Friday Recap "A look inside the market"

Foreign markets were mixed in response to China announcing it was shifting to a "prudent" monetary policy. The Labor Department reported that Nonfarm Payrolls rose in the month of November by 39,000. This was well below the consensus estimates for an increase of 149,000. The private sector (the household survey) showed gains of 50,000 jobs, which was also far below the estimates for 156,000K. The nation’s Unemployment Rate spiked to 9.8%, which was above the expectations for a reading of 9.6%. Stock futures reversed course on the news and pointed to a lower open.

The Friday session began with a small downward gap but to the dismay of the bears the low of the day was painted within opening moments. After a couple of hours of tight range choppy trade the low of the day was successfully tested just before lunch hour and from that point onward the bulls ruled the tape pushing eight points higher off the lows to close near the highs.

This was another huge disappointment for the bears as the employment data was bleak yet traders shook off the bad news and routed the bears. After two successive days of more than 1% gains, the market still was able to rally on bad news. This is a characteristic of a bull market and not a characteristic found in bear markets. During bull markets, as mentioned here previously, your best and most reliable buy signal is any pullback.

The SPX gained 35.31 points and its no coincidence that the dollar was weak during the same period of time. The four week RSI of the four indices (SPX, Dow, NASDAQ, and Russell 200) is 77. Pullbacks often occur as this RSI reaches 80 and bounces near 20.

For the SPX, there were 436 components advancing and 50 declining. Total tick for the week was 416,000. The number of components with their 5 DMA above their 20 DMA increased during the week from a ratio of 1.36 to one under their 20 DMA to 2 to one above their 20 DMA.

On the NYSE, the advance/decline line increased significantly during the week by 2,262 and the 10 DMA of Net Advancing jumped from -207 to 214.

The weekly chart painted a bar that closed above its Bollinger Band. This last happened the week of November 5^th. The December monthly chart bar is also at the top of its Bollinger Band as the recent rally has stretched out all of the oscillators.

The weekly range was 4.37%; this range is a bit unusual and somewhat more common on a down week. During 2010, weeks with greater than a 4% range that were up weeks were most often followed by down weeks, some of which were quite significantly down. The most recent 4% range up week was the week of November 1^st.




For the SPX Index there were 304 Advancers/180 Decliners. On the NYSE 3,130 issues were traded with 1,875 advancing issues and 1,135 retreating issues, a ratio of 1.65 to one advancing. There were 271 new highs and 11 new lows. The five day moving average of New Highs is 141 while the five day moving average of New Lows is 17 and the ten day moving average of Net Advancing is 214. The Net Advancing data indicates a bullish trend.

Advancing volume was higher at a ratio of 2.43 to one. The closing TRIN was 0.68 and the final tick was 1013. The NYSE Composite Index gained 0.51% today while the SPX gained 0.26%.

For the NYSE, relative to the previous 30 session average, volume was -11.72% 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, 20 sessions ended on a positive tick, 6 of last 10. For the SPX, the day's volume was 81.2% of the average daily volume for the last year. Volume was 91.8% of the last 10 day average and 73.3% of the previous day’s volume.

Strong market breadth with the advancing volume again outpacing advancing issues. The broad NYSE Composite Index again outperformed the SPX. One interesting and possibly significant thing to take notice of is the action of the ten day average Net Advancing. This fell from last night and appears to be at risk of falling below 200. While the SPX is at 52 week highs, the NYSE advance/decline line is not. This is a negative divergence which we must keep in mind and keep an eye on.

Total tick for the day was 135,000 and the average tick for the day was 87. There were 51 ticks greater than 600 and 8 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000. This tick action suggests institutional accumulation.
Fridays leaders were Materials, Energy, Tech and Financials, Laggards were Industrials, Staples, Healthcare, Con. Discretionary.

What a week for the metals and miners, the strong secular bull continues. There was a shake out attempt last Thursday when everything in this sector looked as if it was going to nose dive around 12 o'clock. Must have been a computer program set to scare the weak holders. The following day the strong holders were rewarded and now we are at the recent highs, and the charts say that we will take them (old highs) out. If gold stays above 1400 for a while the shorts will panic as they did in silver as I wrote around the 25-26 level. We had a top in that move, sold off and slowly and confidently took it out. Looking at the volume (see spike at recent high) this move doesn't smell of a squeeze at all, this is accumulation pure and simple.

Need I say more, the junior miners look ready to explode. The fundamentals are in place for numerous takeouts in this group. As the larger companies need to show growth their mines mature, and a dearth of new finds sets the juniors up nicely. Another positive catalyst are the profits they will show at these gold and silver prices. so hold on to the bull. 


And lets not forget the biggest catalyst for the bull, Big Ben, no not that big Ben in London or the Steelers Ben, our very own Fed chair Ben. QE to infinity Ben!!!