SPX Recaptures 200 DMA
by Jerome "Mel" Hickerson
Market Recap:
There was no U.S. economic data to review before the open this morning but futures were pointing to a strong open on the back of strong Chinese data and some merger and acquisition activity.
The week began with an impressive large upward gap of about nine points. The SPX continued to work its way upward until 10:49 am when the high of the day was painted on the chart. An orderly decline followed to put the trading low of the day on the chart at 12:23 pm just six and a half points lower than the high. The rest of the session was consolidation and upward as the index closed near the highs.
Looking at the Market Leaders board we see that all the major leaders and foreign markets were up. The SOX continues to be the major drawback but even the SOX index participated in today's rally. Notice that Emerging Markets is nearing its 52 week high.
Market Trend: Nine Sectors Report
This was another interesting session where the internals didn't always seem to jive with the action. Someone with a suspicious mind would suspect manipulation is at work but we won't concern ourselves with that; we will remain focused on what is happening. We will also point out the following from our weekend report: "There is data within the Matrix suggesting an up day on Monday." So an up day today wasn't totally surprising.
Reviewing our Nine Sectors report for tonight, we are a bit surprised by the moves. Three moves isn't surprising but to see that two of the moves were negative and only one positive move does surprise us a little. So the Sell signal remains in effect.
The SPX closed above its 200 DMA today for the first time since August 10th. The index has spent very little time above the 200 DMA since mid May and we are rapidly nearing a significant level of resistance at 1130. Oversold conditions are mounting. Heightened awareness of a possible pullback should be forefront in our minds but a Sell signal does not always mean Short. Caution makes sense until we have a down day or until we reach 1130. Don’t shoot until you see the whites of their eyes.
Volume & Breadth Indicators
For the SPX Index there were 412 Advancers/73 Decliners. On the NYSE 3,149 issues were traded with 2,371 advancing issues and 707 retreating issues, a ratio of 3.35 to 1 advancing. There were 240 new highs and 4 new lows. The 5 day moving average of New Highs is 197 while the 5 day moving average of New Lows is 9 and the 10 day moving average of Net Advancing is 691. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 6.19 to 1. The closing TRIN was 0.54 and the final tick was 507. The NYSE Composite Index gained 1.25% today.
For the NYSE, relative to the previous 30 session average, volume was -4.57% below the average. Of the last 15 sessions 6 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 20 sessions ended on a positive tick, 8 of last 10. For the SPX, the day's volume was 95% of the average daily volume for the last year. Volume was 104.1% of the last 10 day average and 120.6% of the previous day’s volume.
SPX volume was the highest volume in more than a month. Advancing volume far outstripped advancing issues. New Highs blew away New Lows. Net Advancing Issues keeps marching forward. Final tick was again quite strong. The broad NYSE Composite Index outperformed the SPX. Bulls are currently in control; if you are shorting every pump, you had better be really good.
Further, total tick for the day was 96,000 and the average tick for the day was 63. There were 91 ticks greater than 600 and 44 ticks more extreme than -600. There were 2 ticks greater than 1000 and 1 ticks more extreme than -1000. The tick action suggests institutional accumulation.
Indicators look bullish again tonight. The tick data intraday today was not overwhelming yet it was strongly bullish; and that is not always the case on days that gap upward so large – often those days have heavy profit taking.
Moving Average Indicators:
75.20% of the SPX components are giving a crossover Buy signal; 5.60% of the SPX components are giving a Sell signal. This is a 13.4 to 1 ratio of Buy signals over Sell signals.
88.4% of the SPX are above their five day moving average, 90.2% are above their 10 day average, 91.2% are above their 20 day moving average, 78.2% are above their 50 day moving average, 59.2% are above their 100 day moving average, and 54.2% are above their 150 day moving average.
We were a bit surprised to see that the SOX 5 DMA crossed below the 20 DMA today because the SOX was quite strong. This will bear watching the next couple of days. But notice that the percent of SPX components above their 20 DMA surpassed 90% today. This last happened in mid March. So we are quite overbought.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Basic Materials -- Outperformed the SPX by +49%.
- Financials -- Outperformed the SPX by +99%.
- Technology -- Outperformed the SPX by +67%.
- Consumer Discretionary -- Outperformed the SPX by +42%.
Sectors weaker than the SPX for Monday:
- Energy -- Underperformed the SPX by -49%.
- Industrials -- Underperformed the SPX by -13%.
- Consumer Staples -- Underperformed the SPX by -100%.
- Utilities -- Underperformed the SPX by -89%.
- Health Care -- Underperformed the SPX by -111%.
Stocks on the Move:
Today's SPX component winners and losers:
- Largest one day loser is LH with -4.74%
- Largest three day loser is DPS with -8.65%
- Largest five day loser is V with -9.68%
- Largest ten day loser is V with -7.92%
- Largest one day winner is MU with 8.14%
- Largest three day winner is MCO with 11.96%
- Largest five day winner is JDSU with 13.54%
- Largest ten day winner is MCO with 18.39%
In Late Trading:
209 SPX components moved upward and 128 components downward during the after hours with 152 million shares traded.
Tuesday, September 14
Economics
08:30 Retail Sales 0.2% cons.
08:30 Retails Sales ex-Auto 0.3% cons.
10:00 Business Inventories 0.4% cons.
Japan Industrial Production
Great Britain Consumer Price Index 2.9% cons.
Great Britain Retail Price Index 224.3 cons.
Eurozone German ZEW Survey 10.0 cons.
Earnings
Before: BBY, CBRL, KR, WNI
After: NDZ, PLL
After two months of declines, retail sales rose 0.4% in July. Economists have forecasts pointing to a 0.3% increase for the month of August. The government will also release its reading on business inventories -- a number that economists watch since it's a component of GDP -- but financial markets don't usually pay much attention to.
Make it a great Tuesday!
-Mel
