Sluggish Pre-Holiday Session Ends with Bulls in Control
Note: Abbreviated reports this week. With the midweek holiday, trading action may be sluggish.
Market Recap:
SPX big winners were Constellation Brands Inc (STZ) 6.54%, Best Buy Co Inc (BBY) 5.67%, and Metropcs Communications Inc (PCS) 5.11%. SPX big losers were Alexander & Baldwin Inc (ALEX) -103.79%, Joy Global Inc (JOY) -4.23%, and UnitedHealth Group Inc. (UNH) -3.8%.
SPX five day big winners are Constellation Brands Inc (STZ) 31.79%, Best Buy Co Inc (BBY) 19.94%, and QEP Resources (QEP) 19.78%. SPX five day big losers are Alexander & Baldwin Inc (ALEX) -47.62%, O'reilly Automotive Inc (ORLY) -10.64%, and Wellpoint Inc (WLP) -9.7%.
New Ten Day Highs: MMM, ABT, ANF, AES, AFL, AKAM, AGN, ALL, MO, AXP, AIG, AMT, AMP, ABC, AMGN, APC, APA, APOL, T, ADP, AVB, BCR, BAX, BBT, BDX, BBY, BIIB, XL, BA, BXP, BMY, BF/B, BRK.B, CA, CFN, CBS, CTL, CF, CHRW, CVX, CB, CINF, CTAS, CTXS, KO, CCE, CMCSA, CMA, CSC, CPWR, COP, CNX, STZ, SAI, COST, CVS, DVA, DE, DVN, DV, DTV, DFS, DUK, DNB, EMN, ECL, EIX, ESV, ETR, EFX, EQR, ESRX, FIS, FITB, FHN, FE, FISV, FLS, FMC, FRX, BEN, GCI, GD, GE, GIS, GILD, GR, HAR, HIG, HCP, HCN, HSY, HRL, DHI, HCBK, HBAN, TEG, IPG, IGT, INTU, ISRG, IVZ, JEC, JNJ, KMB, KSS, LLL, LH, LM, LEG, LEN, LXK, LLY, LTD, LLTC, LMT, L, LO, MTB, MRO, MMC, MAS, MA, MAT, MKC, MHP, MCK, MDT, WFR, MRK, MET, PCS, MU, TAP, MON, MCO, MS, MYL, NBR, NDAQ, NSM, NWSA, NBL, NU, NTRS, NOC, NVDA, NYX, OXY, OMC, ORCL, PLL, PDCO, BTU, POM, PEP, PFE, PCG, PM, PCL, PNC, PX, PFG, PGN, PLD, PRU, PEG, PSA, PHM, PWR, DGX, RF, RSG, RAI, RDC, SCG, CVG, SNI, SHLD, SRE, SPG, SLM, SWN, S, SPLS, STT, SRCL, STI, SYY, TROW, TSO, TXN, BK, TMO, TWC, TWX, TIE, TMK, TSS, TRV, UNP, UPS, DRYS, MBI, USB, VTR, VZ, VNO, WMT, WPO, WM, WPI, WFC, WU, WY, AMZN, AAPL, ICE
New Ten Day Lows: AET, CVH, F, MJN, VXX, SH, VFC, WLP
Volume & Breadth Indicators
For the SPX Index there were 289 components advancing and 208 components declining. On the NYSE 3,137 issues were traded with 2,150 advancing issues and 905 retreating issues, a ratio of 2.38 to one advancing. There were 271 new highs and 5 new lows. The five day moving average of New Highs is 161 while the five day moving average of New Lows is 32 and the ten day moving average of Net Advancing is 618. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 1.84 to one. The closing TRIN was 1.4 and the final tick was 156. The five day average of TRIN is 1.08 and the ten day average of TRIN is 1.4. The NYSE Composite Index gained 0.39% today while the SPX gained 0.25%.
For the NYSE, relative to the previous 30 session average, volume was -15.87% below the average. Of the last 15 sessions 4 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 19 sessions ended on a positive tick, 5 of last 10. For the SPX, the day's volume was 89.6% of the average daily volume for the last year. Volume was 98.9% of the last 10 day average and 81% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 166,000 and the average tick for the day was 107. There were 28 ticks greater than 600 and 9 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.
Moving Average and Support/Resistance Indicators:
91.6% of the SPX are above their five day moving average, 83.8% are above their 10 day average, 80% are above their 20 day moving average, 58% are above their 50 day moving average, and 56.2% are above their 200 day moving average.
There were two significant moving average crossovers today as both Technology and the Sox had their 5 DMA cross above their 20 DMA. Our moving average Power Rating is 35 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Financials -- Outperformed the SPX by +41%.
- Technology -- Outperformed the SPX by +34%.
- Consumer Staples -- Outperformed the SPX by +31%.
- Utilities -- Outperformed the SPX by +43%.
- Health Care -- Outperformed the SPX by +6%.
- Consumer Discretionary -- Outperformed the SPX by +4%.
Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -71%.
- Energy -- Underperformed the SPX by -17%.
- Industrials -- Underperformed the SPX by -112%.
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 (9) totaled 324,153 shares traded (36,017 average per stock) and declining issues (21) totaled 677,804 shares traded (32,276 average per stock.) 24 components are on an uptrend (no new uptrends today) and 6 components are on a downtrend (2 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 .3% above the 20-Day average.
The Energy sector advancing issues (25) totaled 1,309,528 shares traded (52,381 average per stock) and declining issues (19) totaled 785,071 shares traded (41,320 average per stock.) 42 components are on an uptrend (no new uptrends today) and 2 components are on a downtrend (1 new downtrends today.) There were no 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 .31% above the 20-Day average.
