The FED Announcement Sparks Late Rally
by Jerome "Mel" Hickerson, MarketsPath.com
The FOMC day session began after a relatively flat overnight futures session. The regular session opened with some mild selling pressure, then popped up briefly before the selling rapidly accelerated before setting the pre-FED announcement low of the day at 10:19. The SPX then bounced off support setting the pre-announcement high just before 11:00. From then into the announcement was a slow drift downwards.
And then the announcement. With the announcement came the customary zig-zag spikes along with a calm 15 minutes sideways. Then the bulls took control of the tape. Today’s session closed bullishly and for at least today, it appears that bulls have retaken control of the tape. Can they keep it?
The daily chart pattern has an interesting appearance to it; we’ve seen this pattern several times, only inverted. It certainly looks like a possible bottoming pattern. One thing I am watching carefully (as well as many other traders, I am sure) is the upcoming monthly close. A close below 1085 is a clear sell signal; it would paint a monthly large range outside bar with a close lower than the December close. Many chart pattern books describe this kind of setup and all have various names for the pattern but it all means one thing: Sell. So a close above 1085 is important on Friday.
My guess is that we see at least a couple more days of bullish action before the bears regain control. Of course, the news cycle (read: Obama) can certainly give the bears back control tonight. Or the economic data Thursday may manage to turn the tape. One thing is clear: This recent downturn seemed different than the earlier downturns during this rally. We may yet again retest the highs in the upcoming weeks, but the inside of this rally certainly has had the momentum tested.
Thursday, January 28
Economics
08:30 Initial Claims
08:30 Continuing Claims
08:30 Durable Orders 2.0% cons.
Earnings
Before: FLWS, MMM, ALK, MO, AEP, T, BAX, BDX, BMY, BC, CP, CAH, CELG, CHKP, CRUS, CL, CNX, CY, DHR, LLY, EL, FCF, F, BEN, GR, JNS, JBLU, KSU, LLL, LMT, MKC, MOT, NOK, NVR, OXY, OXPS, OSK, POT, PF, RTN, RCL, TSM, TST, TWC, TYC, UA, ZMH
After: AMZN, CB, CYN, COLM, CYMI, EMN, FORM, GNW, JNPR, MSFT, PMCS, RMBS, SNDK, SPWRA, SXE, VPRT,
Auction
01:00 7-Yr Note Auction
December durable goods orders are expected to have risen 2% in the month versus a rise of 0.2% in the previous month. The weekly reading on initial jobless claims is also due.
SPX Summary for Wednesday, January 27, 2010
258 Advancers/236 Decliners
Today's SPX component winners and losers:
• Largest one day loser is MCO with -15.14%
• Largest three day loser is MCO with -16.05%
• Largest five day loser is X with -26.30%
• Largest ten day loser is X with -25.88%
• Largest one day winner is DV with 12.76%
• Largest three day winner is DV with 11.51%
• Largest five day winner is HBAN with 14.45%
• Largest ten day winner is ZION with 17.51%
*** SPX Technical Summary ***
The lowest 14 day RSI component is OI; the highest 14 day RSI component is DV. The average 14 day RSI of all 500 components is 41.
The greatest positive five day momentum component is HBAN; the greatest negative five day momentum component is X. The average five day momentum of all 500 components is -3.7.
9.40% of the SPX components are giving a crossover Buy signal; 54.40% of the SPX components are giving a Sell signal. This is a 5.8 to 1 ratio of Sell signals over Buy signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 5 components.
• From Buy to Neutral: 14 components.
• From Neutral to Sell: 28 components.
• From Neutral to Buy: 4 components.
Mel’s Random Hits:
• Total tick for the day was -85,000. The opening hour was negative, the second hour turned positive. From then until the FED announcement was negative but the last 90 minutes was strong.
• The day's range was 16.4 points. Unusually small range for a FED announcement day.
• The day's volume was 96.5% of the average daily volume for the last year. Volume was 110.6% of the last 10 day average. This was one of the lightest volumes for a FED announcement in recent memory.
• 3% of the SPX stocks closed with two day RSI above 90. 9% closed with RSI above 80. 30% closed with RSI below 20 and 19% closed with RSI below 10.
• 39% of the SPX are above their five day moving average, 18% are above their 10 day average, and 21% are above their 20 day moving average.
• 20% of the SPX stocks closed below their most recent previous lows.
• 16% of the SPX closed above their most recent previous high.
• 73.0% of stocks closed in the top half of the day's range. (27.0% closed in bottom half.)
• 1.8 of stocks closed in the bottom 20% of the day's range.
• 17.2% of stocks closed in the top 10% of the day's range.
• 3.4% of stocks closed within 2% of their 52 week high. 15.0% of stocks closed within 5% of their 52 week high.
• 27.2% of stocks closed within 50% of their 52 week low. 8.4% of stocks closed within 25% of their 52 week low.
• 17.0% of stocks closed within ¼% of their high for the day.
• 1.0% of stocks closed within ¼% of their low for the day.
• 52.4% of the SPX closed up from the previous close; 58.4% closed higher than the open.
• Sectors weaker than the SPX for the day: Consumer Staples, Consumer Discretionary, Industrials, Utilities, Basic Materials, and Energy.
• Sectors stronger than the SPX for the day: Financials, Health Care, and Technology.
• The $SOX index strength was again stronger than the SPX today.
• The 2 Day RSI of the SPX is 42. The Dow RSI is 44, NASDAQ is 55 and Russell 53.
• Over the last five sessions, the average session closed 32% of the range above the low.
• 182 SPX components moved upward and 78 components downward during the after hours with 158 million shares traded.
Have a great Thursday.
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"Mel"
