Weekly Winning Streaks Come to an End
by Jerome "Mel" Hickerson
Prior to Friday's open, the government’s report on the nation’s first quarter GDP showed that the economy grew at an annualized rate of 3.2% in the first quarter, which was below the expectations for a growth rate of 3.6%, and below the 5.6% growth rate seen in the fourth quarter. The Personal Consumption component of the report came in above expectations with a gain of 3.6%, which was ahead of the estimates for 3.2% and last quarter’s reading of 1.6%. With the exception of Germany and the UK, the major overseas markets were all higher. Futures pointed to a flat open.
The last session of the week opened with no discernable gap, traded sideways for ten minutes then jumped up a couple points and put the high of the day on the chart at 9:44. The SPX then slid steeply downhill until 10:15 before mounting a bounce until 11am. The hour from 11:00 until noon was dull sideways trade but at noon the action began and from then until the close it was wave after wave of selling as evidenced by the tick action: Six ticks more extreme than -1000 and none above 1000. The low of the day was the at the close.
Bull's Pen
• The week, as bad as it was, closed above the 9 week EMA, the 10 week MA and all other important weekly averages.
• In the last year, 21 sessions have ended -15 or worse. Three erased the entire loss within two sessions and by the fourth session ten of the 21 sessions had erased the loss. Only two of the losing session failed to promptly recover, and they were the back-to-back sessions of January 21st and 22nd and that pullback led directly to this latest rally.
• New lows have not made a move higher and until new lows jump it's not really much of a pullback (there were only 10 new lows on Friday.)
• Traders began to significantly hedge their bets Friday. This can be bullish because it allows traders to patiently stay in losing positions longer and reduces panic selling.
• The monthly chart remains bullishly stair-stepping higher.
• The SPX closed Friday higher than Tuesday's low failing to create a new lower low.
• Seasonality for early May is strong. The first session of May is tied for the 18th most positive session (dating to 1950.) Nine of last 11 first sessions of May have closed positive. The second session of May is 8th most likely session of the year to end positive and the third session of May is in the top 20% of the year. So the first several sessions of May trend positive.
• Until a weekly close manages to close below the 50 DMA the rally remains bullish. The 50 DMA is currently in the 1165 area.
Bear's Den
• This was indeed a very bearish looking day. Technical damage to the indices was significant. Foremost in my mind is that the SPX 5 DMA has fallen below the 20 DMA. This crossover is a sell signal for many traders. It is also an early warning signal of a pullback.
• For the third time this week, the index closed below its 20 DMA. Many key MAs are now falling. A test of the 50 DMA seems imminent.
• Seasonality may rear its head as this time of year is often a struggle for the equities ("sell in May and go away").
• The 15 DMA of the Advance/Decline line has turned downward after peaking mid March.
• The markets are currently news driven. Good news and bad news often come in streaks; the current streak is negative and more bad news seems likely.
• The action of two market leaders: The SOX index and the XLF. Both are strongly negative at the moment.
• Small caps are weak. The Russell 2000 closed Friday lower than the low on Tuesday. Small caps often lead.
• Since mid April, the weekly chart has painted a doji followed by an outside week upward followed by an outside week down. This is an indecision pattern that often signals a reversal of trend.
My summary: I think we have a good chance to see a bounce early next week followed by more work to the downside. Tuesday's close should be higher than Monday's open. But there are many suggestions of an interim term top forming. This looks like a good time to swing trade back and forth.
SPX Summary for Friday, April 30, 2010
62 Advancers/430 Decliners
83 Advancers/411 Decliners for the week
Today's SPX component winners and losers:
• Largest one day loser is WFR with -18.63%
• Largest three day loser is EK with -26.50%
• Largest five day loser is HAR with -23.99%
• Largest ten day loser is AKS with -22.46%
• Largest one day winner is SUN with 3.97%
• Largest three day winner is AKAM with 15.22%
• Largest five day winner is AKAM with 13.47%
• Largest ten day winner is HBAN with 21.58%
*** SPX Technical Summary ***
The lowest 14 day RSI component is AKS; 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 AKAM; the greatest negative five day momentum component is HAR. The average five day momentum of all 500 components is -3.03.
32.40% of the SPX components are giving a crossover Buy signal; 29.80% of the SPX components are giving a Sell signal. This is a 1.1 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 3 components.
• From Buy to Neutral: 87 components.
• From Neutral to Sell: 31 components.
• From Neutral to Buy: 5 components.
The moving averages:
Close 1186.69
9 EMA 1204.81 Rising
5 DMA 1196.12 Falling
10 DMA 1201.72 Falling
20 DMA 1198.28 Rising
50 DMA 1165.30 Rising
100 DMA 1136.87 Rising
200 DMA 1090.52 Rising
10 Wk MA 1169.01 Falling
NYSE Summary
On the NYSE 3207 issues were traded with 792 advancing issues and 2343 retreating issues, a ratio of 2.96 to 1 declining. There were 316 new highs and 10 new lows.
Declining volume was higher at a ratio of 6.38 to 1. The closing TRIN was 2.16 and the final tick was -67.
Evidence of trend:
Relative to the previous 30 session average, volume was 33.14% above the average. Of the last 15 sessions 14 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 21 sessions ended on a positive tick, 7 of last 10.
The 5 day moving average of New Highs is 337 while the 5 day moving average of new lows is 12 and the 10 day moving average of Net Advancing is 256. The Net Advancing data indicates a bullish trend.
Remember: Breadth leads, indices follow. Today, the NYSE Advance/Decline line decreased from 212054 to 210503. This -0.74% decrease came while the SPX was losing -1.69%. The 10 day moving ratio of positive volume is 0.98 and the 10 day moving Advance/Decline ratio is 1.18. 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 -1.51% today.
