Stocks Bounce from Opening Hour Lows, then Await Non-Farm Payroll Data
Market Recap:
SPX big winners were Alexander & Baldwin Inc (ALEX) 13.42%, Netflix Inc (NFLX) 13.02%, and Ross Stores Inc (ROST) 6.89%. SPX big losers were Genworth Financial (GNW) -4.79%, Sprint Nextel Corp (S) -4.61%, and Denbury Resources Ltd (DNR) -4.28%.
SPX five day big winners are Constellation Brands Inc (STZ) 31.45%, Alexander & Baldwin Inc (ALEX) 25.04%, and Netflix Inc (NFLX) 22.91%. SPX five day big losers are Wellpoint Inc (WLP) -11.86%, Aetna Inc (AET) -7.57%, and Mead Johnson Nutrition Company (MJN) -7.16%.
New Ten Day Highs: MMM, ABT, ANF, AKAM, AA, ATI, AGN, MO, AEP, AXP, AMGN, APC, APA, AIZ, ADP, AN, AVB, AVP, BHI, BCR, BAX, BDX, HRB, BXP, BRK.B, CF, CHRW, CHK, CVX, CB, CTAS, CTXS, KO, CCE, CL, CMA, CSC, CPWR, COP, CNX, CMI, CVS, DRI, DE, DELL, DNR, DVN, DTV, DFS, DPS, DUK, EMN, ETN, ESV, EQT, EQR, XOM, FAST, FDX, FIS, FISV, FLS, FLR, FMC, FRX, BEN, FCX, FTR, GPS, GD, GIS, GNW, GILD, GR, GWW, HAL, HAR, HRS, HCN, HSY, HES, DHI, HST, HBAN, IPG, INTU, JEC, JDSU, JNJ, KMB, KIM, KSS, KFT, LM, LEN, LUK, LXK, LTD, LLTC, L, LO, MTB, MRO, MMC, MA, MKC, MHP, MCK, PCS, MU, MCO, MS, MUR, MYL, NBR, NSM, NYT, NBL, JWN, NSC, NU, NTRS, NOC, NUE, OXY, ODP, ORCL, OI, PDCO, BTU, PBCT, PM, PNW, PCL, RL, PX, PLD, PSA, PHM, RF, RAI, RDC, CRM, CVG, SEE, SHLD, SIAL, SPG, SLM, SWN, S, SPLS, HOT, STT, SRCL, TE, TSO, BK, TMO, TWC, TWX, TIE, TJX, TMK, TSS, TRV, UPS, X, DRYS, QLD, DYN, KBH, MBI, USB, VLO, VTR, VRSN, VZ, VNO, VMC, WMT, WPI, WU, WY, WHR, AMZN, AAPL, GS, GOOG
New Ten Day Lows: AET, ADM, CVH, JPM, PBI, TGT, TSN, UNH, VXX, SH, WLP
Volume & Breadth Indicators
For the SPX Index there were 136 components advancing and 358 components declining. On the NYSE 3,142 issues were traded with 1,329 advancing issues and 1,695 retreating issues, a ratio of 1.28 to one declining. There were 259 new highs and 6 new lows. The five day moving average of New Highs is 234 while the five day moving average of New Lows is 14 and the ten day moving average of Net Advancing is 549. The Net Advancing data indicates a bullish trend.
Declining volume was higher at a ratio of 2.26 to one. The closing TRIN was 1.77 and the final tick was 7. The five day average of TRIN is 1.31 and the ten day average of TRIN is 1.5. The NYSE Composite Index lost -0.81% today while the SPX lost -0.47%.
For the NYSE, relative to the previous 30 session average, volume was -19.90% below the average. Of the last 15 sessions 5 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, 5 of last 10. For the SPX, the day's volume was 64.4% of the average daily volume for the last year. Volume was 73.1% of the last 10 day average and 92.4% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 127,000 and the average tick for the day was 82. There were 43 ticks greater than 600 and 22 ticks more extreme than -600. There were 1 ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.
Moving Average and Support/Resistance Indicators:
82.8% of the SPX are above their five day moving average, 92.6% are above their 10 day average, 87.4% are above their 20 day moving average, 64.8% are above their 50 day moving average, and 58.6% are above their 200 day moving average.
There was one significant moving average crossover today as China’s 5 DMA crossed above the 20 DMA. Our moving average Power Rating is 45 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Thursday:
- Basic Materials -- Outperformed the SPX by +32%.
- Industrials -- Outperformed the SPX by +29%.
- Technology -- Outperformed the SPX by +50%.
- Consumer Staples -- Outperformed the SPX by +10%.
- Consumer Discretionary -- Outperformed the SPX by +64%.
Sectors weaker than the SPX for Thursday:
- Energy -- Underperformed the SPX by -92%.
- Financials -- Underperformed the SPX by -106%.
- Utilities -- Underperformed the SPX by -5%.
- Health Care -- Underperformed the SPX by -9%.
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 (11) totaled 467,782 shares traded (42,526 average per stock) and declining issues (18) totaled 331,672 shares traded (18,426 average per stock.) 25 components are on an uptrend (no new uptrends today) and 5 components are on a downtrend (4 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 1.46% above the 20-Day average.
