Volatile Session Ends with Indices Lower
by Jerome "Mel" Hickerson
Market Recap:
As the day began, Europe was down on renewed sovereign debt worries and PMI data that was weaker than expectations. The Labor Department reported that initial claims for unemployment insurance for the week ending September 18 increased by 12,000 to 465K. The week’s total was 16K above the Reuters consensus for a reading of 449K. Continuing Claims for unemployment for the week ending Sept. 11 were above consensus at 4.489M vs. expectations for 4.453M and last week’s revised (higher) 4.537M. This pushed U.S. futures lower.
The session began with a nine point downward gap. A bottom was found just six minutes into the day and the SPX came roaring back 12 points to set the high of the day at 11:35 am. But the rally attempt stalled for a couple of hours and then around 2:30 the bottom fell out and plunged to put the low of the day on the chart at 3:44. The final quarter hour saw a mild bounce attempt but it was pretty meaningless as the index closed about 15% of the range off the bottom.
After the housing news at 10:00 this morning today was pretty news-less. Volume was also light. Days such as this have trended upward in the recent past so bears should take some pleasure in today's close.
Looking at our Market Leaders board, we see mixed results but mostly down. The broad Russell Technology index closed higher as well as the Philadelphia SOX Index. Of particular note is the XLF again showing weakness; this does not portend well for the bullish case.
Market Trend: Nine Sectors Report
As we look ahead, there are plenty of mixed signals. Technology and chip makers remain fairly strong. But small caps and financials are weak and often lead the way.
Turning to our Nine Sectors Report we find one change tonight and this brings all nine sectors to a Sell signal. Tomorrow's weekly close is going to be a significant close. The SPX is once again sandwiched between resistance at the 1130 area and support at the 200 DMA at the 1116 area. The odds seem good that one or the other is breached before Friday's close. Due to the action of the Nine Sectors, we are betting on the downside. But a market bounce here can not be ruled out, either. Traders may want to tighten stops and be ready for either direction tomorrow.
Volume & Breadth Indicators
For the SPX Index there were 107 Advancers/379 Decliners. On the NYSE 3,144 issues were traded with 930 advancing issues and 2,126 retreating issues, a ratio of 2.29 to one declining. There were 94 new highs and 18 new lows. The five day moving average of New Highs is 193 while the five day moving average of New Lows is 13 and the ten day moving average of Net Advancing is 163.
Declining volume was higher at a ratio of 3.02 to one. The closing TRIN was 1.32 and the final tick was -643. The NYSE Composite Index lost -0.96% today.
For the NYSE, relative to the previous 30 session average, volume was -5.23% 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, 18 sessions ended on a positive tick, 6 of last 10. For the SPX, the day's volume was 81.9% of the average daily volume for the last year.
Volume was light today but the breadth was bearish. This was the lowest advancing volume since August 7th and the first time we’ve had three consecutive negative final ticks since August 13th. The broad NYSE Composite Index underperformed the SPX as well today.
Further, total tick for the day was -28,000 and the average tick for the day was -18. There were 75 ticks greater than 600 and 91 ticks more extreme than -600. There were 5 ticks greater than 1000 and 7 ticks more extreme than -1000.
At one point today, the ticks greater than 600 were seven to zero all negative. Then 75 to seven as we had an intense bullish move and all the extreme ticks were positive. But the session closed with the bears answering back with 84 consecutive extreme ticks.
The nightly indicators have taken a strong bearish lean tonight. The McClellan Oscillator is worth noticing as it turned negative. The Oscillator hasn’t been negative since the last day of August and very rarely turns negative for just one day; it’s usually the beginning of a lengthier downturn than just one session.
Moving Average Indicators:
68.00% of the SPX components are giving a crossover Buy signal; 4.20% of the SPX components are giving a Sell signal. This is a 16.2 to 1 ratio of Buy signals over Sell signals.
22.4% of the SPX are above their five day moving average, 42.4% are above their 10 day average, 73% are above their 20 day moving average, 70% are above their 50 day moving average, 62.8% are above their 100 day moving average, and 54% are above their 150 day moving average.
The DOW 20 DMA crossed above the 50 DMA today. This bodes well for the longer-term but doesn’t really say much about the short-term. All the SPX component moving averages took a significant downturn today as would be expected.
Sectors on the Move:
Sectors stronger than the SPX for Thursday:
- Energy -- Outperformed the SPX by +27%.
- Technology -- Outperformed the SPX by +74%.
- Consumer Staples -- Outperformed the SPX by +18%.
- Health Care -- Outperformed the SPX by +33%.
- Consumer Discretionary -- Outperformed the SPX by +31%.
Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -13%.
- Financials -- Underperformed the SPX by -112%.
- Industrials -- Underperformed the SPX by -57%.
- Utilities -- Underperformed the SPX by -33%.
Stocks on the Move:
Today's SPX component winners and losers:
- Largest one day loser is NOVL with -6.61%
- Largest three day loser is ADBE with -20.24%
- Largest five day loser is ADBE with -19.65%
- Largest ten day loser is ADBE with -19.60%
- Largest one day winner is RHT with 8.77%
- Largest three day winner is NVDA with 8.50%
- Largest five day winner is NVDA with 9.99%
- Largest ten day winner is JCP with 18.88%
In Late Trading:
160 SPX components moved upward and 171 components downward during the after hours with 132 million shares traded.
Friday, September 24
Economics
08:30 Durable Orders -2.2% cons.
08:30 Durable Orders ex Transportation 0.7% cons.
10:00 New Home Sales 298k cons.
German IFO Business Climate
German IFO Current Assessment
German IFO Expectations
Earnings
Before: KBH
Speeches
01:00 Jeffery Lacker
02:00 Charles Plosser
Before the start of trade, the Commerce Department will release its report on orders for durable goods, items meant to last three years or more. Analysts predict the number of durable orders fell by 1.3% in August. Later Friday, the Commerce Department will also report on new home sales for August. Analysts expect sales of newly constructed homes rose to an annual rate of 290,000 last month from 276,000 inJuly.
Have a great Friday!
-Mel
