The Intermediate Trend Has Changed
by Jerome "Mel" Hickerson
Overnight news that the demand in Europe for the ECB's 3-month lending facility was low gave the European markets a boost. On the U.S. economic front, although ADP reported that the private sector job market expanded for the fifth straight month in June, the report showed that private sector jobs grew by just 13,000 jobs last month, which was well below the consensus expectations for a gain of about 60,000. The May report was revised slightly higher to show a total growth in jobs of 57,000, which was up from the original report of 55,000. Stock futures took a seven point downward move after 8amand pointed to a flat open.
The session opened with a down move but quickly moved into positive territory before 10am. The SPX traded choppy and sideways for about an hour before beginning to climb into the high of the day at 11:52. The first half of the afternoon was also choppy but with a downward bias until a little after 3pma tide of selling overtook the index and it cascaded downward 13 points before a very weak bounce just before the close.
Today was a positive day until about 2pmwhen the decliners began overtaking the advancers. I understand that the closing hour was dominated by fund managers repositioning for the quarter end. But whatever the reasons, it was not a pretty way to end a very ugly month. Closing the month at the lows is unusual, but we’ve now done it twice already this year.
In the 16 months that I have been writing this column, the short-term outlook has changed back and forth many times. But today marks the first time that the intermediate outlook has changed from bullish to bearish.
There is no way to escape the fact that the tone of the market has changed and looking forward the likelihood is greater for lower prices. Significant levels of support have fallen. The health of the market has been questionable for weeks as the market has been overly focused on the news items of the day.
We are certain to see bounces; I am even long TNA again anticipating such a bounce. But overall, I am convinced we see lower prices ahead.
Day Trade Systems Update: (Signals today)
* SSO at: 10:15
* 1/2 SSO at: 12:55
* SSO Scalp at: 3:32
We were only in ProShares Ultra S&P500 ETF (SSO) today. Our first entry was good; the other two were not, resulting in an unusual day of losses. It happens; but it is never fun.
SPX Summary for Wednesday, June 30, 2010
63 Advancers/426 Decliners
Today's SPX component winners and losers:
- Largest one day loser is FITB with -5.17%
- Largest three day loser is CLF with -16.37%
- Largest five day loser is ODP with -17.18%
- Largest ten day loser is ODP with -27.81%
- Largest one day winner is ODP with 3.58%
- Largest three day winner is DPS with 2.08%
- Largest five day winner is NEM with 4.41%
- Largest ten day winner is NEM with 5.85%
*** SPX Technical Summary ***
The lowest 14 day RSI component is FO; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 37.
The greatest positive five day momentum component is ETFC; the greatest negative five day momentum component is ODP. The average five day momentum of all 500 components is -4.55.
3.60% of the SPX components are giving a crossover Buy signal; 48.60% of the SPX components are giving a Sell signal. This is a 13.5 to 1 ratio of Sell signals over Buy signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 1 component.
- From Buy to Neutral: 8 components.
- From Neutral to Sell: 79 components.
- From Neutral to Buy: 3 components.
Movement to the Sell side continues.
The moving averages: SPX NYA
Close 1030.71 6469.65
9 EMA 1033.91 Falling 6476.61 Falling
5 DMA 1059.39 Falling 6644.10 Falling
10 DMA 1083.11 Falling 6787.87 Falling
20 DMA 1083.24 Falling 6769.49 Falling
50 DMA 1118.95 Falling 6995.71 Falling
100 DMA 1132.51 Falling 7153.82 Falling
200 DMA 1112.10 Falling 7121.93 Falling
10 Wk MA 1099.56 Falling
Pretty bearish looking.
NYSE Summary
On the NYSE 3194 issues were traded with 1134 advancing issues and 1954 retreating issues, a ratio of 1.72 to 1 declining. There were 29 new highs and 103 new lows.
Declining volume was higher at a ratio of 2.72 to 1. The closing TRIN was 1.58 and the final tick was -158.
Evidence of trend:
Relative to the previous 30 session average, volume was -3.87% below the average. Of the last 15 sessions 3 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, 5 of last 10.
The 5 day moving average of New Highs is 45 while the 5 day moving average of new lows is 74 and the 10 day moving average of Net Advancing is -604. The Net Advancing data indicates a bearish trend.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line decreased from 200453 to 199633. This -0.41% decrease came while the SPX was losing -1.02%. The 10 day moving ratio of positive volume is 0.58 and the 10 day moving Advance/Decline ratio is 0.67. The 10 day moving ratio of positive volume has trended -0.32 over the last three days and the 10 day moving Advance/Decline ratio has trended -0.26 over the last three days.
The NYSE Composite Index lost -0.77% today.
NYSE Statistics:
Absolute Breadth Index: 49.68 up from previous day of 47.86
Cumulative Volume Index: 32,337.81 down from previous day of 34,829.77
High Low Logic Index: 0.76 up from previous day of 0.72
McClellan Oscillator: (196.26) down from previous day of (165.24)
McClellan 10 DMA: (3.26) down from previous day of 37.28
McClellan Summation Index: (1,361.44) down from previous day of (1,165.18)
% Stocks Above 200 DMA: 37.51 down from previous day of 39.35
% Stocks Above 40 DMA: 25.53 down from previous day of 25.70
New High / New Low Ratio: 25.00 up from previous day of 20.98
26wk New High/Low Ratio: 11.98 down from previous day of 15.74
13wk New High/Low Ratio: 10.28 up from previous day of 10.26
4wk New High/Low Ratio: 13.02 up from previous day of 11.49
Cumulative 4-Week New Hi-Low: 437,790 down from previous day of 438,583
Nasdaq Adv/Decline: 1,275 down from previous day of 1,300
Russell 1000 Advance/ Decline Line: 2,103 down from previous day of 2,167
Russell 2000 Advance/ Decline Line: (2,100) down from previous day of (2,059)
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).
