S&P Recap, a look ahead

Chinese shares jumped Monday as investors got their first chance to react to the government’s pledge to maintain 2011 economic growth at 8%, to fight inflation, and to avoid high-handed action against local manufacturers to meet energy targets. Moody’s Investors Service on Monday cut Greece’s sovereign debt rating three notches to B1, infuriating the Greek government and slightly denting the euro amid renewed worries about the ability of Greece and other debt-loaded euro-zone governments to avoid default. Oil prices rose above $106 a barrel Monday in Asia as intense fighting between Libyan government forces and rebels raised the prospect of a prolonged cut in crude exports from the OPEC nation. The futures are up slightly this morning, Gold and Silver up 9 bucks and 60 cents respectively. JPM shorts are on FIYAH!!!! 

On Friday any hopes for a peace deal in Libya looked to be fading as oil climbed above $103 Friday morning. But foreign markets were up and the day started all about the jobs report. The Labor Department reported that Nonfarm Payrolls rose (Lie) in the month of February by 192,000. 

This was just slightly below the consensus estimates for an increase of 198,000 (Manufactured). The January totals were revised higher to 58K from 36K and the combination of revisions for January and December produced an increase of 58K jobs. The private sector showed gains of 222K jobs (lie some more), which again was above the estimates. The Unemployment Rate was once again a big surprise as it fell to 8.9% (Really?!?), which was below the expectations for a reading of 9.1% and January’s level of 9.0%. Although stock futures initially rallied on the jobs report, crude's continued rude rise pushed prices lower as the open approached.

Friday's session began quietly without a significant gap. But sellers were waiting and the first half hour was gently downhill. Then at 10:00 am the action escalated and the selling picked up. The following thirty minutes gave up eight points before the SPX stabilized and tried to rally back. After oscillating up and down and back up about four points over seventy-five minutes the index rolled over almost twelve points in a half hour. This was essentially the low of the session but it was tested several times later in the day. But the last thirty minutes saw a ferocious ten point recovery as the index exploded upward to close near the midpoint of the intraday range.

As we go into trade today remember that 1332 level that we hit last Tuesday and could not take out on Thursday and Failed Friday as well. If I was long the SPY (S&P ETF) its time to be very cautious. These gyrations are a part of an extended bull run coming to a close. Initially, the mind that has been trained by the markets goes into a state of denial, refusing to admit that its over. But then sadistically teased by the big up moves that invite in more money for fear of missing out, only to be left hanging in misery. 

If I were bullish on US equities at these levels which I am not, I would wait for the market to take out 1332. There is too much downside risk right now, especially given the political environment. 

A look inside the market: For the S&P Index there were 92 components advancing and 383 components declining. On the NYSE 3,143 issues were traded with 1,064 advancing issues and 1,961 retreating issues, a ratio of 1.84 to one declining. There were 155 new highs and 14 new lows. The five day moving average of New Highs is 167 while the five day moving average of New Lows is 14 and the ten day moving average of Net Advancing is 63.

Declining volume was higher at a ratio of 3.13 to one. The closing TRIN was 1.85 and the final tick was 407. The five day average of TRIN is 1.43 and the ten day average of TRIN is 1.32. The NYSE Composite Index lost -0.62% today while the SPX lost -0.74%.

For the NYSE, relative to the previous 30 session average, volume was -1.94% below the average. Of the last 15 sessions 7 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 24 sessions ended on a positive tick, 7 of last 10. For the SPX, the day's volume was 101.9% of the average daily volume for the last year. Volume was 97.6% of the last 10 day average and 103.5% of the previous day’s volume.

Breadth was negative as would be expected on a down day and negative volume was even more negative than issues.

Total tick for the day was -193,000 and the average tick for the day was -124. There were 60 ticks greater than 600 and 162 ticks more extreme than -600. There were 8 ticks greater than 1000 and 12 ticks more extreme than -1000. The tick action suggests institutional distribution.

Clearly the big volume spike Friday was with the index breakdown midday. The late data rally, on the other hand, was on falling volume. 

Sectors Performance or Friday:
- Basic Materials -- Outperformed the SPX by +1%.
- Energy -- Outperformed the SPX by +4%.
- Consumer Staples -- Outperformed the SPX by +31%.
- Utilities -- Outperformed the SPX by +14%.
- Health Care -- Outperformed the SPX by +61%.

Sectors weaker than the SPX for Friday:
- Financials -- Underperformed the SPX by -48%.
- Industrials -- Underperformed the SPX by -42%.
- Technology -- Underperformed the SPX by -6%.
- Consumer Discretionary -- Underperformed the SPX by -1%.