The 1040 Magnet Approaches
by Jerome "Mel" Hickerson
Over night stock futures improved greatly in response to the report that German Factory Orders were up 2.8% in April, which was well above the expectations for a decline of -0.4%. On a year-over-year basis, orders up +29.6% vs. consensus of +25.4%. There was no U.S.economic data released before the open.
The first session of the week opened with a quick four point move upward, fell back seven points, and then ascended to the high of the day at 10:12. Bears took control until 11:15then rested while the market gathered strength setting the afternoon high at 1:33. But the rest of the session was almost entirely a downward move. Bounce attempts were few and feeble as this market obviously is in a mood to sell.
Another test of the 1040 level seems destined. Repeated tests of this support make it increasingly likely to fail. The pirates have regained control of the ship and the Jolly Roger once again flies. We’ve seen a higher high, followed by yet another lower low; more whipsaw is likely ahead. But it’s impossible to remain in a short-term bullish posture now that the 1055 area has been violated on a closing basis.
I am not among those who see a crash as imminent. But as I told subscribers Sunday night, this is what the technicals look like before a crash. Anything can happen here, including a crash. Breaking below 1040 could cause a rapid breath-taking downward spike.
I believe we bounce rather than violate the 1040 area, at least for now. But I won’t bet much of my money on this. A gap down on Tuesday, followed by a short-term bounce makes some sense to me.
But the indices are vulnerable, have been vulnerable for days, and those red candles on the chart tell us what the market is thinking.
Day Trade Systems Update: (Signals today)
* SSO at: 11:02
* USO Short at: 12:14
* USO Short at: 1:43
* GDX Short at: 2:08
* SSO at: 2:40
It was kind of an odd day as we day traded today; the larger moves were all downward but the long side worked as well. We were focused on ProShares Ultra S&P500 (SSO), United State Oil Fund (USO), and Market Vectors Gold Miners (GDX).
SPX Summary for Monday, June 07, 2010
81 Advancers/412 Decliners
Today's SPX component winners and losers:
- Largest one day loser is CVS with -8.06%
- Largest three day loser is TLAB with -15.51%
- Largest five day loser is TLAB with -24.25%
- Largest ten day loser is TLAB with -24.08%
- Largest one day winner is BMY with 6.30%
- Largest three day winner is FE with 3.79%
- Largest five day winner is SWN with 11.41%
- Largest ten day winner is CHK with 14.22%
*** SPX Technical Summary ***
The lowest 14 day RSI component is LEN; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 36.
The greatest positive five day momentum component is SWN; the greatest negative five day momentum component is TLAB. The average five day momentum of all 500 components is -4.55.
8.40% of the SPX components are giving a crossover Buy signal; 61.80% of the SPX components are giving a Sell signal. This is a 7.4 to 1 ratio of Sell signals over Buy signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 4 components.
- From Buy to Neutral: 8 components.
- From Neutral to Sell: 115 components.
- From Neutral to Buy: 7 components.
Movement is once again bearish.
The moving averages:
Close 1050.47
9 EMA 1055.98 Falling
5 DMA 1077.45 Falling
10 DMA 1079.54 Falling
20 DMA 1105.38 Falling
50 DMA 1154.29 Falling
100 DMA 1135.95 Falling
200 DMA 1106.88 Rising
10 Wk MA 1133.51 Falling
NYSE Summary
On the NYSE 3192 issues were traded with 832 advancing issues and 2267 retreating issues, a ratio of 2.72 to 1 declining. There were 21 new highs and 93 new lows.
Declining volume was higher at a ratio of 5.48 to 1. The closing TRIN was 2.01 and the final tick was 425.
Notice the final tick; the last time the final tick was this positive was at the end of a 27 point gain day.
Evidence of trend:
Relative to the previous 30 session average, volume was -10.86% below the average. Of the last 15 sessions 8 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 12 sessions ended on a positive tick, 4 of last 10.
The 5 day moving average of New Highs is 26 while the 5 day moving average of new lows is 40 and the 10 day moving average of Net Advancing is -195.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line decreased from 200232 to 198797. This -0.72% decrease came while the SPX was losing -1.37%. The 10 day moving ratio of positive volume is 0.74 and the 10 day moving Advance/Decline ratio is 0.88. The 10 day moving ratio of positive volume has trended -0.28 over the last three days and the 10 day moving Advance/Decline ratio has trended -0.17 over the last three days.
The NYSE Composite Index lost -1.33% today.
