Thursday Recap: A Look inside the markets

World markets followed Wall Street lower overnight. Trading overseas was also affected by the strong GDP report in China, which leads most to believe the tightening cycle is not yet over. This idea is also supported by reports that Chinese banks lent more than 1 trillion Yuan in the first 19 days of January, which far exceeded the allocation for the month (total allocation for the year is expected to be no more than 7.5 trillion Yuan). However, a good number from Weekly Claims has improved the mood a bit here in the U.S. The Labor Department reported that initial claims for unemployment insurance for the week ending January 15 fell by 37,000 to 404K. The week’s total was below the consensus for a reading of 423K. Continuing Claims for unemployment for the week ending January 1 were below consensus at 3.861M vs. expectations for 3.943M and last week’s revised (higher) 3.887M. Futures were modestly negative as the open approached.

The session began with a small one point gap lower but quickly traded five points down just minutes into the day. After a brief bounce through 10am sellers took over the tape and took the index to the low of the day at 11:34. Then the familiar pattern of buying the dip began. There was a slight pullback just after 1pm but most of the session after the morning lows was consistently higher until the high of the day at 2:44. While trade was choppy the last hour, it was consistently lower as the index gave back a third of the day's range in the last 75 minutes.

For the SPX Index there were 226 components advancing and 254 components declining. On the NYSE 3,132 issues were traded with 1,141 advancing issues and 1,892 retreating issues, a ratio of 1.66 to one declining. There were 44 new highs and 24 new lows. The five day moving average of New Highs is 204 while the five day moving average of New Lows is 71 and the ten day moving average of Net Advancing is -102.

 

Declining volume was higher at a ratio of 1.16 to one. The closing TRIN was 0.7 and the final tick was -510. The five day average of TRIN is 1.31 and the ten day average of TRIN is 1.16. The NYSE Composite Index lost -0.35% today while the SPX lost -0.13%.

 

For the NYSE, relative to the previous 30 session average, volume was 25.46% above the average. Of the last 15 sessions 10 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 18 sessions ended on a positive tick, 7 of last 10. For the SPX, the day's volume was 108.1% of the average daily volume for the last year. Volume was 107.8% of the last 10 day average and 107.2% of the previous day’s volume.

 

Breadth was more negative than might be expected for a day when the SPX was down less than two points. New Highs were quite low; the lowest since November 23^rd. The ten day average of Net Advancing has dropped below zero also for the first time since the end of November.

 

Total tick for the day was 97,000 and the average tick for the day was 63. There were 101 ticks greater than 600 and 37 ticks more extreme than -600. There were no ticks greater than 1000 and no ticks more extreme than -1000.

 

The intraday volume pattern today is unmistakable as volume clearly sagged on the downward moves and spiked on the upward moves. Checking the Nightly Breadth Indicators reveals a somewhat mixed bag suggesting choppy trade at least for tomorrow. But it is interesting to see the McClellan Oscillator move beyond oversold already. The Absolute Breadth Index and the High Low Logic Index are both suggesting that the market has hit a significant top.

Sectors Performance
 
Sectors stronger than the SPX for Thursday:
- Financials -- Outperformed the SPX by +80%.
- Consumer Staples -- Outperformed the SPX by +63%.
- Utilities -- Outperformed the SPX by +88%.
- Health Care -- Outperformed the SPX by +37%.
- Consumer Discretionary -- Outperformed the SPX by +33%.
 
Sectors weaker than the SPX for Thursday:
- Basic Materials -- Underperformed the SPX by -104%.
- Energy -- Underperformed the SPX by -62%.
- Industrials -- Underperformed the SPX by -38%.
- Technology -- Underperformed the SPX by -42%.