The Bear is Biding Time
by Jerome "Mel" Hickerson
One of the more entertaining nine point sessions we’ve seen in a long while, today opened with very mild buying pressure from the futures. The SPX responded with a small gap upward, then 15 minutes of sideways chop followed by an hour and a half of drifting upward setting the high of the day at 11:30. The index drifted lazily downward until shortly after 2pm when two waves of selling hit the tape. Shortly before 3:00 the index bounced, recovering half of the two wave drop, before retreating softly into the close to finish the day just about where it began.
Let’s take a quick look at the daily chart. The SPX has painted an intriguing daily pattern of five consecutive higher highs and five higher lows. This would ordinarily be a bullish pattern but let’s look more closely. We’ve got a gravestone doji followed by a “common” doji to end the five day stretch. This means that the SPX has twice rejected making new highs in order to close near the bottom of the daily range. When you take this daily pattern and add in all the short-term overbought conditions, a pullback soon seems very likely.
Today, the ADP employment report showed a loss of 20,000 jobs which was in line with expectations. The ISM services index came in at 53.0, better than the expected 51.0. Oil inventories increased by 4.1 million barrels, more than the 3.0 million reported last week. The bottom line is still one of caution, but the bull is stirring while the bear is still quietly biding time.
For Thursday, the model is pretty neutral-to-bearish. The data continues to suggest that we are short-term topping but this process may take a couple days. Swing trading short side from here makes sense but as always with swing trades, some patience is required. Watch any break of the 1115 area closely; that should be a signal that the pullback has begun.
SPX Summary for Wednesday, March 03, 2010
238 Advancers/253 Decliners
Today's SPX component winners and losers:
• Largest one day loser is SPLS with -2.97%
• Largest three day loser is SPLS with -12.35%
• Largest five day loser is SPLS with -12.18%
• Largest ten day loser is HRB with -19.59%
• Largest one day winner is NOVL with 27.41%
• Largest three day winner is NOVL with 29.57%
• Largest five day winner is CCE with 37.43%
• Largest ten day winner is MIL with 49.84%
*** SPX Technical Summary ***
The lowest 14 day RSI component is HRB; the highest 14 day RSI component is MIL. The average 14 day RSI of all 500 components is 69.
The greatest positive five day momentum component is CCE; the greatest negative five day momentum component is SPLS. The average five day momentum of all 500 components is 2.19.
64.80% of the SPX components are giving a crossover Buy signal; 8.00% of the SPX components are giving a Sell signal. This is a 8.1 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 11 components.
• From Buy to Neutral: 16 components.
• From Neutral to Sell: 2 components.
• From Neutral to Buy: 40 components.
Thursday, March 4
Economics
08:30 Initial Claims
08:30 Continuing Claims
08:30 Productivity 6.2% cons.
08:30 Unit Labor Costs -4.4% cons.
10:00 Factory Orders 1.2% cons.
10:00 Pending Home Sales 1.7% cons.
Earnings
Before: ECOL, BRLI, CNG, CIEN, DLM, FSYS, STP, TK, WEN, WNR
After: ATHN, COO, BOOM, EQY, MRVL, MENT, MIDD, SLW, SPWPA, UDRL
Events
07:00 BOE Announcement
07:45 ECB Announcement
01:00 Charles Evans Speaks
January factory orders are expected to have risen 1.2% after increasing 1% in December. The January pending home sales index is expected to have risen 1.7% after growing 1% in December. The nation's retailers will be releasing February sales throughout the morning.
Mel’s Random Hits:
• Total tick for the day was +40,000. Breadth was positive until around noon when the first of two negative stretches hit the tape. Negativity lasted about an hour, followed by a positive hour, and then the rest of the session was negative.
• The day's range was 9.06 points.
• The day's volume was 74.532% of the average daily volume for the last year. Volume was 96.8% of the last 10 day average and 96.7% of Tuesday’s volume. Volume did spike with the 2pm down spike.
• 30% of the SPX stocks closed with two day RSI above 90. 42% closed with RSI above 80. 9% closed with RSI below 20 and 3% closed with RSI below 10. These numbers are moderated today, backing over from overbought conditions.
• 78.0% of the SPX are above their five day moving average, 78.2% are above their 10 day average, and 88.4% are above their 20 day moving average. These numbers remain overbought.
• 21% of the SPX stocks closed below their most recent previous lows.
• 23% of the SPX closed above their most recent previous high.
• 26.4% of stocks closed in the top half of the day's range. (73.6% closed in bottom half.)
• 32.8% of stocks closed in the bottom 20% of the day's range.
• 3.0% of stocks closed in the top 10% of the day's range.
• 17.0% of stocks closed within 2% of their 52 week high. 40.2% of stocks closed within 5% of their 52 week high.
• 26.8% of stocks closed within 50% of their 52 week low. 8.6% of stocks closed within 25% of their 52 week low. On a day that closed green (although just barely) the numbers near their 52 week high decreased and the numbers near their 52 week low increased.
• 5.4% of stocks closed within ¼% of their high for the day.
• 25.0% of stocks closed within ¼% of their low for the day.
• 47.4% of the SPX closed up from the previous close; 39.0% closed higher than the open.
• Sectors weaker than the SPX for the day: Utilities, and Health Care.
• Sectors stronger than the SPX for the day: Industrials, Technology, Energy, Financials, Consumer Staples, Basic Materials, and Consumer Discretionary.
• The $SOX index strength was weaker again than the SPX today.
• The 2 Day RSI of the SPX is 94. The Dow RSI is 79, NASDAQ is 96 and Russell 98. Pretty overbought.
• Over the last four sessions, the average session closed 54.5% of the range above the low.
• Upside momentum moderated from Tuesday’s 2.97 to today’s 2.19. The ratio of SPX components giving a crossover buy signal compared to sell signals has increased to 8 to 1.
• 225 SPX components moved upward and 173 components downward during the after hours with 92 million shares traded. Volume was light.
Have a great Thursday everyone!
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"Mel"
ETF’s we trade:
Ultra S&P500 ProShares (NYSE: SSO)
Ultra Dow30 ProShares (NYSE: DDM)
Ultra QQQ ProShares (NYSE: QLD)
PS UTLRSHRT QQQ (NYSE: QID)
UltraShort S&P500 ProShares (NYSE: SDS)
UltraShort Dow30 ProShares (NYSE: DXD)
PowerShares QQQ Trust (NASDAQ: QQQQ)
Direxion Daily Small Cp Bear 3X (NYSE:TZA)
Direxion Daily Small Cp Bull 3X (NYSE:TNA)
