Mixed Session Ahead of FOMC

Market Recap:
 
Stock futures initially declined on the report that Italy's debt rating had been downgraded by S&P. But traders appeared to be trusting the Fed to make everything okay. As such, futures were pointing to a higher open as traders apparently view any and all dips as a buying opportunity. Housing Starts fell in August to an annualized rate of 571K. This was below the consensus for 588K. The July numbers were revised lower to an annualized rate of 601K from 604K. Building Permits for July rose to a rate of 620K. This was above the consensus of 588K and last month's reading of 601K. 
 
The session began with a small gap higher but this was quickly sold as the SPX put the low of the day on the chart during the first thirty minutes of trading. The next hour was all bullish as the index climbed seventeen points. >From 11:00 am through about 2:30 pm the SPX traded in a very tight range but the last ninety minutes of the session saw sharp selling as the sentiment of traders turned apprehensive.
 
Looking at our Market Leaders board, most of our leaders closed lower Tuesday with the Russell 2000leading the way lower.
 
SPX big winners were Interpublic Gr Of Cos (IPG) 8.19%, Celgene Corp (CELG) 7.11%, and Newmont Mining Corp (NEM) 5.48%. SPX big losers were Netflix Inc (NFLX) -9.7%, Coventry Health Care Inc (CVH) -6.99%, and CF Industries Holdings Inc (CF) -6.48%.
 
SPX five day big winners are Goodrich Corp (GR) 31.68%, Textron Inc (TXT) 11.75%, and Ebay Inc (EBAY) 11.33%. SPX five day big losers are Netflix Inc (NFLX) -37.71%, First Solar Inc (FSLR) -12.87%, and Alpha Natural Resources (ANR) -9.12%.
 
New Ten Day Highs: ABT, ANF, AET, APD, ARG, AGN, AEE, AMT, ABC, AMGN, APC, AIZ, T, ADP, AVY, BAX, BIG, XL, HRB, BMY, BRCM, BF/B, CA, CAH, CCL, CBS, CELG, CNP, CTL, CB, XEL, CI, CMS, COH, CL, CMCSA, COP, ED, CEG, COST, DTV, DFS, D, DPS, DTE, DUK, ROST, EIX, ERTS, ETR, EQT, EL, EXC, XOM, FAST, FE, FMC, GE, GILD, GR, HCP, HD, HON, HUM, TEG, INTC, IPG, IBM, IFF, IGT, INTU, ISRG, IRM, KMB, LEN, LLY, LTD, MAR, MA, MAT, MCD, MHP, MSFT, MOLX, MCO, NEM, NWSA, GAS, NKE, NI, JWN, NU, ORCL, PAYX, POM, PCG, PNW, RL, PPG, PPL, PX, PCP, PGN, PLD, PEG, QCOM, PWR, STR, RSH, RHT, RAI, SNDK, SCG, SNI, SRE, SPG, SJM, SO, SBUX, SRCL, TLAB, TDC, TXN, TIF, TWC, TWX, TIE, TJX, TRV, UTX, UNH, QLD, KBH, MBI, USB, VZ, VFC, VIA/B, WAT, WPI, WLP, WU, WY, AAPL, GOOG, ICE
 
New Ten Day Lows: AN, AVB, CF, CAG, CNX, DNR, EQR, EXPE, FSLR, FCX, FTR, HSP, CLF, LSI, NYT, BTU, SH, JASO
 

 
Volume & Breadth Indicators
 
For the SPX Index there were 189 components advancing and 284 components declining. On the NYSE 3,127 issues were traded with 1,100 advancing issues and 1,924 retreating issues, a ratio of 1.75 to one declining. There were 49 new highs and 81 new lows. The five day moving average of New Highs is 31 while the five day moving average of New Lows is 48 and the ten day moving average of Net Advancing is 77.
 
Declining volume was higher at a ratio of 1.74 to one. The closing TRIN was 1.02 and the final tick was -711. The five day average of TRIN is .96 and the ten day average of TRIN is 1.34. The NYSE Composite Index lost -0.24% today while the SPX lost -0.17%.
 