Thursday, July 1
Economics
08:30 Initial Claims
08:30 Continuing Claims
10:00 Construction Spending -0.9% cons.
10:00 ISM Index 58.8 cons.
10:00 Pending Home Sales -10.5% cons.
02:45 France PPI
Earnings
Before: STZ, MEI, MSM
After: DMAN, FLOW
The Institute for Supply Management's manufacturing index for June is expected to have dropped to 59.0 from 59.7 in May. However, any number over 50 still indicates expansion in the sector. The government's construction spending report is due after the start of trading. Spending is expected to have fallen 0.9% in May after rising 2.7% in April. Weekly jobless claims are due in the morning, along with the pending home sales index. Auto and truck sales for June are due through the day.
Mel’s Missives from the Matrix:
- Total tick for the day was 106,000 and the average tick for the day was 69. There were 127 ticks greater than 600 and 78 ticks more extreme than -600. There were 4 ticks greater than 1000 and 8 ticks more extreme than -1000.
- The day's range was 19.45 points. The intraday trading range - 9:35to the close - was 19.45. The 5 DMA of daily range is 20.62.
- Evidence of the intraday trend: At 10am volume was 102.7% of the 10 day average. By noon the volume was 108.11% of the 10 day average, and by 2pm volume was 102.69% of the 10 day average.
- The day's volume was 101.1% of the average daily volume for the last year. Volume was 107.4% of the last 10 day average and 78.5% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 2:00 and 2:15 when relative volume increased 57.6% while the SPX was dropping -0.22%. The largest drop in relative volume came between 10:00 and 10:15 when relative volume dropped -40.1% while the SPX was dropping -0.04%.
- 0% of the SPX stocks closed with two day RSI above 90. 1% closed with RSI above 80. 83% closed with RSI below 20 and 62% closed with RSI below 10.
- 2.4% of the SPX are above their five day moving average, 1.6% are above their 10 day average, 6% are above their 20 day moving average, 5.4% are above their 50 day moving average, 11.6% are above their 100 day moving average, and 18.8% are above their 150 day moving average.
- 3% of the SPX closed above their most recent previous high.
- 56% of the SPX stocks closed below their most recent previous lows.
- 63 SPX issues advanced and 426 issues declined, a net SPX advance/decline of -363.
- Evidence of the intraday trend: At 10am, 76.8% of the SPX components were in the top half of the range. By noon, 74.6% were in the top half of the range, and by 2pm, 60.8% were in the top half of the range.
- 4% of stocks closed in the top half of the day's range. (95.8% closed in bottom half.)
- 0.2% of stocks closed in the top 10% of the day's range. 0.4% of stocks closed in the top 20% of the day's range.
- 40.8% of stocks closed in the bottom 10% of the day's range. 77% of stocks closed in the bottom 20% of the day's range.
- 1.2% of stocks closed within 2% of their 52 week high. 3% of stocks closed within 5% of their 52 week high.
- 71.8% of stocks closed within 50% of their 52 week low. 43.4% of stocks closed within 25% of their 52 week low.
- 0.6% of stocks closed within ¼% of their high for the day.
- 34.4% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 69.8% of the SPX components were up since the open. By noon, 77.8% were up since the open, and by 2pm, 71.2% were up since the open.
- 12.6% of the SPX closed up from the previous close; 16% closed higher than the open.
- Sectors stronger than the SPX for Wednesday:
- Basic Materials -- Outperformed the SPX by +0%.
- Energy -- Outperformed the SPX by +27%.
- Industrials -- Outperformed the SPX by +40%.
- Consumer Staples -- Outperformed the SPX by +35%.
- Utilities -- Outperformed the SPX by +42%.
- Health Care -- Outperformed the SPX by +13%.
- Sectors weaker than the SPX for Wednesday:
- Financials -- Underperformed the SPX by -24%.
- Technology -- Underperformed the SPX by -69%.
- Consumer Discretionary -- Underperformed the SPX by -21%.
- The $SOX index strength was weaker relative to the SPX Wednesday by -0.54%.
- The XLF underperformed the SPX by -0.24% Wednesday.
- The 2 Day RSI of the SPX is 1. The Dow RSI is 0, the NASDAQ is 1 and the Russell is 6.
- Over the last four sessions, the average session closed 28.38% of the range above the low. Wednesday closed at 8.6% of the daily range.
- Upside momentum moved upward Wednesday, from Tuesday’s -5.1 to today’s -4.55. The ratio of SPX components giving a crossover sell signal compared to buy signals increased to the sell side to S 13.5 to 1.
- The ISEE Equity 10 day moving average Wednesday was 147.5. 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.
- 217 SPX components moved upward and 161 components downward during the after hours with 235 million shares traded.
Trade 'em well on Wednesday everyone!
-Mel
