The Topping Process Continues as the SPX Paints a Doji
by Jerome "Mel" Hickerson
Market Recap:
Things were quiet as European markets were moving around breakeven and the futures here in the U.S. were pointing modestly lower. The Commerce Department reported that Retail Sales rose in the month of August by +0.4%. This was above the consensus for +0.3%. When you strip out the sales of autos, sales were up nicely at +0.6%, which was double the consensus for an increase of +0.3%.
The Tuesday session began by quickly moving down six points and putting the low of the day on the chart at 9:45 am. The next couple of hours belonged to the bull as the index climbed eleven points to put the high of the day on the chart at 12:07. The next couple of hours were grinding trade as the index retreated five points before recovering in the 90 minutes leading up to 3:30 pm. But the last twenty minutes saw a five point sell off as the index closed just about where the day began.
It was another kind of odd day as the dollar was down sharply and this often results in an up stock market. The SOX index was leading the way higher today and that has been quite rare recently. To make things even odder today, market bears were cheering (and that is very unusual lately) in spite of the SPX only being down a fraction.
Checking our Market Leaders board we see that the indices were largely mixed today. Technology stocks were strong while banks and small caps struggled.
Market Trend: Nine Sectors Report
We're starting to see some interesting movement within our Nine Sectors Report as the green lights continue to blink off and begin turning red. We had three changes on the report tonight, all towards the Sell side. We're seeing the whites of their eyes and planning a swing short entry at some point tomorrow. It may not be a deep pullback but we believe it is arriving.
The 10 DMA of intraday range is sitting at under 13 points per day. The last time this 10 DMA of range was less than 13 points was April 26th, which just coincidently happens to be the high of the year. There is a strong correlation between range contraction and topping processes.
Volume & Breadth Indicators
For the SPX Index there were 234 Advancers/251 Decliners. On the NYSE 3,115 issues were traded with 1,371 advancing issues and 1,631 retreating issues, a ratio of 1.19 to 1 declining. There were 193 new highs and 3 new lows. The 5 day moving average of New Highs is 204 while the 5 day moving average of New Lows is 6 and the 10 day moving average of Net Advancing is 832. The Net Advancing data indicates a bullish trend.
Declining volume was higher at a ratio of 1.27 to 1. The closing TRIN was 1.07 and the final tick was 519. The NYSE Composite Index gained 0.08% today.
For the NYSE, relative to the previous 30 session average, volume was -5.36% below the average. Of the last 15 sessions 6 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 97.7% of the average daily volume for the last year. Volume was 108.9% of the last 10 day average and 102.9% of the previous day’s volume.
The ratio of declining volume was higher than declining issues today, but only marginally. The broad NYSE Composite Index outperformed the SPX. New Highs once again blew away New Lows. And the final tick was strong.
Further, total tick for the day was 78,000 and the average tick for the day was 51. There were 99 ticks greater than 600 and 63 ticks more extreme than -600. There were 3 ticks greater than 1000 and 3 ticks more extreme than -1000.
The tick action was really pretty neutral today as the average tick was moderate and the extreme ticks were pretty balanced. The nightly indicators are somewhat mixed but lean more to the bullish side but we can see that the McClellan 10 DMA is certainly overbought.
Moving Average Indicators:
77.60% of the SPX components are giving a crossover Buy signal; 5.00% of the SPX components are giving a Sell signal. This is a 15.5 to 1 ratio of Buy signals over Sell signals.
80.4% of the SPX are above their five day moving average, 88.2% are above their 10 day average, 90% are above their 20 day moving average, 76.6% are above their 50 day moving average, 59.2% are above their 100 day moving average, and 53.6% are above their 150 day moving average.
Once again, the SOX 5 DMA crossed above the 20 DMA as the action meanders back and forth. All the significant indices have their short-term averages above the longer-term averages. The first sign that we have entered a pullback will come when these short-term averages begin to cross below their long-term counterparts.
Sectors on the Move:
Sectors stronger than the SPX for Tuesday:
- Technology -- Outperformed the SPX by +48%.
- Consumer Staples -- Outperformed the SPX by +26%.
- Health Care -- Outperformed the SPX by +41%.
- Consumer Discretionary -- Outperformed the SPX by +17%.
Sectors weaker than the SPX for Tuesday:
- Basic Materials -- Underperformed the SPX by -10%.
- Energy -- Underperformed the SPX by -27%.
- Financials -- Underperformed the SPX by -101%.
- Industrials -- Underperformed the SPX by -22%.
- Utilities -- Underperformed the SPX by -11%.
Stocks on the Move:
Today's SPX component winners and losers:
- Largest one day loser is CLF with -6.45%
- Largest three day loser is PCG with -6.72%
- Largest five day loser is DPS with -9.40%
- Largest ten day loser is DPS with -6.43%
- Largest one day winner is JCP with 7.35%
- Largest three day winner is JCP with 15.89%
- Largest five day winner is JDSU with 16.03%
- Largest ten day winner is JDSU with 24.21%
In Late Trading:
181 SPX components moved upward and 144 components downward during the after hours with 96 million shares traded. Very light after hours volume.
Wednesday, September 15
Economics
08:30 NY Fed- Empire Manufacturing Survey 10.0 cons.
08:30 Export Price ex-ag
08:30 Import Price ex-oil
09:15 Industrial Production 0.4% cons.
09:15 Capacity Utilization 75.0 cons.
10:30 Crude Inventories
Australia Dwelling Starts 4.5% cons.
Great Britain Average Weekly Earnings 1.6% cons.
Great Britain Claimant Count Rate 4.5% cons.
Great Britain Jobless Claims Change -5.0k cons.
Swiss ZEW Survey
Euro-Zone Consumer Price Index
New Zealand Rate Decision 3.00% cons.
Earnings
Before: ZLC
After: AIR, APOG, CLC, DBRN
Traders will be watching for the New York Fed's Empire Manufacturing Survey before the bell, as well as readings on industrial production and capacity utilization.
Make it a great Wednesday!
-Mel
