Small Trading Range, Small Loss for the SPX
by Jerome "Mel" Hickerson
Early morning results from FedEx (FDX) were disappointing and Nokia (NOK) lowered their outlook for Q2. The Labor Department reported the Producer Price Index fell in May by -0.3%, which was a bit higher the consensus estimate for an decline of -0.5% but below April’s reading of -0.1%. When you strip out food and energy, the so-called Core PPI came in up +0.2%, which was a tenth above the consensus for +0.1% and in line with April’s +0.2%. Housing Starts fell 10% in May to an annualized rate of 593K, which was well below the consensus for 625K. Building Permits for May fell -5.9% to 574K. This was well also below than the consensus of 637K and the April total of 610K. Markets across Asia were green but the Eurozone was entirely red. U.S .futures were pointing to a moderately lower open.
The midweek session began with an eight point move downward followed by a rapid 30 minute recovery. Bears regained control and pushed the SPX to the lows of the day at 10:33 before the index began ascending in a broad three wave fashion to the high of the day at 2:04. The market then began a gentle descent that abruptly gained pace at 3:15 for several minutes. But the index found a bottom just before 3:30 and climbed into the close to finish in the upper half of the intraday range.
Today’s session was really pretty impressive for the bulls. The market was very short-term overbought. Many traders were projecting a pullback from these levels. And then the market opened with a gap down with some fairly dismal news at the open. How did the market respond? Not with the cascading sell-off that has greeted similar situations recently, but with a quick bounce. Today served to burn off many of the overbought conditions while only giving back a fraction of a point.
But market breadth today was weak in spite of the near breakeven for the SPX. Options expire on Friday and often that will bring volatility. I believe that we see more weakness before the end of the week.
Day Trade Systems Update: (Signals today)
* GDX Short at: 10:11
* SSO at: 10:42
* SDS at: 11:22
* SDS at: 12:14
* GDX Short at: 12:33
* Cover GDX at: 12:48
* SDS at: 2:07
* GDX Short at: 2:40
Our trade systems were busy today. After yesterday’s struggle, I admit to being a bit anxious to take profit early today. But we had a good day focused on Market Vectors Gold Miners (GDX), ProShares Ultra S&P500 ETF (SSO) and ProShares Ultrashort S&P500 ETF (SDS).
SPX Summary for Wednesday, June 16, 2010
210 Advancers/281 Decliners
Today's SPX component winners and losers:
- Largest one day loser is MSFT with -7.94%
- Largest three day loser is DHR with -48.17%
- Largest five day loser is DHR with -46.54%
- Largest ten day loser is DHR with -49.90%
- Largest one day winner is SUN with 6.42%
- Largest three day winner is SUN with 12.50%
- Largest five day winner is APC with 23.99%
- Largest ten day winner is SUN with 16.47%
*** SPX Technical Summary ***
The lowest 14 day RSI component is DHR; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 59.
The greatest positive five day momentum component is APC; the greatest negative five day momentum component is DHR. The average five day momentum of all 500 components is 6.41.
48.20% of the SPX components are giving a crossover Buy signal; 5.20% of the SPX components are giving a Sell signal. This is a 9.3 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 65 components.
- From Buy to Neutral: 4 components.
- From Neutral to Sell: 0 components.
- From Neutral to Buy: 46 components.
The moving averages:
Close 1114.61
9 EMA 1119.19 Rising
5 DMA 1099.57 Rising
10 DMA 1083.37 Rising
20 DMA 1084.25 Falling
50 DMA 1141.85 Falling
100 DMA 1132.84 Rising
200 DMA 1109.09 Rising
10 Wk MA 1129.50 Falling
NYSE Summary
On the NYSE 3206 issues were traded with 1270 advancing issues and 1825 retreating issues, a ratio of 1.44 to 1 declining. There were 54 new highs and 27 new lows.
Declining volume was higher at a ratio of 1.73 to 1. The closing TRIN was 1.2 and the final tick was 247.
