Before the market open the dollar was rising and the futures were lower as well. The Commerce Department reported that Durable Goods orders increased by +3.3% in September, which was above the consensus expectations for +1.8%. The August reading was revised higher to -1.0% from -1.5%. When you strip out the volatile orders for transportation, orders fell by -0.8%, which was below the consensus for +0.5%. The August reading was revised higher to+1.9% from +1.7.
The session began with about a four point gap down. Bears pushed the it down several more points before the bulls mounted a snapback right at 10:00 am. But the bears teased traders again by regaining control and pushing down to put the first leg of a double bottom on the chart just after 11:00 am. After a brief bounce the low of the day was put on the chart at 1:16 pm. Market was still in negative territory for the SPX and Dow, but significantly off the lows, ten points higher.
Looking at our Market Leader’s board, we see mixed results as the chip makers (SOX) was up strongly and the Financials (XLF) managed to close barely into positive ground. The XLF remains the serious laggard on the board.
The SPX index continues trapped within the tight closing range of the last 17 sessions. During this time frame we have closed between 1158 and 1185, only a 17 point spread from top to bottom, and the last six sessions have been even tighter, closing within a seven point range.
Of interest regarding tight range and declining volume, two similar periods this year: Mid January and mid April. if you look up a chart, show similarities and look what happened after each time period and draw your own conclusions about what may happen in the weeks to come. Momentum indicator have also peaked.
Declining volume was higher at a ratio of 1.73 to one. The closing TRIN was 0.91 and the final tick was -625. The NYSE Composite Index lost -0.66% today while the SPX lost -0.27%.
For the NYSE, relative to the previous 30 session average, volume was -3.49% 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, 21 sessions ended on a positive tick, 7 of last 10. For the SPX, the day's volume was 93.6% of the average daily volume for the last year. Volume was 88.4% of the last 10 day average and 101.6% of the previous day’s volume.
Breadth was negative today yet the negative volume was not as negative as might be expected. But New Highs were the lowest since July 16th and New Lows were the highest since September 28th. Volume remains light and the final tick was the most negative since September 27th. Be sure to notice that the broad NYSE Composite Index underperformed the SPX significantly today; this is often a bearish sign.
The tick data certainly suggests a lack of panic selling today as evidenced by the mild action within the greater than 600 tick range. Still, we have seen this for the last week and a half and yet the SPX continues to be range bound.
Looking at the nightly breadth indicators, we see the McClellan Oscillator finally moving into negative territory. The McClellan Summation Index has begun to decline as well. But what catches our attention is the Absolute Breadth Index; this is the lowest it has been since early April. 55.00% of the SPX components are giving a crossover Buy signal; 18.20% of the SPX components are giving a Sell signal. This is a 3 to 1 ratio of Buy signals over Sell signals.
40.8% of the SPX are above their five day moving average, 47.8% are above their 10 day average, 62.4% are above their 20 day moving average, 83.6% are above their 50 day moving average, 80.6% are above their 100 day moving average, 72% are above their 150 day moving average, and 72% are above their 200 day moving average.
Another interesting thing I am seeing is that the emerging markets are weakening, probably due to recent strength in the dollar, because most of those indices are resource stock heavy. But they lead the way down in April and this maybe the canary in the coal mine.
I think we retest the 200wk moving average, fail and head back down in the middle of next week, long term outlook unchanged see previous posts.
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