Technology Drags on the Market
Market Recap:
U.S. stock index futures held their earlier gains Thursday, struggling to reverse a string of losses and following the weekly jobless claims report, but investors continued to worry over the ongoing euro zone debt crisis. Weekly claims for unemployment benefits edge down last week 1,000 to a seasonally adjusted 367,000, according to the Labor Department. Economists had expected claims inching up to 369,000. The four-week moving average for new claims fell 5,250 to 379,000.
Traders opened the session with a large gap higher but the high of the day was quickly on the chart and traders were mostly in sell mode throughout the morning. During the early afternoon the intraday highs were challenged after which the SPX retreated slowly the rest of the session. Only a quick snapback at the close prevented the SPX from closing at the session lows.
Our Market Leaders Board for today is mixed with the NYSE Composite and the Financials leading and Technology lagging significantly.
SPX big winners were News Corp Inc Cl A (NWSA) 4.7%, NRG Energy Inc (NRG) 4.53%, and Frontier Communications Corp (FTR) 4.44%. SPX big losers were Cisco Systems Inc (CSCO) -11.45%, Windstream Corp (WIN) -10.59%, and Salesforce.com Inc (CRM) -9.06%.
SPX five day big winners are Dean Foods Company (DF) 19.33%, Tyson Foods Inc (TSN) 7.13%, and WPX Energy Inc (WPX) 4.78%. SPX five day big losers are Fossil Inc (FOSL) -41.7%, Dun & Bradstreet Corp (DNB) -14.78%, and Cisco Systems Inc (CSCO) -14.76%.
New Ten Day Highs: AIV, BCR, XL, COG, CPB, CNX, DF, DUK, GIS, HNZ, HSY, HRL, KMB, MKC, PCS, PGN, SHW, STJ, TSN, VXX, SH, VNO, DIS
New Ten Day Lows: MMM, ADBE, AMD, AET, AFL, A, APD, AA, ALTR, AMP, APH, ADI, APOL, AMAT, AIZ, ADP, AVY, AVP, BHI, BAC, BAX, BBT, BDX, BBBY, BBY, BMC, BA, BMY, BRCM, COF, CCL, CBG, CNP, CTL, CF, CHK, CVX, CME, CI, CTAS, CSCO, CMCSA, CMA, CSC, CAG, STZ, SAI, GLW, CSX, DE, DELL, XRAY, DVN, DO, DFS, RRD, DOV, DNB, ETFC, EMN, ETN, EMC, EMR, ESV, ETR, EL, EXPD, XOM, FIS, FHN, FSLR, FISV, FLS, FLR, FRX, BEN, FCX, GPS, GD, GE, GT, GWW, HOG, HIG, HAS, HES, HPQ, HON, HSP, HST, HCBK, HUM, HBAN, ITW, TEG, INTC, IBM, IGT, IP, INTU, ISRG, IVZ, JBL, JEC, JDSU, JPM, JNPR, CLF, KEY, KR, LH, LM, LEG, LUK, LXK, LIFE, LTD, LNC, LLTC, LMT, LSI, MTB, M, MA, MAT, MCD, MHP, MWV, WFR, MRK, MET, PCS, MCHP, MU, MSFT, MOLX, MON, MCO, MS, MUR, MYL, NOV, NEM, NWSA, GAS, NBL, NSC, NTRS, NOC, NUE, NVDA, OXY, ODP, OMC, ORCL, PCAR, PDCO, PAYX, BTU, PBCT, PEP, PFE, PM, PXD, PCL, PNC, PCP, PFG, PLD, PRU, PSA, RSH, RTN, RF, RSG, RHI, COL, RDC, SWY, SNDK, SLE, SCHW, SJM, SNA, SE, SWK, STT, SRCL, STI, SVU, SYMC, TE, TXT, BK, TMO, TWC, TWX, TIE, TSS, X, UTX, DRYS, JASO, KBH, UNM, USB, VLO, VRSN, WPO, WM, WLP, WFC, WU, WY, C, GS
Volume & Breadth Indicators
For the SPX Index there were 130 components advancing and 339 components declining. On the NYSE 3,145 issues were traded with 1,893 advancing issues and 1,128 retreating issues, a ratio of 1.68 to one advancing. There were 72 new highs and 24 new lows. The five day moving average of New Highs is 61 while the five day moving average of New Lows is 56 and the ten day moving average of Net Advancing is -254. The Net Advancing data indicates a bearish trend.