Evidence of trend:
Relative to the previous 30 session average, volume was -25.47% 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, 15 sessions ended on a positive tick, 8 of last 10.
The 5 day moving average of New Highs is 41 while the 5 day moving average of new lows is 14 and the 10 day moving average of Net Advancing is 372. The Net Advancing data indicates a bullish trend.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line decreased from 206225 to 205670. This -0.27% decrease came while the SPX was losing -0.05%. The 10 day moving ratio of positive volume is 1.17 and the 10 day moving Advance/Decline ratio is 1.27. The 10 day moving ratio of positive volume has trended 0.13 over the last three days and the 10 day moving Advance/Decline ratio has trended 0.1 over the last three days.
The NYSE Composite Index lost -0.2% today.
NYSE Statistics:
Absolute Breadth Index: 60.48 up from previous day of 59.75
Cumulative Volume Index: 50,537.79 down from previous day of 51,687.95
High Low Logic Index: 0.39 up from previous day of 0.34
McClellan Oscillator: 209.05 down from previous day of 274.48
McClellan 10 DMA: 38.27 up from previous day of 12.07
McClellan Summation Index: (1,328.88) up from previous day of (1,537.68)
% Stocks Above 200 DMA: 60.21 down from previous day of 61.14
% Stocks Above 40 DMA: 42.31 up from previous day of 42.10
New High / New Low Ratio: 71.25 down from previous day of 93.94
26wk New High/Low Ratio: 62.54 down from previous day of 88.91
13wk New High/Low Ratio: 62.28 down from previous day of 85.25
4wk New High/Low Ratio: 85.44 down from previous day of 91.98
Cumulative 4-Week New Hi-Low: 436,627 up from previous day of 436,225
Nasdaq Adv/Decline: 1,494 down from previous day of 1,512
Russell 1000 Advance/ Decline Line: 2,477 down from previous day of 2,498
Russell 2000 Advance/ Decline Line: (1,819) down from previous day of (1,789)
Notes:
Absolute Breadth Index: Low numbers suggest a topping process and high numbers suggest a bottoming process.
Cumulative Volume Index: If this begins to trend down while the averages are trending up, it is a bearish sign. If this begins to trend up while the averages are trending down, it is a bullish sign.
High Low Logic Index: High readings are bearish; low readings are bullish.
McClellan Oscillator: -100 is oversold and +100 is overbought. Also watch for crosses above and below zero.
McClellan Summation Index: Interpreted as bullish or bearish when it crosses over the zero line.
Cumulative 4-Week New Hi-Low: The difference between the number of issues reaching new highs (during a 4-week period) and the number of issues reaching new lows (during the same 4-week period).
Thursday, June 17
Economics
08:30 Initial Claims
08:30 Continuing Claims
08:30 CPI -0.1% cons.
08:30 Core CPI 0.1% cons.
08:30 Current Account Balance-$125.7b
10:00 Leading Indicators 0.4% cons.
10:00 Philadelphia Fed 17.0 cons.
04:30 Great Britain Retail Sales
Earnings
Before: ATU, DFS, SJM, KR, PIR, SFD, WGO
After: SMOD
The weekly jobless claims report from the Department of Labor is due in the morning. Roughly 450,000 Americans are expected to have filed new claims for unemployment last week, down from 452,000 inthe previous week. The consumer price index, the government's main inflation gauge, is expected to show that prices fell 0.2% in May after falling 0.1% the month before. Excluding energy and food prices, the so-called core CPI, prices are forecast to have risen 0.1% last month.
After the market opens, reports on leading economic indicators and manufacturing in Philadelphiaare scheduled to come out. In the afternoon, BP chief executive Tony Hayward is scheduled to testify before a House committee on the Deepwater Horizon, a drilling rig operated by the British oil company, which sank in April after an explosion and caused the worst oil spill in U.S.history.
Mel’s Missives from the Matrix:
- Total tick for the day was 84,000 and the average tick for the day was 54. There were 118 ticks greater than 600 and 75 ticks more extreme than -600. There were 5 ticks greater than 1000 and 5 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 11.61 points. The intraday trading range - 9:35to the close - was 11.26. The 5 DMA of daily range is 17.
