S&P Recap and A Look Inside the Markets

Good Morning! S&P futures are up almost four points, there is news this morning that US employers are begining to hire (yawn) and that OPEC is going to boost oil production (right!). 


Yesterday, Despite the downgrade of Greece's sovereign debt rating, air attacks on rebel forces in Libya, and the price of oil gushing above $106, European stock markets and U.S. stock futures were holding up fairly well before our open. There was no economic data to review before the open today while we did get a report on Consumer Credit at 3:00 pm. But a January credit report in March really has that feel of a lagging indicator.

The week began without a significant gap and quickly moved higher putting the high of the session on the chart several times during the first thirty-five minutes of trading, once again failing the level I have been writing about. But then sellers took command and S&P went down hard, dropping more than twenty points without anything but tiny bounces along the way. But the low of the day was painted soon after 1:00 pm and the SPX began to slowly work its way higher. The final hour saw the pace pick up as the index moved higher until the last fifteen minutes and closed almost seven points off the lows.

For the fifth time in the last six sessions we have seen an early session high followed by a later day low. Clearly this markets behavior has changed.

Breadth was even worse today than it might have appeared; it was worse today than Friday. The ten day average of Net Advancing has plunged below zero for the first time in five weeks and is at its lowest since November 26th. The volume today was not particularly robust for a convincing down day and the TRIN is suggesting that we are due for a bounce. Tick shows institutional distribution, Total tick for the day was -244,000 and the average tick for the day was -157. There were 63 ticks greater than 600 and 231 ticks more extreme than -600. There were 7 ticks greater than 1000 and 32 ticks more extreme than -1000. 

Volume was heavy during the down move early today and then tapered off during the afternoon while the index was moving higher. Looking at the Breadth indicators two things catch my immediate attention. First, the McClellan Oscillator moved into oversold territory where we will frequently see a bounce. Second, the McClellan Summation Index hasn't approached anything near negative territory. Both of these suggest the possibility that this downturn won't be long lasting, or at least the possibility of a one or two session bounce.

Sector performance for Monday:

- Energy -- Outperformed the SPX by +5%.
- Financials -- Outperformed the SPX by +4%.
- Consumer Staples -- Outperformed the SPX by +56%.
- Utilities -- Outperformed the SPX by +122%.
- Health Care -- Outperformed the SPX by +6%.

Sectors weaker than the SPX for Monday:
- Basic Materials -- Underperformed the SPX by -95%.
- Industrials -- Underperformed the SPX by -10%.
- Technology -- Underperformed the SPX by -3690%.
- Consumer Discretionary -- Underperformed the SPX by -17%.