SPX Closes Higher but Financials Drag
Market Recap:
Our Market Leaders Board shows the Financials significantly underperforming today while Technology was up over 2%. This is a rare diversion of this significant size and often leads to some market weakness ahead.
SPX big winners were Amphenol Corp (APH) 13.52%, W.W. Grainger Inc (GWW) 11.37%, and Emc Corp (EMC) 8.79%. SPX big losers were Bank Of America Corp (BAC) -4.95%, American Tower Corp (AMT) -4.05%, and Saint Jude Medical Inc (STJ) -3.98%.
SPX five day big winners are W.W. Grainger Inc (GWW) 17.62%, Amphenol Corp (APH) 13.72%, and Sprint Nextel Corp (S) 13.31%. SPX five day big losers are Lexmark International (LXK) -23.96%, Dean Foods Company (DF) -13.41%, and Safeway Inc (SWY) -8.29%.
New Ten Day Highs: MMM, ABT, ANF, URBN, AFL, APD, MO, AMP, ABC, AMGN, APH, APC, ADI, ADP, AN, AVB, AVY, BHI, BLL, BAX, BBT, HRB, BRK.B, CAM, CAH, CELG, CF, CVX, XEL, CLX, CMS, CL, COP, ED, COST, CSX, CVS, DVA, DVN, DO, DTE, DNB, ROST, EMR, ESV, ETR, EOG, EQT, EFX, EXC, ESRX, XOM, FAST, FDX, FHN, FMC, FTI, FRX, GPS, GPC, GILD, GR, GWW, HAL, HES, HON, HSP, HBAN, TEG, IP, ITT, JEC, JNJ, JCI, KMB, KFT, LEG, LLY, LMT, MTB, MRO, MAS, MAT, MHP, MCK, MDP, PCS, MOLX, MUR, MYL, NDAQ, NI, JWN, NU, NOC, NYX, ORLY, OMC, ORCL, PAYX, PBCT, PFE, PNW, PPL, PCP, PEG, PHM, RTN, RSG, RAI, ROK, SLB, SRE, SE, TSO, BK, TIF, TWC, TWX, UPS, USB, VLO, VZ, VFC, VMC, WMT, WAG, WDC, WHR
New Ten Day Lows: AKS, AGN, CAG, DF, DV, DOV, EIX, FIS, HUM, LLL, LXK, LOW, WFR, NEM, ODP, JCP, PBI, QCOM, STJ, STT, SYK, SVU, X, VXX, SH
Volume & Breadth Indicators
For the SPX Index there were 351 components advancing and 138 components declining. On the NYSE 3,134 issues were traded with 1,871 advancing issues and 1,142 retreating issues, a ratio of 1.64 to one advancing. There were 242 new highs and 22 new lows. The five day moving average of New Highs is 207 while the five day moving average of New Lows is 36 and the ten day moving average of Net Advancing is 14.
Advancing volume was higher at a ratio of 1.65 to one. The closing TRIN was 1.16 and the final tick was 31. The five day average of TRIN is 1.12 and the ten day average of TRIN is 1.47. The NYSE Composite Index gained 0.47% today while the SPX gained 0.66%.
For the NYSE, relative to the previous 30 session average, volume was -8.01% 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, 17 sessions ended on a positive tick, 4 of last 10. For the SPX, the day's volume was 100.6% of the average daily volume for the last year. Volume was 115.2% of the last 10 day average and 100.5% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 95,000 and the average tick for the day was 62. There were 37 ticks greater than 600 and 14 ticks more extreme than -600. There were no ticks greater than 1000 and 1 ticks more extreme than -1000. The tick action suggests institutional accumulation
Moving Average and Support/Resistance Indicators:
76.8% of the SPX are above their five day moving average, 67.4% are above their 10 day average, 67.2% are above their 20 day moving average, 65.2% are above their 50 day moving average, and 55.6% are above their 200 day moving average.
There were two significant moving average crossovers today as both the Dow and Emerging Markets had their 5 DMA cross above their 20 DMA. Our moving average Power Rating is 49 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Wednesday:
- Basic Materials -- Outperformed the SPX by +8%.
- Energy -- Outperformed the SPX by +8%.
- Industrials -- Outperformed the SPX by +118%.
- Technology -- Outperformed the SPX by +106%.
Sectors weaker than the SPX for Wednesday:
- Financials -- Underperformed the SPX by -104%.
- Consumer Staples -- Underperformed the SPX by -64%.
- Utilities -- Underperformed the SPX by -29%.
- Health Care -- Underperformed the SPX by -35%.
- Consumer Discretionary -- Underperformed the SPX by -14%.
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 (20) totaled 750,656 shares traded (37,533 average per stock) and declining issues (7) totaled 147,008 shares traded (21,001 average per stock.) 21 components are on an uptrend (2 new uptrends today) and 6 components are on a downtrend (no 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 -.12% below the 20-Day average.
The Energy sector advancing issues (32) totaled 1,670,254 shares traded (52,195 average per stock) and declining issues (7) totaled 334,921 shares traded (47,846 average per stock.) 37 components are on an uptrend (1 new uptrends today) and 3 components are on a downtrend (no 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 1.89% above the 20-Day average.
The Financials sector advancing issues (25) totaled 710,156 shares traded (28,406 average per stock) and declining issues (39) totaled 4,190,475 shares traded (107,448 average per stock.) 58 components are on an uptrend (2 new uptrends today) and 8 components are on a downtrend (3 new downtrends today.) There were 2 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 .91% above the 20-Day average.
