Friday Recap, A look ahead

Weekly Chart

On Friday decent economic news, and better than expected earnings from Oracle and RIMM as well as the German IFO Business Climate Index increase for the seventh straight month was offset by the fact that Moody's downgraded Ireland, so stock futures were basically flat as the open leading to the quadruple-witch expiration session. 


For the week the SPX gained 3.5 point. The four week RSI of the four indices (SPX, Dow, NASDAQ, and Russell 200) is 83. Pullbacks often occur as this RSI reaches 80 and bounces near 20.
During the week there were 274 advancing and 175 declining stocks. Total tick for the week was 90,000. The number of components with their 5 DMA above their 20 DMA decreased during the week from 70.6% to 56%.

 On the NYSE, the advance/decline line decreased slightly during the week by -32 and the 10 DMA of Net Advancing dropped from 279 to 50. The Semiconductors (SMH) have been really outperforming this market since August and lately the Financial sector (XLF) has been very strong. Its 150dma has started to climb as well and this sector should lead the next leg up.

The weekly range was a mere 14 points, 1.12%. This is the smallest weekly range in years. This year has seen ten weeks with a range less than 2% whereas 2009 only had two such weeks and both were the holiday weeks at the end of the year. Such tight range weeks often lead to pullbacks but we have seen since the end of August that these tight range weeks are the pullback.

For Friday, in the  SPX there were 262 Advancers/187 Decliners.  On the NYSE 3,145 issues were traded with 1,706 advancing issues and 1,357 declining issues, a ratio of 1.26 to one advancing. There were 176 new highs and 22 new lows.  The five day moving average of New Highs is 207 while the five day moving average of New Lows is 67 and the ten day moving average of Net Advancing is 50.

Advancing volume was higher at a ratio of 1.52 to one. The closing TRIN was 0.83 and the final tick was 248. The five day average of TRIN is .98 and the ten day average of TRIN is .8. The NYSE Composite Index lost -0.07% today while the SPX gained 0.08%.

For the NYSE, relative to the previous 30 session average, volume was 87.18% 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, 19 sessions ended on a positive tick, 7 of last 10. For the SPX, the day's volume was 100.9% of the average daily volume for the last year. Volume was 105.1% of the last 10 day average and 109.7% of the previous day’s volume.

Breadth was decent for such a small range day. But bulls should find troubling the dropping ten day average of Net Advancing.

Total tick for the day was 184,000 and the average tick for the day was 119. There were 37 ticks greater than 600 and 11 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000.

Looking at Friday's intraday volume pattern tells us little but it may be worthwhile to mention that this was the lowest option expiration volume of the year. Checking the nightly breadth indicators also is a bit unenlightening but it should be noted that the Absolute Breadth Index has fallen off the planet, strongly suggesting that we are topping.
For the SPX Index there were 262 Advancers/187 Decliners.  On the NYSE 3,145 issues were traded with 1,706 advancing issues and 1,357 retreating issues, a ratio of 1.26 to one advancing. There were 176 new highs and 22 new lows.  The five day moving average of New Highs is 207 while the five day moving average of New Lows is 67 and the ten day moving average of Net Advancing is 50.

Advancing volume was higher at a ratio of 1.52 to one. The closing TRIN was 0.83 and the final tick was 248. The five day average of TRIN is .98 and the ten day average of TRIN is .8. The NYSE Composite Index lost -0.07% today while the SPX gained 0.08%.

For the NYSE, relative to the previous 30 session average, volume was 87.18% 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, 19 sessions ended on a positive tick, 7 of last 10. For the SPX, the day's volume was 100.9% of the average daily volume for the last year. Volume was 105.1% of the last 10 day average and 109.7% of the previous day’s volume.

Breadth was decent for such a small range day. But bulls should find troubling the dropping ten day average of Net Advancing.

Total tick for the day was 184,000 and the average tick for the day was 119. There were 37 ticks greater than 600 and 11 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000.

Looking at Friday's intraday volume pattern tells us little but it may be worthwhile to mention that this was the lowest option expiration volume of the year. Checking the nightly breadth indicators also is a bit unenlightening but it should be noted that the Absolute Breadth Index has fallen off the cliff, this strongly suggesting that we are topping.


So the chart pattern tells me that that we are going to breakout of this weekly cup and handle pattern, the move could be substantial possibly 75 to a 100 points, but the stochastics and the internals are saying otherwise. This market has ignored the technicals since the rumors of second QE started in August and with more problems in Europe and here in the US cheap money is finding a home in stocks or ETF's. 


Long: RES 1/2 position, CRUS, AIB, IRE, TBT, GLD, GDXJ, SLV, UEC, URZ, CCJ.