Range Bound, A look inside the market

In the premarket the futures were pointing to a higher open. The Labor Department reported that initial claims for unemployment insurance for the week ending October 23 fell by 21,000 to 434K. The week’s total was 19K below the Reuters consensus for a reading of 453K. Continuing Claims for unemployment for the week ending October 16 were below consensus at 4.356M vs. expectations for 4.426M and last week’s revised (higher again, of course) 4.478M.

SPX opened with a three point gap higher and surged up quickly to put the high on the chart just nine minutes into the session. After 30 minutes of consolidation sellers hit the tape and took the index down seven points followed by another 90 minutes of sideways action. The Lunch hour brought the usual lull and the low of the day was printed at 12:30 pm. Then in typical fashion, bears scurried back to the caves and bulls continued working throughout the afternoon and managed to close the SPX and Nasdaq in positive territory (rumors of a good quarter by Mr. Softee) after spending much of the day in negative ground. 


The deflationistas were out buying bonds pushing yields down and we saw the odd trend again of bonds and stocks going up together. 

Looking at our Market Leaders board this evening, we find plenty of mixed results. Basically, overseas markets were higher, along with technology, and the large caps (SPX and NYSE Composite), while chip makers (SMH putting in a short-term top), Dow and small caps were weaker.


The dollar was slammed today (PRINT & SPEND BABY) while earnings and economic news was pretty good yet the market shrugged it off. The first sign of a real turn may come when good news starts being ignored by the markets. Watch this carefully to see if it continues.


This is really a RANGE BOUND market until the election and FOMC meeting next week and I expect little to change until then. Today’s close was the 18^th close within the 17 point range and the seventh within a seven point range. We may find ourselves staying right in this zone until after the election and the FOMC meeting on Wednesday.


For the SPX Index there was 250 Advancers/237 Decliners. On the NYSE 3,117 issues were traded with 1,531 advancing issues and 1,462 retreating issues, a ratio of 1.05 to one advancing. There were 149 new highs and 14 new lows. The five day moving average of New Highs is 172 while the five day moving average of New Lows is 10 and the ten day moving average of Net Advancing is 8.
 
Declining volume was higher at a ratio of 1.06 to one. The NYSE Composite Index gained 0.32% today while the SPX gained 0.11%.
 

Breadth was slightly positive today while advancing volume was negative. This is uncommon but we have seen it several times recently. We’re watching the ten day average of Net Advancing closely. This number is hovering near zero but any real pullback will see it fall below -200 and any sustainable bounce will see it move beyond 200.
 
Total tick for the day was 35,000 and the average tick for the day was 23. There were 108 ticks greater than 600 and 95 ticks more extreme than -600. There was 1 tick greater than 1000 and 5 ticks more extreme than -1000.
 
The intraday volume pattern shows an uptick in volume on the late morning down move, but volume continues to be light. Any real move, either direction, should come with amplified volume.

The nightly breadth indicators are being a bit more consistent the last few days as we are starting to see some signals of impending weakness. The McClellan Oscillator is starting to stay in negative territory and the McClellan Summation Index is falling. The Absolute Breadth Index is nearing the 52 week low which is strongly suggesting a topping process.


So looking ahead to Friday, I expect the volume will be sluggish. I expect good news in the GDP to play out poorly in the market. It will be cheered initially and then faded. As you have seen all week, the market is divided.