Wax Museum Abruptly Cancels Engagement At Wall and Broad
by Jerome "Mel" Hickerson
There was no economic data to review this morning before the bell, but we did get a report from the Richmond Fed at 10:00 am eastern. Overseas markets were almost entirely red this morning and futures were pointing towards a weak opening. But futures had climbed about six points after 6am leading to the open.
The session opened with a little unexpected strength as the SPX opened without a gap but quickly moved up about four points and put the high of the day on the chart at 9:48. The next hour was a slow gentle decline of about nine points before the index began a gentle bounce. Until around 2pm it looked like this nine point range might be the range for the entire session. But that range gave way around 2pm as the index fell sharply into the close. Bounce attempts were feeble along the way as the index closed at the low of the day. The recent engagement of the Wax Museum that had been replacing Wall Street came to an abrupt, but welcome, end today.
Today’s afternoon sell-off certainly went a long way towards confirming yesterday’s reversal candle. I’ve been writing for several weeks now that I believe that we will be range bound within this neighborhood for a while. I believe that to remain true. The weekly chart, which is obviously incomplete for this week, is currently painting reversal bars very similar to the previous two weeks except these bars go in opposite directions. So, at least for now, the last four weekly bars appear to be supporting the idea that we are range bound.
It’s also of interest to take a glance at the monthly chart, of which June is obviously yet incomplete. But the similarities of this May and June to November and December of 2007 are striking.
Conditions are ripe for a Wednesday bounce. Ordinarily, I’d be long for the expected bounce. But the recent habit of the market is to paint a second large red candle down after a day such as today. So I’ll be ready for a bounce, but waiting from the sidelines for now.
Day Trade Systems Update: (Signals today)
* SSO at: 10:26
* GDX Short at: 11:02
* SDS at: 11:55
* SSO at: 12:22
* SSO at: 12:52
* GDX Long at: 1:37
* SSO at: 2:11
* SDS at: 2:27
We were once again focused on ProShares Ultra S&P500 ETF (SSO), ProShares Ultrashort S&P500 ETF (SDS), and Market Vectors Gold Miners (GDX). For most of the session we were in scalp mode, taking small gains wherever the market would allow. When trading within a nine point range, as much of today was, it’s difficult to do more than scalp. But today finally gave us another opportunity. I’ll include here four of the messages that were posted for our subscribers this afternoon:
01:21:13 I call your attention to the SPX Adv/Dec number. That's a lot of declining stocks for the index to be just down a fraction.
02:01:24 I don't think we stay within this 9 point range. A breakdown seems most likely.
02:26:57 With 300 decliners, I like the chances of a sell off this afternoon. Short side here.
02:28:00 I am in SDS from .85 and hope to hold into the close.
It felt good to get out of scalp mode and ride a trade for a while. And as you can see from the chart, this one went our way quickly.
SPX Summary for Tuesday, June 22, 2010
18 Advancers/476 Decliners
Today's SPX component winners and losers:
- Largest one day loser is COG with -7.91%
- Largest three day loser is COG with -11.18%
- Largest five day loser is ODP with -14.40%
- Largest ten day loser is GIS with -49.83%
- Largest one day winner is SVU with 2.10%
- Largest three day winner is MTB with 4.74%
- Largest five day winner is MTB with 17.87%
- Largest ten day winner is MTB with 22.14%
*** SPX Technical Summary ***
The lowest 14 day RSI component is DHR; the highest 14 day RSI component is BDK. The average 14 day RSI of all 500 components is 50.
The greatest positive five day momentum component is MTB; the greatest negative five day momentum component is ODP. The average five day momentum of all 500 components is -2.66.
71.20% of the SPX components are giving a crossover Buy signal; 9.20% of the SPX components are giving a Sell signal. This is a 7.7 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
- From Sell to Neutral: 1 component.
- From Buy to Neutral: 22 components.
- From Neutral to Sell: 27 components.
- From Neutral to Buy: 28 components.
Notice that the data today began to back away from the Buy side. We mentioned last night that the numbers had reached the extremes of overbought.
