Unusually Uncertain Economic Outlook
by Jerome "Mel" Hickerson
Abbreviated report tonight due to travel.
There was no economic news to review before today’s open. Apple's report after the bell last night was encouraging and all eyes were on Mr. Bernanke today as he presented part one of his two-day semiannual testimony on monetary policy. Overseas markets were up overnight and our futures were pointing towards some strength at the open.
The market opened with a small gap higher but almost immediately began working its way downward to a morning low just before 10am. Until 2pm, the SPX traded lazily as if in anticipation of a big event; the calm before a storm. Shortly after 2pm the storm arrived as Ben Bernanke’s comments seemed too “hawkish” for traders and selling hit with a fury. The index quickly gave up ten points in ten minutes before trying to stabilize. The final hour was turbulent as the index limped into the close like a wounded animal seeking shelter.
I think we already knew that these were “unusually uncertain” times. But when the FED Chairman, who is expected to select his words very carefully, chooses to use such a phrase, it obviously scares the dickens out of traders.
The outlook going forward is murky. Breadth seems to be dragging the market higher but the market is so news driven that it can’t be seen as healthy. I am staying with a short-term bullish outlook as I believe today’s market reaction to the downside was overblown; but I am in cash at the time of this writing.
Thursday, July 22
Economics
08:30 Initial Claims
08:30 Continuing Claims
10:00 Existing Homes Sales 5.10 mln cons.
10:00 Leading Indicators -0.5% cons.
04:30 Great Britain Retail Sales
08:30 Canada Retail Sales
Earnings
Before: MMM, ALK, T, AN, BAX, BBT, BX, BMY, BG, CSIQ, CAT, CLP, CY, DO, ELN, ENTR, FITB, JAKK, JNS, JBLU, LTM, MHS, NYT, NOK, NUE, OXPS, PENN, PM, PNC, PCP, RS, RAI, SWY, SHW, SON, STJ, HOT, STI, TRAD, TRV, TZOO, UNP, UPS, VFC, VSI, WSO, WVV, XRX, ZMH
After: ALGN, AMZN, AXP, ATHN, BJRI, COF, CAKE, CMG, CB, COLM, CPWR, CYBS, DECK, DRC, ETFC, EZPW, FWRD, HWAY, HITT, HGSI, IBKR, JJSF, MOS, NFX, PMCS, QLGC, RMBS, RVBD, SNDK, SPWRA, WOOF
Speeches
09:30 Ben Bernanke
Mel’s Missives from the Matrix:
- Total tick for the day was 91,000 and the average tick for the day was 59. There were 152 ticks greater than 600 and 86 ticks more extreme than -600. There were 18 ticks greater than 1000 and 8 ticks more extreme than -1000. The tick action suggests institutional accumulation.
- The day's range was 23.71 points. The intraday trading range - 9:35 to the close - was 22.72. The 5 DMA of daily range is 23.72.
- Evidence of the intraday trend: At 10am volume was 113.63% of the 10 day average. By noon the volume was 102.12% of the 10 day average, and by 2pm volume was 98.45% of the 10 day average.
- The day's volume was 93.5% of the average daily volume for the last year. Volume was 112.4% of the last 10 day average and 104.7% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 2:00and 2:15when relative volume increased 139.5% while the SPX was dropping -1.02%. The largest drop in relative volume came between 12:45and 1:00when relative volume dropped -58.6% while the SPX was dropping -0.10%.
- 3% of the SPX stocks closed with two day RSI above 90. 8% closed with RSI above 80. 19% closed with RSI below 20 and 9% closed with RSI below 10.
- 27.2% of the SPX are above their five day moving average, 31.4% are above their 10 day average, 53.2% are above their 20 day moving average, 38.4% are above their 50 day moving average, 24.6% are above their 100 day moving average, and 33.6% are above their 150 day moving average.
- 12% of the SPX closed above their most recent previous high.
- 12% of the SPX stocks closed below their most recent previous lows.
- 59 SPX issues advanced and 431 issues declined, a net SPX advance/decline of -372.
- Evidence of the intraday trend: At 10am, 15.2% of the SPX components were in the top half of the range. By noon, 29.6% were in the top half of the range, and by 2pm, 50.4% were in the top half of the range.
- 6% of stocks closed in the top half of the day's range. (93.8% closed in bottom half.)
- 0.8% of stocks closed in the top 10% of the day's range. 1% of stocks closed in the top 20% of the day's range.
- 22.4% of stocks closed in the bottom 10% of the day's range. 56.4% of stocks closed in the bottom 20% of the day's range.
- 2.2% of stocks closed within 2% of their 52 week high. 11.4% of stocks closed within 5% of their 52 week high.
- 78% of stocks closed within 50% of their 52 week low. 49.8% of stocks closed within 25% of their 52 week low.
- 1.2% of stocks closed within ¼% of their high for the day.
- 15.4% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 33.6% of the SPX components were up since the open. By noon, 35.2% were up since the open, and by 2pm, 45.6% were up since the open.
- 12% of the SPX closed up from the previous close; 7.6% closed higher than the open.
- Sectors stronger than the SPX for Wednesday:
- Basic Materials -- Outperformed the SPX by +70%.
- Industrials -- Outperformed the SPX by +104%.
- Technology -- Outperformed the SPX by +5%.
- Consumer Staples -- Outperformed the SPX by +20%.
- Sectors weaker than the SPX for Wednesday:
- Energy -- Underperformed the SPX by -35%.
- Financials -- Underperformed the SPX by -30%.
- Utilities -- Underperformed the SPX by -50%.
- Health Care -- Underperformed the SPX by -36%.
- Consumer Discretionary -- Underperformed the SPX by -50%.
- The $SOX index strength was weaker relative to the SPX Wednesday by -0.67%.
- The XLF underperformed the SPX by -0.3% Wednesday.
- The 2 Day RSI of the SPX is 31. The Dow RSI is 27, the NASDAQ is 29 and the Russell is 30.
- Over the last four sessions, the average session closed 49.05% of the range above the low. Wednesday closed at 19.1% of the daily range.
- Upside momentum decreased Wednesday, from Tuesday’s -1.08 to today’s -2.38. The ratio of SPX components giving a crossover sell signal compared to buy signals moved downward to B 2 to 1.
- The ISEE Equity 10 day moving average Wednesday was 164.4. The lowest 10 day average in the last 52 weeks was 136.6 on 06/14/10and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
Trade 'em well on Thursday everyone!
-Mel
