Stopped at 1150 Yet Again
by Jerome "Mel" Hickerson
Market Recap:
Things were fairly quiet this morning. As the session began, Asian markets had followed Wall Street higher from Friday’s action while European markets were down a bit or flat. There was some M&A activity for traders to discuss but nothing with significant impact. The Chicago Fed reported that their National Activity Index came in at -0.53 in August, which was below the downwardly revised July reading of -0.11 (from 0.00).
The week began with no significant gap and started working downward in a very choppy fashion. Two rally attempts brought the SPX to the morning highs just ahead of 11:00 am before the index headed down five points prior to noonto establish the trading range that lasted most of the day. But at 1:00 the bulls took control of the tape and boosted the index above the trading range just a point or two - which on a day such as this looked huge at the time. But it appears that 1150 was firmly rejected as the last 75 minutes of the session were sharp selling taking the SPX down seven points to close at the lows. This was a very tight range day and moving from highs to lows didn't require a lot of movement.
Turning to our Market Leader's board, we find all the major indices were down today. If you are bullish, I call your attention to the XLF and the SOX. These two leaders continue to lag behind and it is a rare rally that is sustainable without the participation of the financials and the chip makers. And for the bears out there, be alert if these two sectors decide to join into the rally because they could set the market on end if they begin to strengthen appreciably.
Market Trend: Nine Sectors Report
Today's session was certainly tight range and forgettable. Until just before 3:00, that is. The late afternoon sell-off -- blamed on a Robert Prechter interview on CNBC -- made today's session seem somewhat like Thursday afternoon. The real question now is whether Tuesday will resemble last Friday. We don't think it will and here's our reasoning.
September gave us a 19 session streak without consecutive down days. During the streak the SPX gained more than 8%. Such lengthy streaks with large gains are rare. Over the last decade there have been nine previous such streaks of 19 or more consecutive days without consecutive down days where the index has gained 3% or more and seven times the index has shown a loss during the following two weeks. The two occurrences this year ended on January 21st and April 27th and both led to significant pullbacks. We don't mean to suggest that we see such a significant pullback here but we do believe that we see something that takes us down into the 1110 area.
On the other hand, we often hear that moves to the downside are so much quicker than moves to the upside; and indeed, this is often true. But the last five sessions have seen four down days yet the one up day equals the four down days. So instead of a pullback, we may simply be seeing sideways consolidation. The next couple of days are most likely to clarify for us.
Turning to our Nine Sectors Report, the late day sell-off today kept us from seeing significant changes on this report. As a result of the last hour's action, the report shows no changes for today so we again hold the Sell signal another day.
Volume & Breadth Indicators
For the SPX Index there were 129 Advancers/358 Decliners. On the NYSE 3,135 issues were traded with 1,270 advancing issues and 1,743 retreating issues, a ratio of 1.37 to one declining. There were 191 new highs and 7 new lows. The five day moving average of New Highs is 190 while the five day moving average of New Lows is 11 and the ten day moving average of Net Advancing is 62.
Declining volume was higher at a ratio of 1.67 to one. The closing TRIN was 1.21 and the final tick was -664. The NYSE Composite Index lost -0.52% today.
For the NYSE, relative to the previous 30 session average, volume was -8.67% below the average. Of the last 15 sessions 3 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 19 sessions ended on a positive tick, 5 of last 10. For the SPX, the day's volume was 74.7% of the average daily volume for the last year. Volume was 85.7% of the last 10 day average and 83.3% of the previous day’s volume.
Breadth was not terribly negative today. Volume was once again quite light and we see a fairly large negative final tick. But the stat that catches our eye is the ten day moving average of Net Advancing. We watch this stat nightly because it is a great trend indicator. When greater than 200, it’s a bullish trend and when less than -200, it’s a bearish trend. The 62 for tonight is the lowest since September 1st and should alert us to the possibility of a trend change taking place. This is clearly telling us that market internals are not supporting this Price breakout.
Further, total tick for the day was 45,000 and the average tick for the day was 29. There were 54 ticks greater than 600 and 65 ticks more extreme than -600. There were 4 ticks greater than 1000 and no ticks more extreme than -1000.
The ticks were essentially balanced today but they came in basically two separate waves as the market moved up and down in two clear afternoon waves. Looking at the breadth indicators, we continue to see nightly flip-flops between leaning bullish and leaning bearish. Tonight most of the indicators are bearish looking while the Absolute Breadth Indicator and Cumulative Volume Indicator are significant.
Moving Average Indicators:
66.00% of the SPX components are giving a crossover Buy signal; 4.80% of the SPX components are giving a Sell signal. This is a 13.8 to 1 ratio of Buy signals over Sell signals.
69.2% of the SPX are above their five day moving average, 71.4% are above their 10 day average, 83% are above their 20 day moving average, 80.2% are above their 50 day moving average, 71.4% are above their 100 day moving average, and 61.6% are above their 150 day moving average.
The TECH 20 DMA crossed above the 50 DMA, the TECH 20 DMA crossed above the 100 DMA, and the RUT 20 DMA crossed above the 100 DMA. These crossovers continue to pile up on the bullish side of the equation as we see more and more green being added to the right side of the chart. This does not suggest that a pullback won’t occur but it does suggest a limit to the severity of any pullback.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Energy -- Outperformed the SPX by +31%.
- Technology -- Outperformed the SPX by +59%.
- Utilities -- Outperformed the SPX by +74%.
Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -5%.
- Financials -- Underperformed the SPX by -44%.
- Industrials -- Underperformed the SPX by -9%.
- Consumer Staples -- Underperformed the SPX by -2%.
- Health Care -- Underperformed the SPX by -20%.
- Consumer Discretionary -- Underperformed the SPX by -10%.
Stocks on the Move:
Today's SPX component winners and losers:
- Largest one day loser is MTB with -6.93%
- Largest three day loser is NOVL with -6.76%
- Largest five day loser is ADBE with -18.73%
- Largest ten day loser is ADBE with -16.53%
- Largest one day winner is LUV with 8.80%
- Largest three day winner is AMD with 12.30%
- Largest five day winner is AMD with 15.44%
- Largest ten day winner is LUV with 15.89%
In Late Trading:
110 SPX components moved upward and 219 components downward during the after hours with 127 million shares traded.
Tuesday, September 28
Economics
09:00 Case-Shiller 20 City Index
10:00 Consumer Confidence 54.0 cons.
German Consumer Price Index 1.0% cons.
German Gfk Consumer Confidence 4.1 cons.
UK Current Accounts -9.6b
UK Gross Domestic Product 1.7% cons.
New Zealand Balance 573 cons.
Japan Tankan Large Manufacturing Outlook 4.4%cons.
Earnings
Before: MTRX, WAG
After: LNDC, ZZ, SMSC
Auction
01:00 5 Yr Note Auction
The Case-Shiller 20-city home price index is expected to have increased 3.4% in July after rising 4.2% in June. After the start of trading, the Conference Board releases its Consumer Confidence index for September. Economists forecast the index to have edged down to 52.9 during the month from 53.5 in August.
Make it a great Tuesday!
-Mel