The moving averages:
Close 1095.31
9 EMA 1108.90 Falling
5 DMA 1111.33 Falling
10 DMA 1099.56 Rising
20 DMA 1088.97 Rising
50 DMA 1135.50 Falling
100 DMA 1133.55 Rising
200 DMA 1111.21 Rising
10 Wk MA 1120.03 Falling
The moving averages are taking on a bearish look once again.
NYSE Summary
On the NYSE 3205 issues were traded with 654 advancing issues and 2468 retreating issues, a ratio of 3.77 to 1 declining. There were 31 new highs and 20 new lows.
Declining volume was higher at a ratio of 13.82 to 1. The closing TRIN was 3.66 and the final tick was -456.
This is the first negative final tick since June 4th. There was selling at the close today, even at the low of the session.
Evidence of trend:
Relative to the previous 30 session average, volume was -23.58% below the average. Of the last 15 sessions 4 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 17 sessions ended on a positive tick, 9 of last 10.
The 5 day moving average of New Highs is 55 while the 5 day moving average of new lows is 16 and the 10 day moving average of Net Advancing is 422. The Net Advancing data indicates a bullish trend.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line decreased from 205481 to 203667. This -0.89% decrease came while the SPX was losing -1.63%. The 10 day moving ratio of positive volume is 1.24 and the 10 day moving Advance/Decline ratio is 1.31. The 10 day moving ratio of positive volume has trended -0.18 over the last three days and the 10 day moving Advance/Decline ratio has trended -0.14 over the last three days.
The NYSE Composite Index lost -1.72% today.
NYSE Statistics:
Absolute Breadth Index: 48.50 down from previous day of 49.96
Cumulative Volume Index: 45,065.50 down from previous day of 49,646.62
High Low Logic Index: 0.40 up from previous day of 0.36
McClellan Oscillator: 2.28 down from previous day of 123.96
McClellan 10 DMA: 127.08 up from previous day of 116.17
McClellan Summation Index: (838.17) up from previous day of (840.45)
% Stocks Above 200 DMA: 53.70 down from previous day of 59.73
% Stocks Above 40 DMA: 38.62 down from previous day of 49.47
New High / New Low Ratio: 56.52 down from previous day of 92.86
26wk New High/Low Ratio: 45.58 down from previous day of 80.81
13wk New High/Low Ratio: 35.23 down from previous day of 76.10
4wk New High/Low Ratio: 66.19 down from previous day of 93.03
Cumulative 4-Week New Hi-Low: 439,439 up from previous day of 439,337
Nasdaq Adv/Decline: 1,414 down from previous day of 1,468
Russell 1000 Advance/ Decline Line: 2,332 down from previous day of 2,422
Russell 2000 Advance/ Decline Line: (1,928) down from previous day of (1,858)
Notes:
Absolute Breadth Index: Low numbers suggest a topping process and high numbers suggest a bottoming process.
Cumulative Volume Index: If this begins to trend down while the averages are trending up, it is a bearish sign. If this begins to trend up while the averages are trending down, it is a bullish sign.
High Low Logic Index: High readings are bearish; low readings are bullish.
McClellan Oscillator: -100 is oversold and +100 is overbought. Also watch for crosses above and below zero.
McClellan Summation Index: Interpreted as bullish or bearish when it crosses over the zero line.
Cumulative 4-Week New Hi-Low: The difference between the number of issues reaching new highs (during a 4-week period) and the number of issues reaching new lows (during the same 4-week period).
Wednesday, June 23
Economics
10:00 New Home Sales 480k cons.
10:30 Crude Inventories
02:15 FOMC Rate Decision
08:30 Canada Retail Sales
07:50 Japan Merchandise Trade
Earnings
Before: APP, CSIQ, KMX, RAD SMTS
After: BBBY, CKR, DRI, MLHR, NKE, PAYX
Auction
01:005-yr Note Auction
The May new home sales index from the Census Bureau is due shortly after the start of trading. The index is expected to have fallen to a seasonally adjusted annual rate of 427,000 units, from a 504,000 unit rate in the previous month. The weekly crude oil inventories report from the government is also due in the morning.
