high.
- 86.8% of stocks closed within 50% of their 52 week low. 62.6% of stocks closed within 25% of their 52 week low.
- 1.6% of stocks closed within ¼% of their high for the day.
- 53.2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 89.4% of the SPX components were up since the open. By noon, 38.8% were up since the open, and by 2pm, 48.4% were up since the open.
- 30.8% of the SPX closed up from the previous close; 19.4% closed higher than the open.
- Sectors stronger than the SPX for Monday:
- Energy -- Outperformed the SPX by +45%.
- Consumer Staples -- Outperformed the SPX by +63%.
- Utilities -- Outperformed the SPX by +90%.
- Health Care -- Outperformed the SPX by +86%.
- Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -70%.
- Financials -- Underperformed the SPX by -17%.
- Industrials -- Underperformed the SPX by -69%.
- Technology -- Underperformed the SPX by -53%.
- Consumer Discretionary -- Underperformed the SPX by -49%.
- The $SOX index strength was weaker relative to the SPX Monday by -0.83%.
- The XLF underperformed the SPX by -0.17% Monday.
- The 2 Day RSI of the SPX is 8. The Dow RSI is 6, the NASDAQ is 9 and the Russell is 7.
- Over the last four sessions, the average session closed 37.77% of the range above the low. Monday closed at 1.1% of the daily range.
- Upside momentum moved lower Monday, from Friday’s -0.25 to today’s -0.77. The ratio of SPX components giving a crossover sell signal compared to buy signals moved higher to S 4.95 to 1.
- The ISEE Equity 10 day moving average Monday was 176.1. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10 and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 142 SPX components moved upward and 195 components downward during the after hours with 208 million shares traded.
Trade 'em well on Tuesday everyone!
-Mel