- Evidence of the intraday trend: At 10amvolume was 87.65% of the 10 day average. By noonthe volume was 85.43% of the 10 day average, and by 2pmvolume was 84.28% of the 10 day average.
- The day's volume was 100.1% of the average daily volume for the last year. Volume was 82.5% of the last 10 day average and 94.3% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 3:15and 3:30when relative volume increased 25.5% while the SPX was dropping -0.44%. The largest drop in relative volume came between 2:45and 3:00when relative volume dropped -26.1% while the SPX was rising 0.01%.
- 33% of the SPX stocks closed with two day RSI above 90. 47% closed with RSI above 80. 2% closed with RSI below 20 and 1% closed with RSI below 10.
- 88.8% of the SPX are above their five day moving average, 93.2% are above their 10 day average, 85.2% are above their 20 day moving average, 36.8% are above their 50 day moving average, and 48.2% are above their 100 day moving average.
- 30% of the SPX closed above their most recent previous high.
- 6% of the SPX stocks closed below their most recent previous lows.
- 210 SPX issues advanced and 281 issues declined, a net SPX advance/decline of -71.
- Evidence of the intraday trend: At 10am, 63.2% of the SPX components were in the top half of the range. By noon, 77.4% were in the top half of the range, and by 2pm, 85.4% were in the top half of the range.
- 67.8% of stocks closed in the top half of the day's range. (32% closed in bottom half.)
- 8.4% of stocks closed in the top 10% of the day's range. 20.2% of stocks closed in the top 20% of the day's range.
- 1% of stocks closed in the bottom 10% of the day's range. 5.8% of stocks closed in the bottom 20% of the day's range.
- 8.4% of stocks closed within 2% of their 52 week high. 19.6% of stocks closed within 5% of their 52 week high.
- 58.2% of stocks closed within 50% of their 52 week low. 27.8% of stocks closed within 25% of their 52 week low.
- 12.8% of stocks closed within ¼% of their high for the day.
- 2.6% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 20.2% of the SPX components were up since the open. By noon, 34.2% were up since the open, and by 2pm, 53.6% were up since the open.
- 41% of the SPX closed up from the previous close; 70.8% closed higher than the open.
- Sectors stronger than the SPX for Wednesday:
- Financials -- Outperformed the SPX by +12%.
- Technology -- Outperformed the SPX by +29%.
- Utilities -- Outperformed the SPX by +70%.
- Health Care -- Outperformed the SPX by +44%.
- Sectors weaker than the SPX for Wednesday:
- Basic Materials -- Underperformed the SPX by -6%.
- Energy -- Underperformed the SPX by -1%.
- Industrials -- Underperformed the SPX by -17%.
- Consumer Staples -- Underperformed the SPX by -61%.
- Consumer Discretionary -- Underperformed the SPX by -72%.
- The $SOX index strength was stronger relative to the SPX Wednesday by 0.51%.
- The XLF outperformed the SPX by 0.12% Wednesday.
- The 2 Day RSI of the SPX is 90. The Dow RSI is 94, the NASDAQ is 96 and the Russell is 79.
- Over the last four sessions, the average session closed 65.48% of the range above the low. Wednesday closed at 63.1% of the daily range.
- Upside momentum moved upward Wednesday, from Tuesday’s 6.52 to today’s 6.41. The ratio of SPX components giving a crossover sell signal compared to buy signals moved positively to B 9.27 to 1.
- The ISEE Equity 10 day moving average Wednesday was 144.1. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 182 SPX components moved upward and 179 components downward during the after hours with 118 million shares traded.
- Gary Dean and Mel Hickerson held a Webinar last night on day trading eminis and ETFs. For those who attended, we hope you enjoyed the presentation and gained a better understanding of our strategies for trading these instruments. Here is an archived recording of the Webinar for those who want to view again or for the first time, or share with friends.
Trade 'em well on Thursday everyone!
-Mel
