Tight Intraday Range Continues
by Jerome "Mel" Hickerson
Market Recap:
Hungary completed a T-Bill sale but had to pay 7.77% for 6-week paper. The IMF was said to be losing confidence in Greece's ability to reform anything. And "Team Merkozy" was meeting again in Berlin today. In response, European markets were close to breakeven and Wall Street was looking slightly higher.
The first session of the week began without a significant gap and briefly worked lower before surging to the high of the morning as the first hour of trading ended. The low of the day came forty minutes later as the SPX traded within just more than a seven point intraday range. The high of the day came just before the close, a bullish characteristic.
Checking our Market Leaders Board, most of our leaders closed in positive territory today with the exception of the Russell Technology Index which closed fractionally in the red. The SOX (chip makers) were leading the way higher.
SPX big winners were Netflix Inc (NFLX) 13.23%, Juniper Networks (JNPR) 5.41%, and First Solar Inc (FSLR) 4.47%. SPX big losers were CareFusion Corporation (CFN) -8.95%, Google (GOOG) -4.26%, and Valero Energy Corp (VLO) -3.71%.
SPX five day big winners are Netflix Inc (NFLX) 41.69%, Micron Technology Inc (MU) 15.9%, and Denbury Resources Ltd (DNR) 15.1%. SPX five day big losers are Williams Companies Inc (WMB) -15.87%, CareFusion Corporation (CFN) -8.38%, and Autonation Inc (AN) -8.33%.
New Ten Day Highs: AMD, AES, URBN, A, AKS, ALL, APH, APC, APA, AMAT, AZO, BLL, BAC, BBT, BBY, BRCM, COF, CAT, CBS, CTAS, CSCO, COH, CMCSA, CMA, GLW, CMI, CVS, DE, DELL, DOW, DNB, EMN, EMC, ESRX, FITB, FSLR, FMC, F, FRX, GE, GT, HAL, HAR, HRS, HCBK, HBAN, INTC, IPG, IRM, ITT, JBL, JDSU, JNPR, LUK, LIFE, LNC, LLTC, LSI, MAR, MHP, MCK, MHS, MDT, MET, MU, MOLX, MON, MWW, MCO, MS, NBR, NOV, NWL, NKE, NSC, NTRS, NVLS, NUE, NVDA, OI, PCAR, PAYX, PBCT, PKI, PCL, PNC, RL, PCP, PHM, QLGC, RSH, RF, COL, SWY, SNDK, SCHW, SNI, SRE, SHW, STJ, SPLS, HOT, STI, TROW, TER, TXN, TMO, TWX, UNP, QLD, KBH, USB, DIS, AAPL, C
New Ten Day Lows: ANF, AEE, AVB, BMC, BMY, BF/B, CFN, CME, CSC, COST, CVH, DRI, XRAY, D, DUK, EIX, EQR, GME, GPS, GIS, HCP, TEG, IBM, JNJ, LEG, MMC, MWV, GAS, NI, NU, ODP, POM, PEP, PM, PNW, PGN, RRC, SCG, SPG, TSS, TSN, VXX, DYN, VRSN, VZ, GOOG, ICE
Volume & Breadth Indicators
For the SPX Index there were 299 components advancing and 165 components declining. On the NYSE 3,130 issues were traded with 1,924 advancing issues and 1,109 retreating issues, a ratio of 1.73 to one advancing. There were 114 new highs and 19 new lows. The five day moving average of New Highs is 118 while the five day moving average of New Lows is 12 and the ten day moving average of Net Advancing is 389. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 1.93 to one. The closing TRIN was 0.82 and the final tick was 532. The five day average of TRIN is .98 and the ten day average of TRIN is 1.41. The NYSE Composite Index gained 0.36% today while the SPX gained 0.23%.
For the NYSE, relative to the previous 30 session average, volume was -13.91% below the average. Of the last 15 sessions 2 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 19 sessions ended on a positive tick, 8 of last 10. For the SPX, the day's volume was 78.8% of the average daily volume for the last year. Volume was 111.4% of the last 10 day average and 92.2% of the previous day’s volume.
The breadth data this evening looks pretty solid; even the broad NYSE Composite Index outperformed the SPX.
Total tick for the day was 136,000 and the average tick for the day was 88. There were 52 ticks greater than 600 and 13 ticks more extreme than -600. There were 3 ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.
