Foreign markets were a drag on the futures as traders seemed to have a touch of cold feet about how much they are willing to bet on QE2. The government’s advance report on the nation’s second quarter GDP (which really only includes the first two months of data) shows the economy grew at an annualized rate of just 2.0% in the quarter, which is above the consensus expectations for a growth rate of 1.9. Looking at the consumer activity, the Personal Consumption component of the report came in above expectations with a gain of 2.6% vs. 1.9%.
The last session of the week began with a small gap downward followed by several waves within a tight four point range, putting the high of the day on the chart at 10:26 and the low at 11:48. This session was similar to last Friday when the index traded in a very tight range with low volume.
For day traders, the best thing about days such as this is that they do eventually end. It is just six and half hours like every other session; but it really seems like much longer. We understand the reference to “smart money” better after days like this; they were smart enough to take Friday off.
Looking at our Market Leader’s board, we again see mixed results from Friday’s inaction. A few weeks ago, Technology was lagging alongside of the Financials (XLF); but recently the Financials have stood alone. One item to take note of is that the 52 week lows for the SOX and Russell 2000 slide off the board next week as the calendar moves on.
The SPX gained 0.18 points during the week. The four week RSI of the four indices (SPX, Dow, NASDAQ, and Russell 200) is 87. Pullbacks often occur as this RSI reaches 80.
For the SPX, there were 240 components advancing and 246 declining. Total tick for the week was 154,000. The number of components with their 5 DMA above their 20 DMA decreased during the week from a ratio of 3.65 to one to 2.1 to one.
On the NYSE, the advance/decline line increased slightly during the week but the 10 DMA of Net Advancing dropped from 214 to 133.
Friday ended the nine week streak of consecutive higher Friday closes for the SPX and also ended the ten week streak of consecutive weekly closes on a positive final tick.
The week painted a perfect doji on the weekly chart but even rarer was that we saw five consecutive dojis painted on the daily chart as well. All five sessions closed within a three point range and the average intraday range was 10.22 points.
For the SPX Index there were 292 Advancers/191 Decliners. On the NYSE 3,099 issues were traded with 1,805 advancing issues and 1,189 retreating issues, a ratio of 1.52 to one advancing. There were 147 new highs and 11 new lows. The five day moving average of New Highs is 163 while the five day moving average of New Lows is 12 and the ten day moving average of Net Advancing is 133.
Advancing volume was higher at a ratio of 1.25 to one. The closing TRIN was 1.21 and the final tick was -97. The NYSE Composite Index gained 0.11% today while the SPX lost -0.04%.
For the NYSE, relative to the previous 30 session average, volume was .05% above the average. Of the last 15 sessions 7 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, 6 of last 10. For the SPX, the day's volume was 76.6% of the average daily volume for the last year. Volume was 74.2% of the last 10 day average and 83.8% of the previous day’s volume.
Breadth was strong Friday but the advancing volume ratio was weaker than the advancing issues. Volume was anemic and intraday range was tiny, within a fraction of the smallest this year. But the news from the NYSE statistics is that the ten week streak of consecutive weekly closes on a positive tick ends. The last Friday which closed on a negative tick was August 13th and the SPX was below 1080.
Total tick for the day was 140,000 and the average tick for the day was 91. There were 57 ticks greater than 600 and 13 ticks more extreme than -600. There were 3 ticks greater than 1000 and no ticks more extreme than -1000.
The intraday volume pattern is once again distinctive. Volume spiked on every little downward move of the index and volume dropped off during each little upward move.
Looking at the nightly breadth indicators, we are continuing to see weakness within the indicators. The McClellan Oscillator remains in negative ground, the Summation Index continues to decline, the advance/declines are weakening, and the Absolute Breadth Index is suggesting a market top.
The biggest gainer was the VIX, with a big move up and no move in the market. Fitting during the Halloween week, SCARY! So let the fun begin this week especially late Tuesday or Wednesday.
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