NYSE Statistics:
Absolute Breadth Index: 34.38 up from previous day of 31.51
Cumulative Volume Index: 76,368.78 down from previous day of 81,820.15
High Low Logic Index: 0.51 down from previous day of 0.57
McClellan Oscillator: (102.81) down from previous day of 8.14
McClellan 10 DMA: (25.60) down from previous day of (22.99)
McClellan Summation Index: 3,364.76 down from previous day of 3,467.47
% Stocks Above 200 DMA: 83.32 down from previous day of 85.17
% Stocks Above 40 DMA: 63.84 down from previous day of 72.61
New High / New Low Ratio: 97.89 down from previous day of 98.01
26wk New High/Low Ratio: 94.80 up from previous day of 92.49
13wk New High/Low Ratio: 89.30 down from previous day of 91.59
4wk New High/Low Ratio: 66.43 down from previous day of 74.86
Cumulative 4-Week New Hi-Low: 446,253 up from previous day of 445,990
Nasdaq Adv/Decline: 1,767 down from previous day of 1,822
Russell 1000 Advance/ Decline Line: 2,738 down from previous day of 2,810
Russell 2000 Advance/ Decline Line: (1,548) down from previous day of (1,469)
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).
Mel’s Missives from the Matrix:
• Total tick for the day was -176,000 and the average tick for the day was -115. There were 15 ticks greater than 600 and 131 ticks more extreme than -600. There were no ticks greater than 1000 and 6 ticks more extreme than -1000. The tick action suggests institutional distribution.
• The day's range was 21.67 points. The 5 DMA of daily range is 20.18.
• Evidence of the intraday trend: At 10am volume was 74.75% of the 10 day average. By noon the volume was 80.61% of the 10 day average, and by 2pm volume was 86.72% of the 10 day average.
• The day's volume was 120.6% of the average daily volume for the last year. Volume was 89.9% of the last 10 day average and 101.5% of the previous day’s volume.
• Evidence of the intraday trend: The largest increase in relative volume came between 10:00 and 10:15 when relative volume increased 50.3% while the SPX was dropping -0.40%. The largest drop in relative volume came between 12:30 and 12:45 when relative volume dropped -42.4% while the SPX was rising 0.06%.
• 3% of the SPX stocks closed with two day RSI above 90. 9% closed with RSI above 80. 30% closed with RSI below 20 and 15% closed with RSI below 10.
• 29.8% of the SPX are above their five day moving average, 30.8% are above their 10 day average, 42% are above their 20 day moving average, 68.8% are above their 50 day moving average, and 79% are above their 100 day moving average.
• 6% of the SPX closed above their most recent previous high.
• 52% of the SPX stocks closed below their most recent previous lows.
• 62 SPX issues advanced and 430 issues declined, a net SPX advance/decline of -368.
• Evidence of the intraday trend: At 10am, 36.8% of the SPX components were in the top half of the range. By noon, 40.8% were in the top half of the range, and by 2pm, 20.2% were in the top half of the range.
• 9.6% of stocks closed in the top half of the day's range. (90.2% closed in bottom half.)
• 0.6% of stocks closed in the top 10% of the day's range. 2% of stocks closed in the top 20% of the day's range.
• 56.2% of stocks closed in the bottom 10% of the day's range. 73% of stocks closed in the bottom 20% of the day's range.
• 7.6% of stocks closed within 2% of their 52 week high. 38.8% of stocks closed within 5% of their 52 week high.
• 43.4% of stocks closed within 50% of their 52 week low. 12.6% of stocks closed within 25% of their 52 week low.
• 1.2% of stocks closed within ¼% of their high for the day.
• 50% of stocks closed within ¼% of their low for the day.
• Evidence of the intraday trend: At 10am, 45.6% of the SPX components were up since the open. By noon, 38.2% were up since the open, and by 2pm, 23.2% were up since the open.
• 13.4% of the SPX closed up from the previous close; 11.8% closed higher than the open.
• Sectors stronger than the SPX for Friday:
- Energy -- Outperformed the SPX by +45%.
- Consumer Staples -- Outperformed the SPX by +99%.
- Utilities -- Outperformed the SPX by +207%.
- Health Care -- Outperformed the SPX by +40%.
• Sectors weaker than the SPX for Friday:
- Basic Materials -- Underperformed the SPX by -8%.
- Financials -- Underperformed the SPX by -93%.
- Industrials -- Underperformed the SPX by -69%.
- Technology -- Underperformed the SPX by -17%.
- Consumer Discretionary -- Underperformed the SPX by -40%.
• The $SOX index strength was weaker relative to the SPX Friday by -2.89%.
• The XLF underperformed the SPX by -0.93% Friday.
• The 2 Day RSI of the SPX is 32. The Dow RSI is 32, the NASDAQ is 29 and the Russell is 28.
• Over the last four sessions, the average session closed 41.2% of the range above the low. Friday closed at 1% of the daily range.
• Upside momentum decreased Friday, from Thursday’s -0.32 to today’s -3.03. The ratio of SPX components giving a crossover buy signal compared to sell signals also decreased to B 1.09 to 1.
• The ISEE Equity 10 day moving average Friday was 205. The lowest 10 day average in the last 52 weeks was 141.5 on 06/29/09 and the highest 10 day average in the last 52 weeks was 249.3 on 04/15/10.
• 189 SPX components moved upward and 210 components downward during the after hours with 139 million shares traded.
Have a great weekend everyone!
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"Mel"
