Stocks Sell then Stall Awaiting Earnings
Market Recap:
Although Asian markets took a fairly substantial hit on worries over slowing growth, European markets were only slightly lower - perhaps on hope relating to yet another meeting of Eurozone finance ministers today. U.S. futures pointed to a modestly lower open.
The Monday session began with a small gap lower and worked lower throughout the opening hour. But the rest of the session traded within a tight range and closed near the trading highs of the day.
Our Market Leaders Board shows that the Sox took the largest hit today while the Financials and the SPX got off the easiest.
SPX big winners were Wellpoint Inc (WLP) 3.24%, Rowan Companies Inc (RDC) 1.99%, and Coventry Health Care Inc (CVH) 1.98%. SPX big losers were Alpha Natural Resources (ANR) -7.46%, Peabody Energy (BTU) -6.27%, and Alexander & Baldwin Inc (ALEX) -5.16%.
SPX five day big winners are Netflix Inc (NFLX) 21.17%, Alexander & Baldwin Inc (ALEX) 19.78%, and Autonation Inc (AN) 11.08%. SPX five day big losers are Fossil Inc (FOSL) -11.52%, Autodesk Inc (ADSK) -10.23%, and Red Hat Inc (RHT) -9.42%.
New Ten Day Highs: ABT, MO, AMT, BA, CHK, CSX, GPS, GR, HCN, DHI, KMB, KSS, MRK, NSM, NSC, PM, PG, RAI, CVG, SPG, SLM, TLAB, TJX, KBH, VTR, VMC, WMT, WDC
New Ten Day Lows: ADBE, ADI, ADM, ADSK, BMS, BMC, BRCM, CCL, CTXS, SAI, DF, DD, FLIR, IBM, IFF, JPM, JNPR, KLAC, KR, LIFE, MJN, MCHP, NTAP, PBI, RHT, TSN, VXX, VAR, WPO, WAT
Volume & Breadth Indicators
For the SPX Index there were 156 components advancing and 337 components declining. On the NYSE 3,148 issues were traded with 1,345 advancing issues and 1,699 retreating issues, a ratio of 1.26 to one declining. There were 206 new highs and 21 new lows. The five day moving average of New Highs is 240 while the five day moving average of New Lows is 9 and the ten day moving average of Net Advancing is 487. The Net Advancing data indicates a bullish trend.
Declining volume was higher at a ratio of 2.02 to one. The closing TRIN was 1.75 and the final tick was -20. The five day average of TRIN is 1.66 and the ten day average of TRIN is 1.48. The NYSE Composite Index lost -0.26% today while the SPX lost -0.16%.
For the NYSE, relative to the previous 30 session average, volume was -22.94% 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, 18 sessions ended on a positive tick, 5 of last 10. For the SPX, the day's volume was 80.5% of the average daily volume for the last year. Volume was 94.5% of the last 10 day average and 99.6% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 40,000 and the average tick for the day was 26. There were 28 ticks greater than 600 and 34 ticks more extreme than -600. There were 1 ticks greater than 1000 and no ticks more extreme than -1000.
Moving Average and Support/Resistance Indicators:
24.8% of the SPX are above their five day moving average, 63.4% are above their 10 day average, 66.8% are above their 20 day moving average, 54% are above their 50 day moving average, and 54.2% are above their 200 day moving average.
There were three significant moving average crossovers today as the SPX, Dow, and Russell 2000 all had their 20 DMA crossed above their 50 DMA. Notice that the green on our chart is flowing in from the left side; this is usually a bullish sign. Our moving average Power Rating is 53 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Financials -- Outperformed the SPX by +11%.
- Industrials -- Outperformed the SPX by +4%.
- Consumer Staples -- Outperformed the SPX by +4%.
- Health Care -- Outperformed the SPX by +79%.
Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -49%.
- Energy -- Underperformed the SPX by -23%.
- Technology -- Underperformed the SPX by -10%.
- Utilities -- Underperformed the SPX by -19%.
- Consumer Discretionary -- Underperformed the SPX by -37%.
What We Learned from Monday's Action:
Monday was session 2 to close below the 5 DMA, session 6 to close above the 10 DMA, session 9 to close above the 20 DMA, and session 6 to close above the 50 DMA. This was also session 19 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 5.36 points above the 10 DMA.
The SPX 5 DMA is 1362.85, 10 DMA is 1347.1, 20 DMA is 1340.5, 50 DMA is 1338.53, 100 DMA is 1360.34, and 200 DMA is 1303.71.
On Monday the SPX traded below the opening range but did not trade above the opening range. 33.4% of the SPX closed up from the previous close; 40.6% closed higher than the open. During Monday's session the SPX lost -2.2 points from open to close. The SPX intraday trading range was 7.47 points. The 5-Day average intraday trading range is 9.73 points, the 10-Day average is 11.18 points, and the 20-Day average is 14.25 points. The trading range is contracting. The session was an NR7 day (Narrowest Range last 7 days). The 5-Day SPX gain is -0.71%, the 10-Day gain is 1.31%, and the 15-Day gain is 0.72%.
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 -1. 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 42 and Mel's 10-Day Oscillator is 43 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bearish for Tuesday's session.
Monday’s action did nothing to change the technical backdrop described in the weekend report. We’re still thinking we see lower prices (after possibly an up day on Tuesday) then a continuation of the summer rally after a possible test of the SPX 1335-1340 level.
Due to a data issue tonight, there will be no Market Internals chart.
Economics
07:30 NFIB Small Business Optimism, est. 93.5, prior 94.4
10:00 IBD/TIPP Economic Optimism, est. 46.5, prior 46.7
10:00 JOLTS Job Openings, prior 3416
2:00 CNY Trade Balance, est. $21.50 B, prior $18.7 B
5:00 JPY Consumer Confidence, prior 40.7
8:30 GBP Industrial Production, est. -2.2%, prior -1.0%
14:00 GBP NIESR Gross Domestic Product Estimate, prior 0.1%
Earnings
Before:
Shaw Group (SHAW) EPS 58, revs $1.49 B
After:
No major events.
There were no important economic releases on Monday and there will be none on Tuesday.
Thank you for reading. Think on it, trade on it, and be well.
-Mel