The tick data today shows that buyers were in control but these are modest numbers suggesting that traders were not entirely enthusiastic today.
The intraday volume pattern continues to show the early morning spike in volume followed by declining volume throughout the day. We have seen this intraday volume pattern several successive days now.
Moving Average and Support/Resistance Indicators:
60.8% of the SPX are above their five day moving average, 68.2% are above their 10 day average, 79.8% are above their 20 day moving average, 67.2% are above their 50 day moving average, and 42.8% are above their 200 day moving average.
There was one significant moving average crossover today as the NYSE Composite Index 20 DMA crossed above the 50 DMA. Our moving average Power Rating is 64 of a possible 100.
Sectors on the Move:
Sectors stronger than the SPX for Monday:
- Energy -- Outperformed the SPX by +22%.
- Financials -- Outperformed the SPX by +19%.
- Industrials -- Outperformed the SPX by +47%.
Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -2%.
- Technology -- Underperformed the SPX by -37%.
- Consumer Staples -- Underperformed the SPX by -6%.
- Utilities -- Underperformed the SPX by -16%.
- Health Care -- Underperformed the SPX by -16%.
- Consumer Discretionary -- Underperformed the SPX by -32%.
In Late Trading:
218 SPX components moved upward and 94 components downward during the after hours with 178.2 million shares traded.
What We Learned from Monday's Action:
Monday was session 5 to close above the 5 DMA, session 13 to close above the 10 DMA, session 13 to close above the 20 DMA, and session 13 to close above the 50 DMA. This was also session 11 for the 5 DMA to close above the 20 DMA. One early sign of a sustainable rally or pullback is often a close above or below the 10 DMA. The SPX closed 11.2 points above the 10 DMA.
The SPX 5 DMA is 1278.79, 10 DMA is 1269.5, 20 DMA is 1250.2, 50 DMA is 1241.64, 100 DMA is 1211.62, and 200 DMA is 1258.4.
On Monday the SPX traded both below and above the opening range. 59.8% of the SPX closed up from the previous close; 54% closed higher than the open. During Monday's session the SPX gained 2.87 points from open to close.
Note: The Opening Range Breakout is one of the simplest day trading set-ups to understand. The first hour of the trading day is the most volatile. Bears and bulls are battling it out in the stock market, trying to show you who’s going to be in charge for the day. If we break out of that trading range, it's telling us that new buying or selling is impacting traders' assessments of value. Looking back at today’s breakouts also helps us grasp sentiment going forward because when a clear trend is established it often carries through for several sessions.
Looking Ahead:
The Market Environment for Tuesday is +1. Greater than three is bullish and less than negative three is bearish. Based solely on the technicals, our bias is slightly bullish for Tuesday's session.
It can be difficult to find a lot to write about after a sluggish seven point range session. So we’ll just touch on a few things that get our attention:
The indices are significantly overbought but have resisted, at least for now, any significant selling. Lows have been in the early day and highs late in the day, a bullish characteristic.
Since the gap higher open on the first trading session of the year, the intraday trading range has been miniscule. This can often be a prelude to selling as traders appear to be disinterested in chasing equities higher.
The major indices are hovering just below significant levels of resistance. One common way to get above resistance is a gap up open. But another way is to pullback and burn off overbought conditions first.
We believe Tuesday’s session is likely to resolve many of the short term questions regarding market direction. Higher before lower is our best guess, but keep in mind that this is more of a guess than based on solid evidence.
Tuesday, January 10
Economics
07:30 NFIB Small Business Optimism
10:00 IBD/TIPP Economic Optimism
10:00 JOLTS Job Openings
10:00 Wholesale Inventories – consensus 0.5%
11:00 Fed to purchase $1b-$1.15b notes in 7 to 30-year range
11:30 U.S. to sell 4-week bills
11:30 U.S. to sell $25b 52-week bills
1:00 U.S. to sell $32b 3-yr notes
CNY Trade Balance
13:15 CAD Housing Starts
5:00 Greece to sell EU1.25b 182-day bills
Earnings
Before:
After: SNX
There were no significant economic releases on Monday and there will be none on Tuesday.
Good trading!
Thank you for reading. Think on it, trade on it, and be well.
-Mel