For the NYSE, relative to the previous 30 session average, volume was -25.06% below the average. Of the last 15 sessions 1 sessions ended with volume greater than the previous rolling 30 day average volume. Of the last 30 sessions, 22 sessions ended on a positive tick, 7 of last 10. For the SPX, the day's volume was 98.7% of the average daily volume for the last year. Volume was 86.8% of the last 10 day average and 98.2% of the previous day’s volume.
 
Total tick for the day was -40,000 and the average tick for the day was -26. There were 84 ticks greater than 600 and 135 ticks more extreme than -600. There were 11 ticks greater than 1000 and 24 ticks more extreme than -1000. The tick action suggests institutional distribution.
 
Our tick chart for Tuesday shows that sellers were in control. The data strongly suggests that institutions were selling into strength.
 

 
Tuesday’s volume was light. Looking at the intraday volume pattern, we can see that volume peaked early morning and declined throughout the session.
 

 
Moving Average and Support/Resistance Indicators:
 
24.4% of the SPX are above their five day moving average, 48.2% are above their 10 day average, 51.2% are above their 20 day moving average, 29.4% are above their 50 day moving average, and 23.4% are above their 200 day moving average.
 
We had one significant moving average crossover Tuesday as the NYSE Composite Index had the 5 DMA cross above the 20 DMA. Our moving average Power Rating is 21 of a possible 100.
 

 
Sectors on the Move:
 
Sectors stronger than the SPX for Tuesday:
- Consumer Staples -- Outperformed the SPX by +34%.
- Utilities -- Outperformed the SPX by +158%.
- Health Care -- Outperformed the SPX by +100%.
 
Sectors weaker than the SPX for Tuesday:
- Basic Materials -- Underperformed the SPX by -112%.
- Energy -- Underperformed the SPX by -58%.
- Financials -- Underperformed the SPX by -2%.
- Industrials -- Underperformed the SPX by -58%.
- Technology -- Underperformed the SPX by -10%.
- Consumer Discretionary -- Underperformed the SPX by -39%.
 
In Late Trading:
114 SPX components moved upward and 206 components downward during the after hours with 131 million shares traded.
 
What We Learned from Tuesday's Action:
 
Tuesday was session 1 to close below the 5 DMA, session 5 to close above the 10 DMA, session 5 to close above the 20 DMA, and session 39 to close below the 50 DMA. This was also session 4 for the 5 DMA to close above the 20 DMA. One early sign of a sustainable rally or pullback is often a close above or below the 10 DMA. The SPX closed 12.7 points above the 10 DMA.
 
The SPX 5 DMA is 1204, 10 DMA is 1189.39, 20 DMA is 1187.77, 50 DMA is 1223.4, 100 DMA is 1269.92, and 200 DMA is 1283.38.
 
Looking Ahead:

Wednesday will be driven by the afternoon announcement from the FOMC. While Fed days generally drift higher during the morning, since the 2008 financial crisis there have been twenty-two Fed days and sixteen have ended positively.

While many technicals continue to point lower, it usually doesn't pay to fight the Fed. Probably the best way to trade this Fed meeting is to simply be patient and consider a short-side entry just before the announcement.



Wednesday, September 21

Economics
07:00 MBA Mortgage Purchase Index
10:00 Existing Home Sales – consensus 4.75m
02:15 FOMC Rate Decision – consensus 0.25%
03:00 NZD Credit Card Spending
04:30 JPY All Industry Activity Index
08:30 GBP Bank of England Minutes
08:30 GBP PSNB ex- Interventions
11:00 CAD CPI
22:45 NZD GDP

Earnings
Before: AMSC, GIS, IHS
After: BBBY, CPRT, FUL, MLHR, RHT, SCS, TXI

The Mortgage Bankers Association will release its index of mortgage applications for the week ended September 17.  The National Association of Realtors will release their August existing home sales data as well. The weekly crude oil inventories report is also due in the morning. But the real driver for the day will be the FOMC announcement.
 
Thank you for reading. Think on it, trade on it, and be well.

-----------

"Mel"
 
http://melsinfo.com/
http://www.marketspath.com/