Advancing volume was higher at a ratio of 1.59 to one. The closing TRIN was 1.08 and the final tick was -17. The five day average of TRIN is 1.42 and the ten day average of TRIN is 1.39. The NYSE Composite Index gained 0.42% today while the SPX gained 0.25%.
For the NYSE, relative to the previous 30 session average, volume was -3.04% below the average. Of the last 15 sessions 7 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 17 sessions ended on a positive tick, 5 of last 10. For the SPX, the day's volume was 107.6% of the average daily volume for the last year. Volume was 114.6% of the last 10 day average and 104.1% of the previous day’s volume.
Looking at the NYSE 15-second tick data, the total tick for the day was 61,000 and the average tick for the day was 40. There were 115 ticks greater than 600 and 55 ticks more extreme than -600. There were 11 ticks greater than 1000 and 3 ticks more extreme than -1000. The tick action suggests institutional accumulation.
Moving Average and Support/Resistance Indicators:
36.2% of the SPX are above their five day moving average, 19.2% are above their 10 day average, 29.4% are above their 20 day moving average, 32.6% are above their 50 day moving average, and 63.6% are above their 200 day moving average.
There was one significant moving average crossover today as Emerging Markets had the 20 DMA cross below the 100 DMA. Our moving average Power Rating is 33 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Thursday:
- Technology -- Outperformed the SPX by +68%.
- Consumer Staples -- Outperformed the SPX by +30%.
- Utilities -- Outperformed the SPX by +66%.
- Consumer Discretionary -- Outperformed the SPX by +27%.
Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -20%.
- Energy -- Underperformed the SPX by -4%.
- Financials -- Underperformed the SPX by -45%.
- Industrials -- Underperformed the SPX by -52%.
- Health Care -- Underperformed the SPX by -2%.
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 (7) totaled 117,350 shares traded (16,764 average per stock) and declining issues (22) totaled 878,288 shares traded (39,922 average per stock.) 5 components are on an uptrend (1 new uptrends today) and 25 components are on a downtrend (no new downtrends today.) There were 2 New Highs and no New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -2.38% below the 20-Day average.
The Energy sector advancing issues (26) totaled 1,271,608 shares traded (48,908 average per stock) and declining issues (18) totaled 1,145,248 shares traded (63,625 average per stock.) 9 components are on an uptrend (2 new uptrends today) and 35 components are on a downtrend (no new downtrends today.) There were no New Highs and no New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -2.39% below the 20-Day average.
The Financials sector advancing issues (59) totaled 3,190,171 shares traded (54,071 average per stock) and declining issues (21) totaled 2,054,238 shares traded (97,821 average per stock.) 28 components are on an uptrend (8 new uptrends today) and 53 components are on a downtrend (1 new downtrends today.) There were no New Highs and no New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -1.44% below the 20-Day average.
The Industrials sector advancing issues (31) totaled 923,282 shares traded (29,783 average per stock) and declining issues (30) totaled 792,837 shares traded (26,428 average per stock.) 10 components are on an uptrend (1 new uptrends today) and 51 components are on a downtrend (1 new downtrends today.) There were no New Highs and 1 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -1.67% below the 20-Day average.
The four 'risk sectors' totaled 123 advancing issues and 91 declining issues today with 12 new uptrends and 2 new downtrends. 24.1% of Risk Sector components are uptrending.
The Technology sector advancing issues (28) totaled 2,826,862 shares traded (100,959 average per stock) and declining issues (49) totaled 6,471,064 shares traded (132,063 average per stock.) 10 components are on an uptrend (5 new uptrends today) and 69 components are on a downtrend (2 new downtrends today.) There were no New Highs and 1 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -2.03% below the 20-Day average.
The Consumer Staples sector advancing issues (36) totaled 1,418,795 shares traded (39,411 average per stock) and declining issues (5) totaled 461,222 shares traded (92,244 average per stock.) 20 components are on an uptrend (4 new uptrends today) and 21 components are on a downtrend (1 new downtrends today.) There were 5 New Highs and no New Lows. The sector is on a Sell signal and closed above the daily pivot. The sector 5-Day average closed .02% above the 20-Day average.