The Energy sector advancing issues (5) totaled 391,910 shares traded (78,382 average per stock) and declining issues (39) totaled 1,645,665 shares traded (42,197 average per stock.) 44 components are on an uptrend (no new uptrends today) and no components are on a downtrend (no 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 2.35% above the 20-Day average.
The Financials sector advancing issues (3) totaled 67,239 shares traded (22,413 average per stock) and declining issues (77) totaled 4,412,085 shares traded (57,300 average per stock.) 77 components are on an uptrend (no new uptrends today) and 4 components are on a downtrend (3 new downtrends today.) There were 3 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 2.06% above the 20-Day average.
The Industrials sector advancing issues (23) totaled 497,072 shares traded (21,612 average per stock) and declining issues (37) totaled 817,384 shares traded (22,091 average per stock.) 57 components are on an uptrend (1 new uptrends today) and 4 components are on a downtrend (1 new downtrends today.) There were 1 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 1.12% above the 20-Day average.
The four 'risk sectors' totaled 42 advancing issues and 171 declining issues today with 1 new uptrends and 8 new downtrends. 94.% of Risk Sector components are uptrending.
The Technology sector advancing issues (24) totaled 798,739 shares traded (33,281 average per stock) and declining issues (54) totaled 3,971,068 shares traded (73,538 average per stock.) 74 components are on an uptrend (2 new uptrends today) and 5 components are on a downtrend (1 new downtrends today.) There were 4 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 1.05% above the 20-Day average.
The Consumer Staples sector advancing issues (12) totaled 585,231 shares traded (48,769 average per stock) and declining issues (29) totaled 836,091 shares traded (28,831 average per stock.) 35 components are on an uptrend (no new uptrends today) and 6 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 1.25% above the 20-Day average.
The Utilities sector advancing issues (2) totaled 82,951 shares traded (41,476 average per stock) and declining issues (29) totaled 467,217 shares traded (16,111 average per stock.) 24 components are on an uptrend (no new uptrends today) and 7 components are on a downtrend (5 new downtrends today.) There were 1 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 .55% above the 20-Day average.
The Health Care sector advancing issues (7) totaled 175,599 shares traded (25,086 average per stock) and declining issues (45) totaled 1,263,089 shares traded (28,069 average per stock.) 45 components are on an uptrend (no new uptrends today) and 7 components are on a downtrend (no new downtrends today.) There were 4 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 1.7% above the 20-Day average.
The Consumer Discretionary sector advancing issues (49) totaled 1,866,086 shares traded (38,083 average per stock) and declining issues (31) totaled 1,401,597 shares traded (45,213 average per stock.) 65 components are on an uptrend (7 new uptrends today) and 16 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 .62% 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 Thursday's Action:
Thursday was session 6 to close above the 5 DMA, session 4 to close above the 10 DMA, session 7 to close above the 20 DMA, and session 4 to close above the 50 DMA. This was also session 17 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 25.14 points above the 10 DMA.
The SPX 5 DMA is 1359.66, 10 DMA is 1342.44, 20 DMA is 1337.17, 50 DMA is 1340.5, 100 DMA is 1360.44, and 200 DMA is 1302.09.
On Thursday the SPX traded above the opening range but did not trade below the opening range. 28% of the SPX closed up from the previous close; 41.4% closed higher than the open. During Thursday's session the SPX lost -6.14 points from open to close. The SPX intraday trading range was 10.8 points. The 5-Day average intraday trading range is 12.15 points, the 10-Day average is 14.01 points, and the 20-Day average is 15.17 points. The trading range is contracting. The 5-Day SPX gain is 2.68%, the 10-Day gain is 0.88%, and the 15-Day gain is 4.01%.
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 Friday is zero. Greater than three is bullish and less than negative three is bearish. The short-term trend appears to be lower. Mel's 5-Day Oscillator is 70 and Mel's 10-Day Oscillator is 46 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, we are neutral on Friday's bias.
The SPX has declined more than 1% on each of the last three non-farm payrolls Fridays. A fourth consecutive tomorrow? We confess to being uneasy about being short. It is much safer to simply wait for any potential upcoming dip and buy in on the long side.
Despite today’s minor weakness, the Market Internals remain at extremely strong levels.
Friday, July 6
Economics
8:30 am: Nonfarm Payrolls, est. 90K, prior 69K
8:30 am: Private Payrolls, est. 97K, prior 82K
8:30 am: Manufacturing Payrolls, est. 5K, prior 12K
8:30 am: Unemployment Rate, est. 8.2%, prior 8.2%
8:30 am: Avg Weekly Hours, est: 34.4, prior 34.4
11:00 am: Fed to sell $7b-$8b notes in 1-year range
7:15 CHF Consumer Price Index
8:30 GBP Producer Price Index
10:00 EUR German Industrial Production
12:30 CAD Unemployment Rate
The ISM non mfg. number was 52.1, less than the expected 53.0. Initial claims were 374,000, less than the consensus 386,000. Oil inventories were down 4.3 million barrels. The ADP employment report was much better than expected, up 176,000. The expectation was for a rise of 95,000. On Friday we will get the non farm payroll.
Thank you for reading. Think on it, trade on it, and be well.
-Mel