Thursday Recap: A Look inside the markets

SPX going to end up 7 weeks in a row!

On Thursday overnight auctions in Spain and Italy were considered successful as Spain raised as much money as they had hoped and the rate increases for both auctions weren't significant. The Labor Department reported the Producer Price Index (an indication of inflation at the wholesale level) for December rose by +1.1%, which was above the consensus estimate for +0.9% and above November’s +0.8% (October: +0.4%). When you strip out food and energy, the so-called Core PPI came in up +0.2%, which was inline with the consensus for +0.2% and below November’s +0.3%. The Labor Department also reported that initial claims for unemployment insurance for the week ending January 8 rose by 35K to 445K. The week’s total was well above the consensus for a reading of 409K. Continuing Claims for unemployment for the week ending January 1 were below consensus at 3.879M vs. expectations for 4.06M and last week’s revised (higher) 4.124M. Futures were modestly negative as the open approached.

Yesterday's session began without a significant gap and quickly moved lower to put the low of the day on the chart at 10:11 am. But every dip must be bought and this one followed the pattern as the index began crawling higher. Then the index double topped at 11:38 and 12:18 before gently declining much of the afternoon. But this was a tight range session and all moves were tiny. The low of the day was put on the chart at 3:34 and the final half hour was mostly a small bounce higher as dip buyers arrived.

The SPX Index there were 220 components advancing and 260 components declining. On the NYSE 3,134 issues were traded with 1,370 advancing issues and 1,651 retreating issues, a ratio of 1.21 to one declining. There were 246 new highs and 108 new lows. The five day moving average of New Highs is 212 while the five day moving average of New Lows is 36 and the ten day moving average of Net Advancing is 220. The Net Advancing data indicates a bullish trend.
 
Declining volume was higher at a ratio of 1.57 to one. The closing TRIN was 1.31 and the final tick was 734. The five day average of TRIN is 1.02 and the ten day average of TRIN is .95. The NYSE Composite Index lost -0.05% today while the SPX lost -0.17%.
 
For the NYSE, relative to the previous 30 session average, volume was -1.81% 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, 9 of last 10. For the SPX, the day's volume was 94.3% of the average daily volume for the last year. Volume was 111.6% of the last 10 day average and 105.5% of the previous day’s volume.
 

Total tick for the day was -75,000 and the average tick for the day was -49. There were 15 ticks greater than 600 and 48 ticks more extreme than -600. There were no ticks greater than 1000 and 3 ticks more extreme than -1000. The tick action suggests institutional distribution.
 
The intraday volume's largest spikes today came on the down moves. But in such a tight range of trading it is difficult to draw much from such a pattern. But looking at the Nightly Breadth Indicators is of interest tonight, particularly the spike in the High Low Logic Index. This is by far the largest one day spike we have ever seen in this indicator with yesterday's spike being the largest in two years. So the two day spike is either a clue or a total anomaly. It bears watching over the next few days.


Yesterday was another one of those days that looks like a minus 1% day rather than minus 0.17%. 108 New Lows today. The real losers on the day were the commodities related names, metals and miners were hammered even as the dollar got blasted. The FXE (EURO ETF) was up more than 1.5%. 


This was a big negative day for those of us who are subscribing to the theory that things aren't going to get better anytime soon. That inflation is real and its here to stay, and that easing around the world has to continue (right or wrong), as will efforts to promote job growth and stabilize the financial system and stem deflation/depression. And until that changes I will stick to what works in that environment, though it doesn't seem to work everyday as we saw yesterday, and this morning gold and silver are down again even as the dollar is weak. It seems to me that the metals dollar inverse correlation has been lost and not the metals are more closely related to the perceived well being or problems in Europe. When the Euro is stronger based on the bond auctions etc and people feel better about Europe, they sell gold, silver etc. This confusion is creating volatility in the metals, funds are buying and selling based on the daily news flow. I think its time to take a step back and see the forest through the trees.