Stocks Extend Losses to Third-Straight Session
Market Recap:
Futures took a sharp decline around 2:00 am as they plunged about 15 points. Then the better-than-expected economic numbers before the open took some of the edge off the early decline. Orders for long-lasting goods rose in January. The Commerce Department reported that Durable Goods orders increased by +2.7% during the month, which was below the consensus expectations for an increase of +2.9%. The December reading was revised higher to -0.4% from -2.3% When you strip out the volatile orders for transportation, orders fell by -3.6%, which was well below the consensus for +0.3%. Initial Claims for Unemployment Insurance for the week ending 2/19 were reported at 391K. This was well below the consensus estimate for 406K and last week’s total of 413K. Continuing Claims for the week ending 2/12 came in at 3.79M vs. 3.893M.
The session began with a small gap lower and traded a few points downward before quickly bouncing to put the high of the day on the chart at 10:21. But from then until 2:00 pm sellers came in wave after wave and took the index down almost seventeen points to put the low of the day on the chart at 1:56. But a very sharp bounce ensued bringing the index up more than ten points off the lows in about forty-five minutes. But buyers weren't yet done; after a brief consolidation the index was ran up another five points. But traders surrendered a few points into the close to finish the session just into the upper third of the intraday range.
Checking in with our Market Leaders board this evening we find a mixed board with almost as many leaders closing higher as closing lower. The big losers today were the Dow and Germany but each lost a bit less than a 1/3%. The big gainer today was the SOX and this might bode well for the next couple days in the broader market.
SPX big winners were Priceline.com Inc (PCLN) 7.79%, Perkinelmer Incorporated (PKI) 6.8%, and Advanced Micro Devices (AMD) 6.4%. SPX big losers were Newmont Mining Corp (NEM) -7.35%, Sears Holding Corp (SHLD) -5.57%, and Tesoro Corp (TSO) -5.36%.
SPX five day big winners are Chesapeake Energy Corp (CHK) 11.96%, Vf Corp (VFC) 10.82%, and Cabot Oil & Gas Corp (COG) 9.11%. SPX five day big losers are Hewlett-Packard Co (HPQ) -13.92%, Netapp Inc (NTAP) -13.15%, and Frontier Communications Corp (FTR) -12.28%.
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report tonight we had several changes as sectors were moving into Neutral. Energy moved from Buy to Neutral while Industrials, Technology, Health Care and Consumer Discretionary all moved from Sell to Neutral. This is almost but not quite a signal change so we will hold the Nine Sectors signal on Sell for another day.
But today's chart almost painted a reversal bar. It was quite the afternoon move off the lows. While it is possible this was the expected bounce, the possibility of another bounce Friday can not be ignored.
Volume & Breadth Indicators
For the SPX Index there were 249 components advancing and 231 components declining. On the NYSE 3,137 issues were traded with 1,631 advancing issues and 1,416 retreating issues, a ratio of 1.15 to one advancing. There were 83 new highs and 18 new lows. The five day moving average of New Highs is 240 while the five day moving average of New Lows is 15 and the ten day moving average of Net Advancing is 99.
Declining volume was higher at a ratio of 1.37 to one. The closing TRIN was 1.58 and the final tick was -509. The five day average of TRIN is 1.23 and the ten day average of TRIN is 1.13. The NYSE Composite Index lost -0.2% today while the SPX lost -0.1%.
For the NYSE, relative to the previous 30 session average, volume was 15.69% above 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, 21 sessions ended on a positive tick, 6 of last 10. For the SPX, the day's volume was 116.9% of the average daily volume for the last year. Volume was 116.5% of the last 10 day average and 87.4% of the previous day’s volume.
SPX breadth was positive. NYSE breadth was positive. NASDAQ breadth was positive. Yet many indices closed negatively. But the ten day average of Net Advancing moved upward today and the NYSE Composite Index outperformed the SPX. If the indices can’t rally on Friday, there will be no denying that the character of the market has changed.
Total tick for the day was 20,000 and the average tick for the day was 13. There were 125 ticks greater than 600 and 121 ticks more extreme than -600. There were 2 ticks greater than 1000 and 7 ticks more extreme than -1000.
Today's volume was a bit lighter than Wednesday's volume. The intraday pattern clearly shows that volume picked up during the afternoon moves, especially on the up move. Looking at our Nightly Breadth Indicators we see that the recent down days is making itself felt on the indicators. But the McClellan Oscillator backed away from the oversold conditions today while about the only positive among the indicators is that the number of stocks above their 200 DMA increased today.
Moving Average and Support/Resistance Indicators:
15% of the SPX are above their five day moving average, 20.8% are above their 10 day average, 40.4% are above their 20 day moving average, 62.8% are above their 50 day moving average, and 87.2% are above their 200 day moving average.
Technology 5 DMA crossed below the 20 DMA. So we finally begin to see a touch of red creeping into the left of the chart.
Sectors on the Move:
Sectors stronger than the SPX for Thursday:
- Industrials -- Outperformed the SPX by +65%.
- Technology -- Outperformed the SPX by +45%.
- Health Care -- Outperformed the SPX by +45%.
- Consumer Discretionary -- Outperformed the SPX by +70%.
Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -42%.
- Energy -- Underperformed the SPX by -132%.
- Financials -- Underperformed the SPX by -14%.
- Consumer Staples -- Underperformed the SPX by -31%.
- Utilities -- Underperformed the SPX by -29%.
In Late Trading:
158 SPX components moved upward and 154 components downward during the after hours with 113 million shares traded.
Friday, February 25
Economics
08:30 GDP-Second Estimate
08:30 GDP Deflator
09:55 Michigan Sentiment
Great Britain GDP
German Consumer Price Index
Great Britain Consumer Confidence
POMO Schedule
Treasury Coupon Purchase: 5/15/2018-2/15/2021: $6-8 bln
Earnings
Before: ABVT, XTEX, ZINC, IAG, IPG, KDN, POM, POR, RIMG, RDC, SUG, THC, TTI, WCRX,
After: AWK, PSA
The Street will get a second reading on the U.S.'s fourth-quarter gross domestic product Friday. Economists expect GDP to come in slightly higher at 3.3% growth. A final read of February's University of Michigan consumer sentiment survey also is on the docket. The index is expected to remain unchanged at 75.1. JC Penney (JCP) rounds out the retail-heavy week when it releases its quarterly results before the market open. Analysts are looking for the department store chain to earn $1.08 a share.
Have a great Friday!
-Mel