NYSE Statistics:
Absolute Breadth Index: 43.81 up from previous day of 43.32
Cumulative Volume Index: 36,054.99 down from previous day of 40,622.38
High Low Logic Index: 0.44 up from previous day of 0.42
McClellan Oscillator: (186.10) down from previous day of (110.59)
McClellan 10 DMA: (160.81) up from previous day of (172.75)
McClellan Summation Index: (2,001.87) down from previous day of (1,815.77)
% Stocks Above 200 DMA: 39.19 down from previous day of 51.79
% Stocks Above 40 DMA: 14.81 down from previous day of 18.50
New High / New Low Ratio: 16.52 down from previous day of 28.00
26wk New High/Low Ratio: 10.99 down from previous day of 25.76
13wk New High/Low Ratio: 7.34 down from previous day of 22.90
4wk New High/Low Ratio: 10.32 down from previous day of 37.05
Cumulative 4-Week New Hi-Low: 436,230 down from previous day of 436,847
Nasdaq Adv/Decline: 1,361 down from previous day of 1,424
Russell 1000 Advance/ Decline Line: 2,207 down from previous day of 2,280
Russell 2000 Advance/ Decline Line: (2,016) down from previous day of (1,944)
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).
Tuesday, June 8
Economics
No significant U.S.releases
02:00German Merchandise Trade
02:45FranceMerchandise Trade
06:00German Industrial Production
Earnings
Before: DG, TLB
After: BOBE, MIND, NAV, OXM, TTWO
Auction
01:003-Yr Note Auction
Federal Reserve Board Governor Elizabeth A. Duke speaks at a conference in Floridaabout the aftermath of the financial crisis.
Mel’s Missives from the Matrix:
- Total tick for the day was -84,000 and the average tick for the day was -68. There were 94 ticks greater than 600 and 207 ticks more extreme than -600. There were 5 ticks greater than 1000 and 28 ticks more extreme than -1000. The tick action suggests institutional distribution.
- The day's range was 21.5 points. The intraday trading range - 9:35to the close - was 20.87. The 5 DMA of daily range is 24.96.
- Evidence of the intraday trend: At 10amvolume was 76.26% of the 10 day average. By noonthe volume was 85.24% of the 10 day average, and by 2pmvolume was 86.94% of the 10 day average.
- The day's volume was 109.5% of the average daily volume for the last year. Volume was 93.2% of the last 10 day average and 88.6% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 10:45and 11:00when relative volume increased 45.1% while the SPX was dropping -0.45%. The largest drop in relative volume came between 11:00and 11:15when relative volume dropped -31.4% while the SPX was dropping -0.11%.
- 0% of the SPX stocks closed with two day RSI above 90. 0% closed with RSI above 80. 71% closed with RSI below 20 and 32% closed with RSI below 10.
- 6% of the SPX are above their five day moving average, 9.6% are above their 10 day average, 7.4% are above their 20 day moving average, 7.4% are above their 50 day moving average, and 17.2% are above their 100 day moving average.
- 1% of the SPX closed above their most recent previous high.
- 79% of the SPX stocks closed below their most recent previous lows.
- 81 SPX issues advanced and 412 issues declined, a net SPX advance/decline of -331.
- Evidence of the intraday trend: At 10am, 73.2% of the SPX components were in the top half of the range. By noon, 44.4% were in the top half of the range, and by 2pm, 32.8% 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. 0.6% of stocks closed in the top 20% of the day's range.
- 69% of stocks closed in the bottom 10% of the day's range. 82.8% of stocks closed in the bottom 20% of the day's range.
- 1% of stocks closed within 2% of their 52 week high. 3.4% of stocks closed within 5% of their 52 week high.
- 69.8% of stocks closed within 50% of their 52 week low. 37.8% of stocks closed within 25% of their 52 week low.
- 0.8% of stocks closed within ¼% of their high for the day.
- 56.8% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 73.6% of the SPX components were up since the open. By noon, 48.2% were up since the open, and by 2pm, 42.2% were up since the open.
- 15.2% of the SPX closed up from the previous close; 13.4% closed higher than the open.
- Sectors stronger than the SPX for Monday:
- Energy -- Outperformed the SPX by +48%.
- Consumer Staples -- Outperformed the SPX by +58%.
- Utilities -- Outperformed the SPX by +196%.
- Health Care -- Outperformed the SPX by +100%.
- Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -43%.
- Financials -- Underperformed the SPX by -55%.
- Industrials -- Underperformed the SPX by -122%.
- Technology -- Underperformed the SPX by -32%.
- Consumer Discretionary -- Underperformed the SPX by -55%.
- The $SOX index strength was weaker relative to the SPX Monday by -2.27%.
- The XLF underperformed the SPX by -0.55% Monday.
- The 2 Day RSI of the SPX is 12. The Dow RSI is 10, the NASDAQ is 13 and the Russell is 12.
- Over the last four sessions, the average session closed 48.3% of the range above the low. Monday closed at 0% of the daily range.
- Upside momentum moved downward Monday, from Friday’s -4.27 to today’s -4.55. The ratio of SPX components giving a crossover sell signal compared to buy signals also moved negatively to S 7.36 to 1.
- The ISEE Equity 10 day moving average Monday was 154.3. The lowest 10 day average in the last 52 weeks was 141.5 on 06/29/09and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
- 202 SPX components moved upward and 120 components downward during the after hours with 191 million shares traded.
Trade 'em well on Tuesday everyone!
