The Downward Slide Continues
by Jerome "Mel" Hickerson
Before the open, the Labor Department reported that initial claims for unemployment insurance for the week ending June 19th fell by 19,000 to 457K. The week’s total was below the Reuters consensus for a reading of 462K. Continuing Claims for unemployment for the week ending June 12th were also below consensus at 4.545M vs. expectations for 4.59M. The Commerce Department reported that Durable Goods orders declined -1.1% during the month, which was a bit above the consensus expectations for an drop of -1.2%. When you strip out the volatile orders for transportation, orders in May rose by 0.9%, which was just below the consensus for +1.2%. The futures pointed to a lower open on worries over Europe, but things were improved after the Durable Goods and Weekly Jobless Claim reports.
The Thursday session began with about a five point downward gap. The SPX continued down in an orderly fashion until 10am when a small multipoint bounce occurred. But the bounce quickly faded and the index worked downward for about 40 minutes before attempting another bounce from a lower level. For the next three hours it appeared that this low may hold as the index worked higher until 2pm. But from there, it was all to the downside with the exception of the final 45 minutes which were very choppy but mostly sideways.
Looking ahead, internal indicators such as percentage over the 20 DMA have not yet reached the level where a bounce is called for. But other indicators such as RSI are deeply oversold. My Matrix once again generated a signal suggesting that Monday’s close should be higher than Friday’s open. Nothing is a given in this market but I like the chances for a long side swing trade for the next couple of days.
But don’t misunderstand me: This market is vulnerable here. Every news headline has the ability to rock things in unpredictable directions. And the 50 DMA is looming overhead, apparently on a collision course with the 200 DMA. This is ominous looking down the road further.
Day Trade Systems Update: (Signals today)
* SSO at: 10:03
* GDX at: 10:20
* SSO at: 10:50
* SSO at: 11:11
* SDS at: 11:57
* Add SDS at: 12:07
* SDS at: 1:42
* GDX at: 2:48
* SSO at: 3:17
Another day focused on ProShares Ultra S&P500 ETF (SSO), ProShares Ultrashort S&P500 ETF (SDS), and Market Vectors Gold Miners (GDX). We had a decent day; made some money. But the easiest trades were early in the session.
SPX Summary for Thursday, June 24, 2010
39 Advancers/452 Decliners
Today's SPX component winners and losers:
- Largest one day loser is DELL with -6.79%
- Largest three day loser is APC with -13.13%
- Largest five day loser is COG with -12.97%
- Largest ten day loser is DHR with -50.73%
- Largest one day winner is HAS with 4.14%
- Largest three day winner is JBL with 4.49%
- Largest five day winner is BTU with 4.43%
- Largest ten day winner is SUN with 13.54%
*** SPX Technical Summary ***
The lowest 14 day RSI component is DHR; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 53.
The greatest positive five day momentum component is BTU; the greatest negative five day momentum component is COG. The average five day momentum of all 500 components is -4.36.
26.80% of the SPX components are giving a crossover Buy signal; 18.60% of the SPX components are giving a Sell signal. This is a 1.4 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 0 components.
- From Buy to Neutral: 157 components.
- From Neutral to Sell: 31 components.
- From Neutral to Buy: 1 component.
The flight to the Sell side continues.
The moving averages:
Close 1073.69
9 EMA 1088.39 Falling
5 DMA 1098.35 Falling
10 DMA 1101.88 Falling
20 DMA 1090.15 Rising
50 DMA 1130.65 Falling
100 DMA 1133.57 Falling
200 DMA 1111.83 Rising
10 Wk MA 1117.87 Falling
The 50 DMA is only 19 points overhead the 200 DMA.
NYSE Summary
On the NYSE 3187 issues were traded with 688 advancing issues and 2391 retreating issues, a ratio of 3.48 to 1 declining. There were 28 new highs and 53 new lows.
Declining volume was higher at a ratio of 10.59 to 1. The closing TRIN was 3.05 and the final tick was -345.
Notice the extreme negativity today. A snapper rally attempt is common after such extreme days, especially when such days are preceded by down days.
Evidence of trend:
Relative to the previous 30 session average, volume was -13.07% 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, 16 sessions ended on a positive tick, 8 of last 10.
The 5 day moving average of New Highs is 53 while the 5 day moving average of new lows is 26 and the 10 day moving average of Net Advancing is -4.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line decreased from 203515 to 201812. This -0.84% decrease came while the SPX was losing -1.71%. The 10 day moving ratio of positive volume is 0.83 and the 10 day moving Advance/Decline ratio is 1. The 10 day moving ratio of positive volume has trended -0.41 over the last three days and the 10 day moving Advance/Decline ratio has trended -0.32 over the last three days.
The NYSE Composite Index lost -1.75% today.
NYSE Statistics:
Absolute Breadth Index: 49.52 up from previous day of 47.45
Cumulative Volume Index: 39,420.71 down from previous day of 44,123.21
High Low Logic Index: 0.48 up from previous day of 0.42
McClellan Oscillator: (108.58) down from previous day of (12.31)
McClellan 10 DMA: 116.23 down from previous day of 134.01
McClellan Summation Index: (959.06) down from previous day of (850.48)
% Stocks Above 200 DMA: 47.07 down from previous day of 52.53
% Stocks Above 40 DMA: 32.66 down from previous day of 39.02
New High / New Low Ratio: 35.14 down from previous day of 38.00
26wk New High/Low Ratio: 28.31 down from previous day of 29.60
13wk New High/Low Ratio: 23.36 down from previous day of 25.00
4wk New High/Low Ratio: 34.60 down from previous day of 46.39
Cumulative 4-Week New Hi-Low: 439,291 down from previous day of 439,413
Nasdaq Adv/Decline: 1,357 down from previous day of 1,407
Russell 1000 Advance/ Decline Line: 2,237 down from previous day of 2,319
Russell 2000 Advance/ Decline Line: (2,005) down from previous day of (1,937)
Notes:
Absolute Breadth Index: Low numbers suggest a topping process and high numbers suggest a bottoming process.
