Stocks End Mixed as Traders Wait for Jobs Data
by Jerome "Mel" Hickerson
Market Recap:
Despite falling yields at French and Spanish bonds auctions and a 2% surge in Chinese stocks, European markets turned sluggish as concerns relating to the Greek debt swap deal continued to plague the markets. U.S. futures followed and were pointing to a flat open. Initial Claims for Unemployment Insurance for the week ending 1/28 fell by 12,000 to 367K, which was below the consensus estimate for 373K. The government reported U.S. Nonfarm Productivity in the fourth quarter of 2011 rose by +0.7%, which was in line with the estimates for reading of +0.7% but below Q3's +2.3%. On the wage inflation front, Unit Labor Costs rose by +1.2% versus the expectations for +0.7% and Q3's +2.2%.
Thursday's session opened without a significant gap and began to trade lower but quickly reversed direction before the end of the first half hour of trading. The SPX put the high of the day on the chart just before 11:00 am and spent the next ninety minutes trading lower. The last three hours of trading were gently higher but this was a session where traders seemed reluctant to make any moves before Friday's jobs data.
On our Market Leaders Board most of our leaders closed a bit higher while the Dow lagged.
SPX big winners were Gap Inc (GPS) 9.83%, Cme Group Inc (CME) 8.22%, and Big Lots Inc (BIG) 7.64%. SPX big losers were Abercrombie & Fitch Co (ANF) -15.44%, Ameriprise Financial Inc (AMP) -8.6%, and Ryder Systems Inc (R) -7.4%.
SPX five day big winners are Whirlpool Corp (WHR) 18.27%, Gap Inc (GPS) 14.59%, and Marathon Petroleum Corp (MPC) 13.46%. SPX five day big losers are Abercrombie & Fitch Co (ANF) -11.94%, JDS Uniphase Corp (JDSU) -9.5%, and Staples Inc (SPLS) -9.15%.
New Ten Day Highs: AMD, ALL, AXP, AMGN, APC, AMAT, AIZ, AVB, BHI, BAX, BIG, BIIB, XL, BMC, BXP, CA, CF, CME, CTSH, CSC, CNX, STZ, COST, CMI, DRI, DELL, DNB, EBAY, ESV, EOG, EXPE, FIS, FE, FISV, BEN, GPS, GNW, GILD, GR, HCN, INTU, ISRG, JEC, JNS, JPM, LUK, LTD, MA, WFR, MDP, PCS, MCHP, MSFT, NBR, NEM, NBL, NU, NVLS, NVDA, ORCL, PLL, PKI, PXD, RL, PG, PGN, PGR, RRC, RDC, CRM, SLE, SCG, SPG, SNA, LUV, SRCL, SUN, SYMC, SYY, TGT, TMO, TIF, TMK, X, UTX, QLD, MBI, VNO, WM, WAT, C, ICE
New Ten Day Lows: ANF, AGN, AEP, AMP, BSX, XEL, CI, EXPD, XOM, GILD, JDSU, MRK, NDAQ, NOV, NOC, NYX, OXY, PCAR, PBCT, PFE, PEG, R, SNI, SO, SE, SPLS, HOT, TE, VXX, DRYS, DYN
Volume & Breadth Indicators
For the SPX Index there were 231 components advancing and 204 components declining. On the NYSE 3,122 issues were traded with 1,714 advancing issues and 1,290 retreating issues, a ratio of 1.33 to one advancing. There were 206 new highs and 8 new lows. The five day moving average of New Highs is 208 while the five day moving average of New Lows is 10 and the ten day moving average of Net Advancing is 580. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 1.29 to one. The closing TRIN was 0.92 and the final tick was -235. The five day average of TRIN is 1.26 and the ten day average of TRIN is 1.21. The NYSE Composite Index gained 0.18% today while the SPX gained 0.11%.
For the NYSE, relative to the previous 30 session average, volume was 5.31% above the average. Of the last 15 sessions 8 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 22 sessions ended on a positive tick, 7 of last 10. For the SPX, the day's volume was 104.9% of the average daily volume for the last year. Volume was 107.9% of the last 10 day average and 98.9% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 44,000 and the average tick for the day was 28. There were 22 ticks greater than 600 and 11 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.
