The Wall Street Wax Museum
by Jerome "Mel" Hickerson
Today opened with – drum roll please – a gap down. It’s been a while. But just before 9:45 there was a sudden surge upward – by recent standards a three point move seems huge. But the index gently gave that back over the next hour, bounced a little, then glided gently downward into the closing hour, with every little bounce being met with a little pullback. The final 30 minutes saw a few buyers and fewer sellers; as a result the market levitated higher in the final minutes.
Unless you make pennies and are happy with that, day trading in a four point range is not easy. For an index trader, the market might as well be closed on days such as we have had this week ; it must look like a wax museum on the trading floor. Every move seems large but when you step back and look at it, the entire day went sideways.
The low volume is typical for holiday periods; the low trading range is not typical. Historical data suggests two things. An uptrend followed by small range usually breaks to the upside. But when you examine the data further, you find that an uptrend followed by tiny range usually breaks to the downside. I’d consider the recent range tiny, not just small. Take it for what it’s worth; I’ve been as bullish as anyone but I do not see this period of extremely small range as bullish.
The failure to low volume levitate the last couple of sessions may also be telling us something.
But having said that, I believe we end the year on a positive note with an upward day on Thursday. 2009 will mark the best year for the market since 2003 in spite of lingering and persistent doubts about the economy. But if you try to equate the economy with the market you’ll go broke. I’ll remind everyone that the market rallied many times during the 1930’s while the economy was in a depression. Yes, the market always gave back those gains; but there were many rallies that persisted for a year or longer. So don’t kid yourself that this rally can’t outlast you.
For the final session, I still believe tomorrow’s close will be higher than today’s open, followed by a difficult first week of the year, and a likely ramp upward during the second half of January.
Thursday, December 31
Economics
08:30 Initial Claims
08:30 Continuing Claims
The government's weekly jobless claims report is due before the market opens.
Mel’s Random Hits:
• Total tick for the day was +5,000. The entire day was negative except for two stretches; from 11:30 through 1:15 and the closing hour.
• The day's range was 4.48 points. Range has not exceeded 6.87 points in six sessions. Today’s session traded within the first 18 minute trading range for the entire session until the last minute of trading when the index broke above the trading range. The average trading range for the last five sessions has been 0.5%. This is the first five day period with a ½% daily trading range this decade. The entire week has traded within a 6.87 point range. The week in not completed but we are on pace to have the smallest trading range for the week in more than 10 years.
• The day's volume was 41.7% of the average 2009 daily volume. The volume was 52% of the last 10 day (shrinking) average. This was the eighth day in a row of volume being lower than the previous day (excluding the abbreviated Christmas Eve session.)
• 11% of the SPX stocks closed with two day RSI above 90. 20% closed with RSI above 80. 25% closed with RSI below 20 and 7% closed with RSI below 10. Overbought conditions once again relieved somewhat by the sideways movement. From two nights ago: “27% of the SPX stocks closed with two day RSI above 90. 40% closed with RSI above 80. 6% closed with RSI below 20 and 1% closed with RSI below 10.” Notice the change in the numbers and the SPX has retreated less than two points. A short-term two day RSI is useful but has limitations as well.
• 42% of the SPX are above their five day moving average, 69% are above their 10 day average, and 82% are above their 20 day moving average. The numbers above their short-term averages are also dropping due to the sideways movement.
• 30% of the SPX stocks closed below their most recent previous lows.
• 16% of the SPX closed above their most recent previous high.
• 65.0% of stocks closed in the top half of the day's range. (35.0% closed in bottom half.)
• 7.0% of stocks closed in the bottom 20% of the day's range.
• 19.0% of stocks closed in the top 10% of the day's range.
• 26.6% of stocks closed within 2% of their 52 week high.
• 24.0% of stocks closed within 50% of their 52 week low.
• 32.6% of stocks closed within ¼% of their high for the day.
• 6.8% of stocks closed within ¼% of their low for the day.
• 43.0% of the SPX closed up from the previous close; 66.2% closed higher than the open.
• Sectors weaker than the SPX for the day: Energy, Industrials, Consumer Staples, and Health Care
• Sectors stronger than the SPX for the day: Utilities, Technology, Basic Materials, Financials, and Consumer Discretionary
• The $SOX index strength was stronger than the SPX today.
• The 2 Day RSI of the SPX is 53. The Dow RSI is 68, NASDAQ is 88 and Russell 62.
• SPX components moved upward during the after hours.
Have a great holiday weekend!
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"Mel"
Today we closed out of:
Ultra S&P 500 ProShares (SSO) +0.00%
