The Focus is on the Unemployment Numbers
by Jerome "Mel" Hickerson, MarketsPath.com
Today’s session was as boring as yesterday’s was entertaining. Futures were down overnight but had rebounded into positive territory by the time the regular session opened. The index moved up from the open for the first half hour before a hard move down setting the low of the session at 10:41. From there, it was one wave up, two hours sideways, a wave down just before 2pm, and then two waves upward. The final ten minutes saw a very weak sell off.
Volume was again very light as the market appears abnormally focused on the unemployment numbers coming up on Friday.
The indices remain mired in a narrow trading range. Even after surmounting the 50-day moving averages trading volume has contracted; none of the last 16 sessions has had more than 84% of the yearly average volume and 13 of those sessions have been in the mid to low 70% range. This lack of volume suggests a lack of conviction among buyers.
For Friday, the catalyst will be the jobs data released before the open. Will the numbers be “doctored”? If doctored, would they possibly paint the numbers as worse than they really are? Just so that “they” can jam through another “stimulus”? Trying to guess the news and the reaction of traders to the news is beyond what I try to do here.
On the daily charts, the SPX, DOW, and Russell all painted inside days. The SPX inside bar follows a gravestone doji and a common doji. These chart patterns are far from bullish. Meanwhile daily range continues to contract; normally a bearish signal. (See chart.)
The metrics I use have been calling for a several day pullback while the SPX has been flattening out yet crawling upward. Data tonight continues to suggest a pullback, but there are conflicting signals which would also suggest we may have to be patient a couple more days. Conclusion: We are overbought but can remain that way for some time.
Breadth continues to suggest further upside lies down the road after a mild pullback. I remain cautious, but optimistic longer term.
SPX Summary for Thursday, March 04, 2010
302 Advancers/187 Decliners
Today's SPX component winners and losers:
• Largest one day loser is SWN with -4.14%
• Largest three day loser is SPLS with -11.25%
• Largest five day loser is SPLS with -11.29%
• Largest ten day loser is HRB with -21.17%
• Largest one day winner is ANF with 14.73%
• Largest three day winner is NOVL with 26.74%
• Largest five day winner is NOVL with 25.16%
• Largest ten day winner is MIL with 48.46%
*** 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 67.
The greatest positive five day momentum component is NOVL; the greatest negative five day momentum component is SPLS. The average five day momentum of all 500 components is 2.46.
72.60% of the SPX components are giving a crossover Buy signal; 5.20% of the SPX components are giving a Sell signal. This is a 14.0 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 10 components.
• From Buy to Neutral: 13 components.
• From Neutral to Sell: 1 component.
• From Neutral to Buy: 52 components.
Friday, March 5
Economics
08:30 Unemployment Rate 9.8% cons.
08:30 Nonfarm Payrolls -20k cons.
08:30 Hourly Earnings 0.2% cons.
08:30 Average Workweek 33.7 cons.
03:00 Consumer Credit -$4.1B
Earnings
Before: AIR, ALC, SOLF
The Friday jobs report is the monster event of the day.
Mel’s Random Hits:
• Total tick for the day was +92,000. Breadth was positive at the open for half an hour, then negative for 90 minutes. The rest of the session was positive with the exception of 30 minutes around 1:45 to 2:15.
• The day's range was 7.07 points. There are some who claim to successfully day trade the indices within such a range; I find it difficult when not only the range is tiny but volatility within the range is lacking as well.
• The day's volume was 74.4% of the average daily volume for the last year. Volume was 93.0% of the last 10 day average and 97.3% of Wednesday’s volume.
• 23% of the SPX stocks closed with two day RSI above 90. 36% closed with RSI above 80. 9% closed with RSI below 20 and 4% closed with RSI below 10.
• 72.6% of the SPX are above their five day moving average, 79.4% are above their 10 day average, and 89.0% are above their 20 day moving average. These numbers remain overbought.
• 23% of the SPX stocks closed below their most recent previous lows.
• 20% of the SPX closed above their most recent previous high.
• 60.6% of stocks closed in the top half of the day's range. (39.4% closed in bottom half.)
• 8.8% of stocks closed in the bottom 20% of the day's range.
• 13.8% of stocks closed in the top 10% of the day's range.
• 19.4% of stocks closed within 2% of their 52 week high. 40.6% of stocks closed within 5% of their 52 week high. These numbers continue to creep upward.
• 27.2% of stocks closed within 50% of their 52 week low. 8.6% of stocks closed within 25% of their 52 week low.
• 24.4% of stocks closed within ¼% of their high for the day.
• 6.8% of stocks closed within ¼% of their low for the day.
• 59.8% of the SPX closed up from the previous close; 54.2% closed higher than the open.
• Sectors weaker than the SPX for the day: Energy, Consumer Staples, Utilities, and Health Care.
• Sectors stronger than the SPX for the day: Industrials, Technology, Financials, Basic Materials, and Consumer Discretionary.
• The $SOX index strength was again weaker again than the SPX today.
• The 2 Day RSI of the SPX is 97. The Dow RSI is 95, NASDAQ is 98 and Russell 98. Pretty overbought; obviously this can continue, but odds are improving for a pullback.
• Over the last four sessions, the average session closed 59% of the range above the low.
• Upside momentum moved upward from yesterday’s 2.19 to today’s 2.46. The ratio of SPX components giving a crossover buy signal compared to sell signals has jumped to 14 to 1. This is an unusual ratio to see.
• 210 SPX components moved upward and 166 components downward during the after hours with 101 million shares traded.
Have a great Friday everyone!
-----------
"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)
