Yesterday's Dip Firmly Bought Today
Market Recap:
Yesterday's decline was rapidly erased pre-market today as the pattern continues; up, up, and away as bears are constantly burned and buyers are over and over again rewarded. Absolutely nothing matters when traders on the long side are constantly encouraged by profits to relentlessly buy every little dip. Futures were strong overnight and remained strong as the open approached.
Under buying pressure from the futures, the session began with a gap higher and kept moving higher until around 11:00 am. The following 75 minutes saw a six point decline to excite the bears and put the trading low of the day on the chart about 12:10. But buyers resumed their presence and once again slowly inched the index back near the highs of the day. So the tight-range slow-moving upward-always scenario continues without a break as we continue the pattern of never having two successive negative sessions of at least three points.
Checking our Market Leaders board reveals total agreement among the leaders; today was a rally. China, Germany, the Sox, and the Russell 2000 all gained more than one percent. The Financials were the laggard. Six of the ten leaders closed at new closing highs and only Emerging Markets and China missed by more than a fraction of a percent.
SPX big winners were Family Dollar Stores Inc (FDO) 16.74%, Dell Inc (DELL) 11.15%, and Abercrombie & Fitch Co (ANF) 7.3%. SPX big losers were Nyse Euronext (NYX) -3.71%, CenturyLink Inc (CTL) -2.7%, and Qwest Cmmnctns Intl Inc (Q) -2.38%.
SPX five day big winners are Family Dollar Stores Inc (FDO) 21.02%, Goodyear Tire&Rubber Co (GT) 19.74%, and Tesoro Corp (TSO) 16.64%. SPX five day big losers are Expedia Inc (EXPE) -16.67%, Cisco Systems Inc (CSCO) -15.7%, and Masco Corp (MAS) -13.2%.
Market Trend: Nine Sectors Report
Turning to our Nine Sectors Report this evening we have only one change to report as Consumer Staples moves from Sell to Neutral. This will result in the Nine Sectors holding on Sell. But we are certainly not suggesting to short this beast! We are simply reporting what the system tells us. This market is a freight train and we wouldn't tell you to step out in front of a train until it stops.
Remember all the stuff about the Hindenburg Omen and the Death Cross? Few talk about that stuff any more. What we see is that any study that suggests selling simply is laughed at by the market. And repeatedly fails. Until that pattern breaks, playing the short side for the indices is a setup for failure. The money spigots are on and the liquidity is flowing into the equities. Fight that at your financial peril.
But we do find it interesting that at index highs here across the board, a lot of big stocks didn't make new highs and some not even come close.
Volume & Breadth Indicators
For the SPX Index there were 344 components advancing and 137 components declining. On the NYSE 3,162 issues were traded with 2,291 advancing issues and 766 retreating issues, a ratio of 2.99 to one advancing. There were 337 new highs and 13 new lows. The five day moving average of New Highs is 263 while the five day moving average of New Lows is 12 and the ten day moving average of Net Advancing is 423. The Net Advancing data indicates a bullish trend.
Advancing volume was higher at a ratio of 2.77 to one. The closing TRIN was 1.08 and the final tick was 712. The five day average of TRIN is 1.03 and the ten day average of TRIN is .95. The NYSE Composite Index gained 0.84% today while the SPX gained 0.62%.
For the NYSE, relative to the previous 30 session average, volume was -9.87% below the average. Of the last 15 sessions 6 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 24 sessions ended on a positive tick, 9 of last 10. For the SPX, the day's volume was 96.2% of the average daily volume for the last year. Volume was 105.5% of the last 10 day average and 111.8% of the previous day’s volume.
Strong advancing breadth today but advancing volume was rather uninspired. New Highs were strong and the NYSE Composite outperformed the SPX. All-in-all, pretty bullish looking.
Total tick for the day was 276,000 and the average tick for the day was 178. There were 81 ticks greater than 600 and 6 ticks more extreme than -600. There were no ticks greater than 1000 and 1 ticks more extreme than -1000. The tick action suggests institutional accumulation.
Intraday volume clearly spiked on the down moves again today. But this seems so meaningless as we constantly climb higher disregarding everything else. Looking at the Nightly Breadth Indicators gives us a rare example of total agreement tonight; all indicators are bullish and moving higher today.
Moving Average and Support/Resistance Indicators:
71.2% of the SPX are above their five day moving average, 77.6% are above their 10 day average, 84.2% are above their 20 day moving average, 82% are above their 50 day moving average, and 90.8% are above their 200 day moving average.
There were no significant moving average crossovers today. Notice also that all the moving averages are rising, without exception.
Sectors on the Move:
Sectors stronger than the SPX for Wednesday:
- Basic Materials -- Outperformed the SPX by +67%.
- Energy -- Outperformed the SPX by +53%.
- Health Care -- Outperformed the SPX by +6%.
- Consumer Discretionary -- Outperformed the SPX by +19%.
Sectors weaker than the SPX for Wednesday:
- Financials -- Underperformed the SPX by -7%.
- Industrials -- Underperformed the SPX by -14%.
- Technology -- Underperformed the SPX by -6%.
- Consumer Staples -- Underperformed the SPX by -34%.
- Utilities -- Underperformed the SPX by -83%.
In Late Trading:
230 SPX components moved upward and 125 components downward during the after hours with 81 million shares traded.
Thursday, February 17
Economics
08:30 Initial Claims
08:30 Continuing Claims
08:30 CPI
08:30 Core CPI
10:00 Leading Indicators
10:00 PhiladelphiaFed
New Zealand Consumer Confidence
Euro-Zone Current Account Deficit
Euro-Zone Consumer Confidence
POMO Schedule
Treasury Coupon Purchase: 5/15/2018-2/15/2021: $6-8 bln
Earnings
Before: TDSC, ACPR. ANAD, APA, ABX, BBW, CAB, CPO, CRY, DPS, DUK, DEP, RAIL, HOS, HUN, SJM, KSWS, TYPE, NXY, OHI, ORB, PCG, PNCL, PDC, POOL, PDE, RS, SPW, STRA, TBL, TRW, ULBI, VDSI, VM, WTW
After: AWH, APEI, ANH, AGII, ARUN, ATHN, BCSI, BRCD, BUCY, BEAT, CECO, CF, CLWR, DDIC, HGIC, HITT, INTU, KEG, MXWL, NOH, OIS, RRGB, SONO, SPWRA, SHO, WOOF, WRE
The U.S. consumer price index, the government's main inflation gauge, is expected to show that prices rose 0.3% in January, slightly less than the 0.5% increase in December. Economists expect consumer prices excluding food and energy to inch up 0.1%, matching the previous month's increase. The government's weekly report on initial claims for jobless benefits is expected to show an uptick to 410,000 from 383,000 in the previous week. An index on leading economic indicators for January is expected to increase 0.2%, after a 1% rise the month before. Also out in the morning is the preliminary Philadelphia Fed index for February, a regional reading on manufacturing. The index is forecast to rise to 21.9, up from 19.3.
Let's all have a good Thursday.
-Mel