Cumulative Volume Index: If this begins to trend down while the averages are trending up, it is a bearish sign. If this begins to trend up while the averages are trending down, it is a bullish sign.
High Low Logic Index: High readings are bearish; low readings are bullish.
McClellan Oscillator: -100 is oversold and +100 is overbought. Also watch for crosses above and below zero.
McClellan Summation Index: Interpreted as bullish or bearish when it crosses over the zero line.
Cumulative 4-Week New Hi-Low: The difference between the number of issues reaching new highs (during a 4-week period) and the number of issues reaching new lows (during the same 4-week period).
Friday, June 25
Economics
08:30 GDP-Third Estimate
08:30 GDP Deflator 1.1% cons.
09:55 University of Michigan Sentiment 75.3 cons.
02:45 France GDP
Earnings
Before: AZZ, KBH
The revised reading on gross domestic product (GDP) growth in the first quarter is due in the morning. GDP is expected to have grown at a 3% annualized rate, unchanged from the previous reading. The University of Michigan's final reading on consumer sentiment in June is due in the morning. It's expected to hold steady at 75.5, unchanged from the last reading.
Mel’s Missives from the Matrix:
- Total tick for the day was -75,000 and the average tick for the day was -48. There were 109 ticks greater than 600 and 150 ticks more extreme than -600. There were 13 ticks greater than 1000 and 7 ticks more extreme than -1000. The tick action suggests institutional distribution.
- The day's range was 19.33 points. The intraday trading range - 9:35t to the close - was 16.24. The 5 DMA of daily range is 20.24.
- Evidence of the intraday trend: At 10am volume was 99.84% of the 10 day average. By noon the volume was 116.89% of the 10 day average, and by 2pm volume was 117.64% of the 10 day average.
- The day's volume was 96.6% of the average daily volume for the last year. Volume was 113.9% of the last 10 day average and 110.4% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 12:45 and 1:00 when relative volume increased 37.9% while the SPX was rising 0.26%. The largest drop in relative volume came between 2:00 and 2:15 when relative volume dropped -65.0% while the SPX was dropping -0.27%.
- 0% of the SPX stocks closed with two day RSI above 90. 1% closed with RSI above 80. 78% closed with RSI below 20 and 60% closed with RSI below 10.
- 5.4% of the SPX are above their five day moving average, 8% are above their 10 day average, 23.4% are above their 20 day moving average, 16.4% are above their 50 day moving average, 25.4% are above their 100 day moving average, and 35.2% are above their 150 day moving average.
- 2% of the SPX closed above their most recent previous high.
- 62% of the SPX stocks closed below their most recent previous lows.
- 39 SPX issues advanced and 452 issues declined, a net SPX advance/decline of -413.
- Evidence of the intraday trend: At 10am, 12.6% of the SPX components were in the top half of the range. By noon, 22.4% were in the top half of the range, and by 2pm, 66.8% were in the top half of the range.
- 7.2% of stocks closed in the top half of the day's range. (92.6% closed in bottom half.)
- 0.2% of stocks closed in the top 10% of the day's range. 0.8% of stocks closed in the top 20% of the day's range.
- 25% of stocks closed in the bottom 10% of the day's range. 61.2% of stocks closed in the bottom 20% of the day's range.
- 2% of stocks closed within 2% of their 52 week high. 6% of stocks closed within 5% of their 52 week high.
- 67% of stocks closed within 50% of their 52 week low. 35% of stocks closed within 25% of their 52 week low.
- 0.6% of stocks closed within ¼% of their high for the day.
- 22.2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 9.6% of the SPX components were up since the open. By noon, 13.4% were up since the open, and by 2pm, 27.4% were up since the open.
- 8.2% of the SPX closed up from the previous close; 13.6% closed higher than the open.
- Sectors stronger than the SPX for Thursday:
- Consumer Staples -- Outperformed the SPX by +53%.
- Utilities -- Outperformed the SPX by +112%.
- Health Care -- Outperformed the SPX by +95%.
- Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -88%.
- Energy -- Underperformed the SPX by -43%.
- Financials -- Underperformed the SPX by -6%.
- Industrials -- Underperformed the SPX by -8%.
- Technology -- Underperformed the SPX by -39%.
- Consumer Discretionary -- Underperformed the SPX by -72%.
- The $SOX index strength was weaker relative to the SPX Thursday by -1.28%.
- The XLF underperformed the SPX by -0.06% Thursday.
- The 2 Day RSI of the SPX is 1. The Dow RSI is 3, the NASDAQ is 1 and the Russell is 1.
- Over the last four sessions, the average session closed 21% of the range above the low. Thursday closed at 13.5% of the daily range.
- Upside momentum moved downward Thursday, from Wednesday’s -2.57 to today’s -4.36. The ratio of SPX components giving a crossover sell signal compared to buy signals also moved downward to B 1.44 to 1.
- The ISEE Equity 10 day moving average Thursday was 143.1. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 215 SPX components moved upward and 141 components downward during the after hours with 147 million shares traded.
Trade 'em well on Friday everyone!
-Mel