Looking at the one-minute tick data, there were 52 ticks greater than 500 and 21 ticks more extreme than -500. 58.2% one-minute ticks were positive. There were no ticks greater than 900 and 0 ticks more extreme than -900. The tick action suggests institutional accumulation.
The tick data today shows that buyers remained in control Thursday.
The intraday volume pattern shows the largest spike of volume during the late morning SPX decline. The Nightly Breadth Indicators remain overbought but days such as this do tend to burn off the overbought conditions.
Moving Average and Support/Resistance Indicators:
75.4% of the SPX are above their five day moving average, 73.8% are above their 10 day average, 79.2% are above their 20 day moving average, 87.6% are above their 50 day moving average, and 68.2% are above their 200 day moving average.
There were no significant moving average crossovers today. Our moving average Power Rating is 88 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Thursday:
Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -147%.
- Energy -- Underperformed the SPX by -32%.
- Financials -- Underperformed the SPX by -43%.
- Industrials -- Underperformed the SPX by -102%.
- Technology -- Underperformed the SPX by -77%.
- Consumer Staples -- Underperformed the SPX by -56%.
- Utilities -- Underperformed the SPX by -134%.
- Health Care -- Underperformed the SPX by -129%.
- Consumer Discretionary -- Underperformed the SPX by -114%.
What We Learned from Thursday's Action:
Thursday was session 2 to close above the 5 DMA, session 2 to close above the 10 DMA, session 30 to close above the 20 DMA, and session 30 to close above the 50 DMA. This was also session 28 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 7.35 points above the 10 DMA.
The SPX 5 DMA is 1318.27, 10 DMA is 1318.19, 20 DMA is 1305.34, 50 DMA is 1262.14, 100 DMA is 1234.47, and 200 DMA is 1257.31.
On Thursday the SPX traded both below and above the opening range. 61.2% of the SPX closed up from the previous close; 39.6% closed higher than the open. During Thursday's session the SPX gained 1.3 points from open to close. The SPX intraday trading range was 7.62 points. The 5-Day average intraday trading range is 10.75 points, the 10-Day average is 12.14 points, and the 20-Day average is 11.45 points. The trading range is contracting. The daily bar painted an Inside day. The session was an NR7 day (Narrowest Range last 7 days).
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 -1. 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 59 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bearish for Friday's session.
Today was a consolidation session ahead of the big economic data to be released Friday morning. The jobs report will determine whether this rally has fuel to continue higher. We won't pretend to know which way the data goes tomorrow but it seems possible that expectations are higher than reality can meet. But let's wait and see what tomorrow brings.
Friday, February 3
Economics
08:30 Change in Nonfarm Payrolls – consensus 150K
08:30 Change in Private Payrolls – consensus 170K
08:30 Change in Manufacturing Payrolls – consensus 13K
08:30 Unemployment Rate – consensus 8.5%
08:30 Average Hourly Earnings – consensus 1.9%
08:30 Average Weekly Hours – consensus 34.4
10:00 ISM Non-Manufacturing Composite – consensus 53.1
10:00 Factory Orders – consensus 1.5%
CNY Industrial Profits YTD
01:00 CNY Non-manufacturing PMI
07:00 CHF UBS Real Estate Bubble Index
08:55 EUR German PMI
09:30 GBP PMI
10:00 EUR Euro-Zone Retail Sales
12:00 CAD Unemployment Rate
Earnings
Before: ABMD, AXL, AON, BEAM, BAH, CLX, CEG, UFS, EL, HNT, IMN, KNL, MAC, MOD, MGI, SPG, SIRO, SEP, SPB, TSN, WY, YRCW
Jobless claims came in at 367,000, slightly less than the 370,000 anticipated. On Friday we will get the employment numbers, factory orders and the ISM services index.
Good trading!
Thank you for reading. Think on it, trade on it, and be well.
-Mel