Mel’s Missives from the Matrix:
- Total tick for the day was -124,000 and the average tick for the day was -80. There were 64 ticks greater than 600 and 165 ticks more extreme than -600. There were 5 ticks greater than 1000 and 23 ticks more extreme than -1000. The tick action suggests institutional distribution.
- The day's range was 24.32 points. The intraday trading range - 9:35to the close - was 24.15. The 5 DMA of daily range is 16.56.
- Evidence of the intraday trend: At 10am volume was 75.87% of the 10 day average. By noon the volume was 88.75% of the 10 day average, and by 2pm volume was 87.44% of the 10 day average.
- The day's volume was 90.5% of the average daily volume for the last year. Volume was 92.3% of the last 10 day average and 99.8% of the previous day’s volume.
- Evidence of the intraday trend: The largest increase in relative volume came between 2:30and 2:45when relative volume increased 46.8% while the SPX was dropping -0.26%. The largest drop in relative volume came between 3:00and 3:15when relative volume dropped -59.2% while the SPX was rising 0.10%.
- 1% of the SPX stocks closed with two day RSI above 90. 1% closed with RSI above 80. 75% closed with RSI below 20 and 47% closed with RSI below 10.
- 5.2% of the SPX are above their five day moving average, 32% are above their 10 day average, 59% are above their 20 day moving average, 23.4% are above their 50 day moving average, 34.2% are above their 100 day moving average, and 42.8% are above their 150 day moving average.
- 1% of the SPX closed above their most recent previous high.
- 87% of the SPX stocks closed below their most recent previous lows.
- 18 SPX issues advanced and 476 issues declined, a net SPX advance/decline of -458.
- Evidence of the intraday trend: At 10am, 38% of the SPX components were in the top half of the range. By noon, 46% were in the top half of the range, and by 2pm, 22.4% were in the top half of the range.
- 1.2% of stocks closed in the top half of the day's range. (98.6% closed in bottom half.)
- 0.2% of stocks closed in the top 10% of the day's range. 0.2% of stocks closed in the top 20% of the day's range.
- 70.4% of stocks closed in the bottom 10% of the day's range. 91.4% of stocks closed in the bottom 20% of the day's range.
- 2% of stocks closed within 2% of their 52 week high. 11.2% of stocks closed within 5% of their 52 week high.
- 63.4% of stocks closed within 50% of their 52 week low. 32.8% of stocks closed within 25% of their 52 week low.
- 0.6% of stocks closed within ¼% of their high for the day.
- 54.2% of stocks closed within ¼% of their low for the day.
- Evidence of the intraday trend: At 10am, 61% of the SPX components were up since the open. By noon, 50.2% were up since the open, and by 2pm, 32.2% were up since the open.
- 4.4% of the SPX closed up from the previous close; 4.2% closed higher than the open.
- Sectors stronger than the SPX for Tuesday:
- Financials -- Outperformed the SPX by +4%.
- Technology -- Outperformed the SPX by +74%.
- Consumer Staples -- Outperformed the SPX by +50%.
- Health Care -- Outperformed the SPX by +61%.
- Sectors weaker than the SPX for Tuesday:
- Basic Materials -- Underperformed the SPX by -53%.
- Energy -- Underperformed the SPX by -127%.
- Industrials -- Underperformed the SPX by -83%.
- Utilities -- Underperformed the SPX by -88%.
- Consumer Discretionary -- Underperformed the SPX by -64%.
- The $SOX index strength was weaker relative to the SPX Tuesday by -0.2%.
- The XLF outperformed the SPX by 0.04% Tuesday.
- The 2 Day RSI of the SPX is 7. The Dow RSI is 9, the NASDAQ is 7 and the Russell is 5.
- Over the last four sessions, the average session closed 40.65% of the range above the low. Tuesday closed at 5.3% of the daily range.
- Upside momentum fell downward sharply Tuesday, from Monday’s 2.03 to today’s -2.66. The ratio of SPX components giving a crossover sell signal compared to buy signals also moved sharply downward to B 7.74 to 1.
- The ISEE Equity 10 day moving average Tuesday was 143.5. 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.
- 177 SPX components moved upward and 182 components downward during the after hours with 138 million shares traded.
Trade 'em well on Wednesday everyone!
-Mel
