Wednesday Recap: A Look Inside the market

Stock futures were pointing upward for a change on decent data out of China, a successful auction in Portugal, and a handful of decent reports here in the U.S. ADP reported that the private sector job market expanded again during the month of November. The report shows that private sector jobs rose by 93,000 jobs during the month, which was well above the consensus expectations for a gain of about 43K. October’s report was revised higher to a gain of 82,000 jobs, up from the initial report of +43K. In addition, the government reported U.S. Nonfarm Productivity in the third quarter rose by +2.3%, which was dead on with the consensus expectations for a reading of +2.3% and Q2’s unrevised level of +1.9% (Q1 was +3.9%). On the inflation front, Unit Labor Costs were reported to have fallen -0.1% versus the expectations for a decrease of -0.3%.

The midweek session began with a huge spike higher. The SPX was up nineteen points within five minutes and twenty-two points before 10:00 am. Then there was simple bullish consolidation within a tight trading range until just before noon when the index spiked upward several more points. The rest of the session traded within a tight range as the bulls that gave the bear no chance for an exit.

This session was bullish from start to finish; the small pullbacks were inconsequential. An oversold market got good news; the fuel for the rally came in overnight and continued through the ISM at 10am. I mentioned yesterday i see a bull close to the week followed by a pullback next week. We will probably test the 1225-1230  range and come back down.

The Market Leaders were the Russell 2000  and the SOX  that both set new 52 week highs. This is quite bullish; except for the action of the Financials (XLF). If the XLF begins to participate, this rally will easily set new 52 week highs. But without the XLF, I believe the tug-of-war trade continues (choppy trade , range bound market).


For the SPX Index there were 476 Advancers/12 Decliners. On the NYSE 3,147 issues were traded with 2,403 advancing issues and 676 retreating issues, a ratio of 3.55 to one advancing. There were 265 new highs and 10 new lows. The five day moving average of New Highs is 97 while the five day moving average of New Lows is 17 and the ten day moving average of Net Advancing is 264. The Net Advancing data indicates a bullish trend.

Advancing volume was higher at a ratio of 13.31 to one. The closing TRIN was 0.27 and the final tick was 581. The NYSE Composite Index gained 2.33% today while the SPX gained 2.12%.

For the NYSE, relative to the previous 30 session average, volume was 8.37% above 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, 19 sessions ended on a positive tick, 6 of last 10. For the SPX, the day's volume was 98.9% of the average daily volume for the last year. Volume was 116.9% of the last 10 day average and 113.8% of the previous day’s volume.

Market breadth was outstanding and advancing volume absolutely blew away the advancing issues. The ten day average of Net Advancing exploded into positive territory. But the advance/decline line does not (yet) support today’s rally; there is a negative divergence that bears watching.

Total tick for the day was 100,000 and the average tick for the day was 64. There were 42 ticks greater than 600 and 13 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.

Intraday volume spiked on the up moves today; there were buyers but few sellers. But the nightly breadth indicators are interestingly not as bullish as could be expected. The Absolute Breadth Index is suggesting a topping process. The McClellan Oscillator remains negative and the Summation Index continues to move towards zero. The breadth indicators should at least make bulls stop and think about the market internals.

The $DXY got resistance around the 200dma and has pulled  back. Probably will pullback below the 200wkma before next adavnce. This should allow the rally to continue to next week.

The Precious metals are in a good solid uptrend and will be nearing recent highs soon, expecting a pullback at that point.

As I wrote this will test 100 and fail, support at 200wk as seen before. If that breaks see previous lows in April.
Long TBT!!