The Utilities sector advancing issues (31) totaled 860,621 shares traded (27,762 average per stock) and declining issues (no) totaled no shares traded (no average per stock.) 29 components are on an uptrend (9 new uptrends today) and 3 components are on a downtrend (no new downtrends today.) There were 5 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.% above the 20-Day average.
The Health Care sector advancing issues (38) totaled 1,886,741 shares traded (49,651 average per stock) and declining issues (13) totaled 241,314 shares traded (18,563 average per stock.) 16 components are on an uptrend (5 new uptrends today) and 35 components are on a downtrend (1 new downtrends today.) There were no New Highs and no New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -.61% below the 20-Day average.
The Consumer Discretionary sector advancing issues (50) totaled 2,449,236 shares traded (48,985 average per stock) and declining issues (31) totaled 1,364,592 shares traded (44,019 average per stock.) 22 components are on an uptrend (6 new uptrends today) and 59 components are on a downtrend (2 new downtrends today.) There were 4 New Highs and 1 New Lows. The sector is on a Sell signal and closed below the daily pivot. The sector 5-Day average closed -.91% below the 20-Day average.
Based on the SPX sector data, we are on a Sell for the SPX and the Russell 2000.
What We Learned from Thursday's Action:
Thursday was session 6 to close below the 5 DMA, session 5 to close below the 10 DMA, session 5 to close below the 20 DMA, and session 5 to close below the 50 DMA. This was also session 3 for the 5 DMA to close below 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 23.61 points below the 10 DMA.
The SPX 5 DMA is 1363, 10 DMA is 1381.6, 20 DMA is 1380.84, 50 DMA is 1386.13, 100 DMA is 1348.33, and 200 DMA is 1276.98.
On Thursday the SPX traded above the opening range but did not trade below the opening range. 27.4% of the SPX closed up from the previous close; 68.2% closed higher than the open. During Thursday's session the SPX gained 3.41 points from open to close. The SPX intraday trading range was 11.07 points. The 5-Day average intraday trading range is 15.18 points, the 10-Day average is 13.49 points, and the 20-Day average is 12.35 points. The trading range is expanding. The 5-Day SPX gain is -2.41%, the 10-Day gain is -3.00%, and the 15-Day gain is -1.37%.
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 sideways. Mel's 10 Day Oscillator is 15 (below 35 is oversold and above 65 is overbought.) Based solely on the technicals, our bias is slightly bullish for Friday's session.
The SPX closed seven and a half points lower than it opened today. Only 29% of the SPX components closed today higher than they opened. But the chart pattern (best seen on the SPY rather than the SPX) paints a doji, an indecision day, suggesting the possibility that we have reached a bottom and may turn higher.
But internal data suggests we have more downside to come. The most notable thing within the internals is that the SPX risk sectors did not keep pace with the index today. You can see this on the bottom portion of the chart, the green line. It diverges lower on an up day, which usually (about 80% of the time) leads to a down session the following day.
So we have some conflicting signals here. But today's close was ugly, as recent closes have mostly been. The high was at 9:52 am and the low was at 3:54 pm. This is a characteristic of a bearish trend. So gut feeling is that the downtrend continues.
Note: After hours, JPM made an unscheduled announcement regarding a large trading loss and disappointed the market. A down open tomorrow looks even more likely.
SPX levels to watch include 1376; a close above is bullish and a close below is bearish. For the Russell 2000, keep an eye on the 800 level.
Friday, May 11
Economics
08:30 Producer Price Index – consensus 0.0%
08:30 PPI Ex Food & Energy – consensus 0.2%
09:55 University of Michigan Confidence – consensus 76.4
CNY New Yuan Loans
01:30 CNY CPI
05:30 CNY Industrial Production
05:30 CNY Retail Sales
06:00 EUR German CPI
08:30 GBP PPI
09:00 EUR European Commission Releases Economic Growth Forecasts
12:30 CAD Unemployment Rate
10:00 Italy to sell bills
Earnings
Before:
Dillard’s (DDS) EPS $1.67, revs $1.52B
Nvidia (NVDA) EPS 16c, revs $916.02M
The trade deficit came in at $51.8 billion, more than the expected $49.5e billion. Jobless claims were 367,000, slightly more than the consensus 366,000. On Friday we will get consumer sentiment and the PPI.
Good trading!
Thank you for reading. Think on it, trade on it, and be well.
-Mel