The Financials sector advancing issues (61) totaled 2,748,674 shares traded (45,060 average per stock) and declining issues (19) totaled 2,185,898 shares traded (115,047 average per stock.) 79 components are on an uptrend (2 new uptrends today) and 2 components are on a downtrend (no new downtrends today.) There were 8 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 1.26% above the 20-Day average.
The Industrials sector advancing issues (17) totaled 377,144 shares traded (22,185 average per stock) and declining issues (44) totaled 1,588,860 shares traded (36,110 average per stock.) 50 components are on an uptrend (1 new uptrends today) and 11 components are on a downtrend (6 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 .16% above the 20-Day average.
The four 'risk sectors' totaled 112 advancing issues and 103 declining issues today with 3 new uptrends and 9 new downtrends. 90.3% of Risk Sector components are uptrending.
The Technology sector advancing issues (32) totaled 3,333,855 shares traded (104,183 average per stock) and declining issues (46) totaled 2,369,959 shares traded (51,521 average per stock.) 68 components are on an uptrend (no new uptrends today) and 11 components are on a downtrend (4 new downtrends today.) There were 7 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 .22% above the 20-Day average.
The Consumer Staples sector advancing issues (26) totaled 948,100 shares traded (36,465 average per stock) and declining issues (15) totaled 587,878 shares traded (39,192 average per stock.) 37 components are on an uptrend (2 new uptrends today) and 4 components are on a downtrend (1 new downtrends today.) There were 13 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 .37% above the 20-Day average.
The Utilities sector advancing issues (29) totaled 762,032 shares traded (26,277 average per stock) and declining issues (2) totaled 60,610 shares traded (30,305 average per stock.) 31 components are on an uptrend (no new uptrends today) and 1 components are on a downtrend (no new downtrends today.) There were 11 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 .07% above the 20-Day average.
The Health Care sector advancing issues (34) totaled 1,173,741 shares traded (34,522 average per stock) and declining issues (18) totaled 817,539 shares traded (45,419 average per stock.) 45 components are on an uptrend (no new uptrends today) and 7 components are on a downtrend (2 new downtrends today.) There were 12 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 1.37% above the 20-Day average.
The Consumer Discretionary sector advancing issues (56) totaled 2,453,642 shares traded (43,815 average per stock) and declining issues (25) totaled 1,376,192 shares traded (55,048 average per stock.) 59 components are on an uptrend (2 new uptrends today) and 22 components are on a downtrend (2 new downtrends today.) There were 7 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 .24% 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 4 to close above the 5 DMA, session 2 to close above the 10 DMA, session 5 to close above the 20 DMA, and session 2 to close above the 50 DMA. This was also session 15 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 25.86 points above the 10 DMA.
The SPX 5 DMA is 1341.71, 10 DMA is 1339.65, 20 DMA is 1330.12, 50 DMA is 1340.41, 100 DMA is 1359.95, and 200 DMA is 1300.48.
On Monday the SPX traded below the opening range but did not trade above the opening range. 53.8% of the SPX closed up from the previous close; 45.8% closed higher than the open. During Monday's session the SPX gained 3.18 points from open to close. The SPX intraday trading range was 10.48 points. The 5-Day average intraday trading range is 12.66 points, the 10-Day average is 14.38 points, and the 20-Day average is 15.62 points. The trading range is contracting. The session was an NR7 day (Narrowest Range last 7 days). The 5-Day SPX gain is 3.94%, the 10-Day gain is 1.54%, and the 15-Day gain is 4.32%.
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 +2. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be higher. Mel's 10 Day Oscillator is 47 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bullish for Tuesday's session.
12.6% of the stocks in the SPX hit 52-week highs today. That's the best reading since May 1st. It sure has been a wild ride since May 1st.
While we continue to look for a brief downturn, we also believe that the data tells us to buy any potential upcoming dip. Market breadth has been phenomenal as the Advance/Decline line is pushing higher, far exceeding the SPX performance. This is most often a bullish sign going forward.
The Russell strongly outperformed the SPX today, 1.18% gain vrs 0.25% gain for the SPX. During the session today, another trader suggested to us that this might be a good reason to be cautious about trading on the short-side. So we decided to hit the data after the close and see if there is a discernable pattern to what happens after the Russell outperforms the SPX by at least 0.75% during a session.
This was the 11th occurrence this year of the Russell outperforming the SPX by that much. The Russell was up the following session six of the ten occurrences by an average of 0.46%. The Russell was down the following session four of the ten occurrences by an average of -0.89%. We don’t see any particular relevance to this; we wouldn’t see any reason to be reluctant to trade short based on the strength today of the Russell 2000.
Looking at our Market Internals data after today’s session, a couple of things jump to our attention. The advancing issues for the SPX risk sectors was only 52.1% and that was almost entirely carried by the Financial sector which had 76% advancing. So the other three risk sectors seem kind of weak to us. The other thing of interest is the 89.75% of the Russell 2000 on uptrends. This percentage got as high as 85.74% after March 26th before the index surrendered 62 points. The uptrending also touched 90% on February 3rd before dropping twenty points.
Tuesday, July 3
Economics
10:00 am: Factory Orders, est. 0.1%, prior -0.6%
11:30 am: U.S. to sell 4-week bills
US market closes at 1:00 p.m. ET
1:00 CNY China Non-manufacturing PMI
4:30 AUD Reserve Bank of Australia Rate Decision
8:30 GBP Purchasing Manager Index Construction
9:00 EUR Euro-Zone Producer Price Index
Earnings
Before:
No major events.
After:
No major events.
The ISM manufacturing index came in at 49.7, worse than the expected 52.0. Construction spending rose 0.9%, better than the consensus 0.2%. On Tuesday we will get factory orders.
Thank you for reading. Think on it, trade on it, and be well.
-Mel