The Session and the Week Close at the Highs as the Creeper Rally Continues
Foreign markets were higher overnight but all eyes were focused on the jobs report. The Labor Department reported that Nonfarm Payrolls rose in the month of January by just 36,000. This was well below the consensus estimates for an increase of 142,000. The private sector showed gains of 50K jobs, which again was also well below the estimates. However the November/December reports were revised higher by a cumulative total of +121K jobs. The big surprise in the report is the nation’s Unemployment Rate dove to 9.0%, which was well below the expectations for a reading of 9.5% and December’s level of 9.4%.
This report is a head-scratcher for sure as the data appears to be contradictory. It was the largest two-month decline in unemployment rate since 1958. Private sector employment has now grown for eleven consecutive months. But the participation in the labor force has dropped to a 26 year low as discouraged job seekers have given up looking for work. While this improves the unemployment numbers it does nothing to improve the economic outlook for the country.
The final session of the week began without a significant gap, quickly moved down four points, bounced and recovered, and then moved down almost six points to put the low of the day on the chart at 11:05. Then, as we have seen so often recently, the morning low gave way to a slow creep higher throughout the day as the buying any dip continues to be the trade. The session and the entire week closed at the highs.
This market has shown a remarkable resiliency. Not even a world crisis can shake the dip buyers for more than a few hours. Yet Friday’s market internals were about as odd as we have seen. The entire session was ruled by institutional distribution yet we once again saw the low volume force the indices slowly higher. The NYSE tick action was easily the most negative we have seen on an up day.
Checking our Market Leaders board at the end of the week we see a mixed board as all the winners and the losers hovered around the breakeven mark. Every leader on our board closed the weekly charts at 52 week closing highs except the Financials (XLF), China, and Emerging Markets.
Market Recap – Weekly Review:
The SPX gained 34.53 points during the week. The range for the week was 34.50 points, 2.7% as the week opened at the lows and just missed closing at the high. The four week RSI of the four indices (SPX, Dow, NASDAQ, and Russell 2000) is 78. When the market repeatedly moves into overbought territory it is a sign of an extreme bullish trend. The largest market moves come at these extremes. The four indices have not neared oversold territory since the first week of July.
Total tick for the week was 834,000. Usually a pullback follows such an extreme week for the total tick. On the NYSE, the advance/decline line increased during the week by 3,153 (setting an all-time high on Thursday) and the 10 day average of Net Advancing increased from -60 to 410. There were 1,129 New Highs and a mere 54 New Lows.
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report we have only one change as a result of Friday’s action as Consumer Staples moves from Neutral to Buy. The Nine Sectors signal holds on Neutral.
80% of the time when SPX closes at a 52 week high on Payroll Report day, it has a lower close within 3 days.
Volume & Breadth Indicators
For the SPX Index there were 305 components advancing and 175 components declining. On the NYSE 3,132 issues were traded with 1,481 advancing issues and 1,536 retreating issues, a ratio of 1.04 to one declining. There were 221 new highs and 12 new lows. The five day moving average of New Highs is 201 while the five day moving average of New Lows is 11 and the ten day moving average of Net Advancing is 410. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 1.08 to one. The closing TRIN was 0.89 and the final tick was 709. The five day average of TRIN is .99 and the ten day average of TRIN is 1.16. The NYSE Composite Index lost 0.01% today while the SPX gained 0.29%.
For the NYSE, relative to the previous 30 session average, volume was -4.56% below the average. Of the last 15 sessions 13 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 20 sessions ended on a positive tick, 9 of last 10. For the SPX, the day's volume was 86.5% of the average daily volume for the last year. Volume was 84.4% of the last 10 day average and 89.5% of the previous day’s volume.
SPX breadth was stronger than the overall market breadth as the NYSE posted a declining ratio but with advancing volume. Overall volume was light.
Total tick for the day was -10,000 and the average tick for the day was -6. There were 7 ticks greater than 600 and 65 ticks more extreme than -600. There were no ticks greater than 1000 and 3 ticks more extreme than -1000. The tick action suggests institutional distribution. This was certainly odd tick action for an up day.
Intraday volume clearly spiked on the morning down move and tapered off during the end of session rally. The Nightly Breadth Indicators are extremely mixed but worth noticing is the continued decline of the percentage of stocks above their 40 day moving average and above their 200 day moving average.
Moving Average and Support/Resistance Indicators:
66% of the SPX are above their five day moving average, 72.6% are above their 10 day average, 72.2% are above their 20 day moving average, 76.6% are above their 50 day moving average, and 88.6% are above their 200 day moving average.
The Russell 2000 5 DMA crossed above the 20 DMA while China’s 20 DMA crossed below 50 DMA.
Sectors on the Move:
Sectors stronger than the SPX for Friday:
- Industrials -- Outperformed the SPX by +13%.
- Technology -- Outperformed the SPX by +36%.
- Consumer Staples -- Outperformed the SPX by +30%.
- Health Care -- Outperformed the SPX by +18%.
- Consumer Discretionary -- Outperformed the SPX by +41%.
Sectors weaker than the SPX for Friday:
- Basic Materials -- Underperformed the SPX by -27%.
- Energy -- Underperformed the SPX by -40%.
- Financials -- Underperformed the SPX by -31%.
- Utilities -- Underperformed the SPX by -105%.
In Late Trading:
207 SPX components moved upward and 121 components downward during the after hours with 182 million shares traded.
Week of February 07 - February 11 Overview
02/07/11 15:00 Consumer Credit/$2.5B
02/09/11 7:00 MBA Mortgage Purchase Index/NA
02/09/11 10:30 Crude Inventories/NA
02/10/11 8:30 Initial Claims/413K
02/10/11 8:30 Continuing Claims/3900K
02/10/11 10:00 Wholesale Inventories/0.007
02/10/11 14:00 Treasury Budget
02/11/11 8:30 Trade Balance/-$40.7B
02/11/11 9:55 Mich Sentiment/75.5
Monday, February 7
03:00 Consumer Credit
Australia Retail Sales
Japan Coincident Index
Japan Leading Index
Euro-Zone Sentix Index
Canada Building Permits
Treasury Coupon Purchase: 2/15/2018-11/15/2020: $7-9 bln
Before: AMRI, BWP, CSL, CAN, CTSH, HAS, HUM, IPSU, L, LO, MTRX, MCY, SYY, TDG
After: ADVS, AHL, BMI, BDX, BMR, BLKB, BRE, BRO, CRK, CUZ, DST, ESLR, FMC, GLUU, HMN, IPHS, KEYW, OTTR, OMI, PLY, PXD, SNCR, TWTC, VECO
Have a great weekend!