The Industrials sector advancing issues (50) totaled 1,804,802 shares traded (36,096 average per stock) and declining issues (9) totaled 199,241 shares traded (22,138 average per stock.) 52 components are on an uptrend (17 new uptrends today) and 7 components are on a downtrend (2 new downtrends today.) There were 3 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 -.76% below the 20-Day average.
The four 'risk sectors' totaled 127 advancing issues and 62 declining issues today with 22 new uptrends and 5 new downtrends. 87.5% of Risk Sector components are uptrending.
The Technology sector advancing issues (55) totaled 5,514,734 shares traded (100,268 average per stock) and declining issues (10) totaled 876,413 shares traded (87,641 average per stock.) 46 components are on an uptrend (31 new uptrends today) and 19 components are on a downtrend (3 new downtrends today.) There were 2 New Highs and 1 New Lows. The sector is on a Sell signal and closed above the daily pivot. The sector 5-Day average closed -.68% below the 20-Day average.
The Consumer Staples sector advancing issues (28) totaled 1,005,554 shares traded (35,913 average per stock) and declining issues (11) totaled 530,735 shares traded (48,249 average per stock.) 27 components are on an uptrend (2 new uptrends today) and 12 components are on a downtrend (no new downtrends today.) There were 10 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 1.54% above the 20-Day average.
The Utilities sector advancing issues (17) totaled 299,937 shares traded (17,643 average per stock) and declining issues (5) totaled 92,932 shares traded (18,586 average per stock.) 20 components are on an uptrend (no new uptrends today) and 3 components are on a downtrend (no 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 1.15% above the 20-Day average.
The Health Care sector advancing issues (30) totaled 1,193,767 shares traded (39,792 average per stock) and declining issues (15) totaled 596,355 shares traded (39,757 average per stock.) 35 components are on an uptrend (4 new uptrends today) and 10 components are on a downtrend (2 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 1.11% above the 20-Day average.
The Consumer Discretionary sector advancing issues (47) totaled 2,008,296 shares traded (42,730 average per stock) and declining issues (17) totaled 689,389 shares traded (40,552 average per stock.) 47 components are on an uptrend (4 new uptrends today) and 22 components are on a downtrend (1 new downtrends today.) There were 6 New Highs and 2 New Lows. The sector is on a Sell signal and closed above the daily pivot. The sector 5-Day average closed -.16% below 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 Wednesday's Action:
Wednesday was session 4 to close above the 5 DMA, session 2 to close above the 10 DMA, session 4 to close above the 20 DMA, and session 4 to close above the 50 DMA. This was also session 2 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 18.85 points above the 10 DMA.
The SPX 5 DMA is 1356.33, 10 DMA is 1353.93, 20 DMA is 1347.59, 50 DMA is 1333.43, 100 DMA is 1360.07, and 200 DMA is 1310.9.
On Wednesday the SPX traded above the opening range but did not trade below the opening range. 66% of the SPX closed up from the previous close; 77.2% closed higher than the open. During Wednesday's session the SPX gained 9.2 points from open to close. The SPX intraday trading range was 14.85 points. The 5-Day average intraday trading range is 14.59 points, the 10-Day average is 13.33 points, and the 20-Day average is 13.79 points. The trading range is expanding. The 5-Day SPX gain is 2.34%, the 10-Day gain is -0.09%, and the 15-Day gain is 4.00%.
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 Thursday is +3. 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 58 and Mel's 10-Day Oscillator is 35 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bullish for Thursday's session.
Yesterday Technolgy underperformed big. Today Financials underperformed big. The two largest sectors of the market. Yet the market was up decently both days. This is some odd action.
We are switching from buying the morning dip to shorting rallies, at least for now, as we suspect that the strange market internals along with resistance here at these levels will lead to at some kind of market downturn. We are likely a bit early, again, making this switch but we don’t want to miss an expected move by looking for the “perfect” entry. The large cap Tech stocks that reported after hours today all had positive market reactions and a pop higher at Thursday’s open seems likely.
Looking at our Market Internals this evening, some of what we are seeing looks bullish but we are seeing levels that often lead to pullbacks as the market requires a breather before possibly pushing higher.
Thursday, July 19
Economics
08:30 Initial Jobless Claims – consensus 363K, prior 386K
08:30 Continuing Claims – consensus 3288K, prior 3304K
10:00 Philadelphia Fed – consensus -8.0, prior -16.6
10:00 Existing Home Sales – consensus 4.62M, prior 4.55M
10:00 Leading Indicators – consensus -0.1%, prior 0.3%
11:00 Fed to purchase $1.5b-2.b in 25 to 30-year bonds
1:00 U.S. to sell $15b 10-yr TIPS
06:00 CHF Trade Balance
08:30 GBP Retail Sales
9:30 Spain to sell bonds
10:00 France to sell bonds/notes
10:30 U.K. to sell bonds
Earnings
Before:
AutoNation (AN) EPS 58c
Blackstone (BX) EPS 23c
Freeport-McMoran (FCX) EPS 84c
Goodrich (GR) EPS $1.69
Morgan Stanley (MS) EPS 47c
Nokia (NOK) EPS -9c
Novartis (NVS) EPS $1.36
Phillip Morris (PM) EPS $1.35
Safeway (SWY) EPS 48c
Sherwin-Williams (SHW) EPS $2.11
Travelers (TRV) EPS $1.42
Verizon (VZ) EPS 64c
After:
Advanced Micro (AMD) EPS 7c
Capital One (COF) EPS $1.40
Chipotle (CMG) EPS $2.30
Google (GOOG) EPS $10.13
Microsoft (MSFT) EPS 62c
Sandisk (SNDK) EPS 19c
Thank you for reading. Think on it, trade on it, and be well.
-Mel