Nightly Report for Thu September 2nd 2010

Thu September 2nd 2010
A Late Day Rally Lifts Indices
by Jerome "Mel" Hickerson www.MarketsPath.com

Market Recap:

First-time jobless claims fell 6,000 last week and futures were several points off the nightly lows as the session was ready to open.

The session began sluggishly but moved up about four points before 10 am. An up, down, up move left the SPX up six points for the day at 11 am and after a couple minor moves that is where the index sat as we entered the final hour. But traders apparently were not afraid of the employment data to be released Friday morning - or maybe shorts were afraid to stay short and they were covering. Regardless, the index steadily moved higher during the final hour to close at the highs of the day.

Today's session was bullish consolidation after Wednesday's explosive move higher. While Friday's reaction the non-farm payroll data is anyone's guess, just look back at the last few days and you have to see a bullish trend trying to get started. The SPX has now climbed on top of several crucial moving averages. The index sits above all the shorter-term averages with only the longer-term 100 and 200 DMAs overhead. Even the significant 50 DMA is trying to turn upward. These average may now yield some support against any pullback.



Market Trend:  Nine Sectors Report

The Nine Sectors Report tonight shows no changes from last night's nine buy signals. While we remain with a long signal, the market at this point is a bit short-term overbought and it won't be surprising to see a market decline, regardless of the jobs data. For those keeping track, the index is up 35 points since we turned on this long signal on August 25th. The Nine Sectors Report has gained 204 points since June 1st while the SPX has gained 17 points.

Be alert for anything on Friday. The market reaction to the non-farm payroll data is all that matters to a trader. Forget the data itself; just focus on the reaction. And keep in mind that the reaction to this data is the most reliable move to fade of any that we know.

Volume & Breadth Indicators

For the SPX Index there were 421 Advancers/69 Decliners.  On the NYSE 3,130 issues were traded with 2,149 advancing issues and 878 retreating issues, a ratio of 2.45 to 1 advancing. There were 168 new highs and 13 new lows.  The 5 day moving average of New Highs is 135 while the 5 day moving average of New Lows is 46 and the 10 day moving average of Net Advancing is 135.

Advancing volume was higher at a ratio of 4.99 to 1. The closing TRIN was 0.49 and the final tick was 1245. The NYSE Composite Index gained 0.8% today.

For the NYSE, relative to the previous 30 session average, volume was -6.58% below the average. Of the last 15 sessions 8 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, 6 of last 10. For the SPX, the day's volume was 77.3% of the average daily volume for the last year. Volume was 88.5% of the last 10 day average and 79.5% of the previous day’s volume.

The broader NYSE Composite outperformed the SPX today. Advancing volume once again outperformed advancing issues. This is the second consecutive session closing on a final tick greater than 1000; this last occurred on July 8^th. These are all bullish signals.

Further, total tick for the day was 202,000 and the average tick for the day was 131. There were 122 ticks greater than 600 and 33 ticks more extreme than -600. There were 4 ticks greater than 1000 and no ticks more extreme than -1000. The tick action suggests institutional accumulation.

The tick action today was rather mild but the 4-to-1 ratio of ticks greater than 600 continues to be a strong ratio. Many of the nightly indicators continue to move towards bullish territory. Notice the McClellan Summation Index as it moves toward positive ground.



Moving Average Indicators:

17.00% of the SPX components are giving a crossover Buy signal; 26.40% of the SPX components are giving a Sell signal. This is a 1.6 to 1 ratio of Sell signals over Buy signals.

 95% of the SPX are above their five day moving average, 91.8% are above their 10 day average, 69% are above their 20 day moving average, 56.6% are above their 50 day moving average, 42.8% are above their 100 day moving average, and 43.6% are above their 150 day moving average.

We have not yet had any bullish crossovers of the short-term averages above the long-term averages on any of the major and international indices. As a matter of fact, even with the two day rally, the SPX 20 DMA crossed below the 50 DMA and the Germany 20 DMA crossed below the 50 DMA and below the 100 DMA. This rally will need to continue a few more days for the short-term averages to catch up.



Sectors on the Move:

Sectors stronger than the SPX for Thursday:
- Basic Materials -- Outperformed the SPX by +29%.
- Financials -- Outperformed the SPX by +9%.
- Industrials -- Outperformed the SPX by +36%.
- Consumer Discretionary -- Outperformed the SPX by +95%.

Sectors weaker than the SPX for Thursday:
- Energy -- Underperformed the SPX by -20%.
- Technology -- Underperformed the SPX by -0%.
- Consumer Staples -- Underperformed the SPX by -27%.
- Utilities -- Underperformed the SPX by -90%.
- Health Care -- Underperformed the SPX by -38%.

Stocks on the Move:

Today's SPX component winners and losers:
      Largest one day loser is ANF with -3.88%
      Largest three day loser is HRB with -5.98%
      Largest five day loser is HRB with -6.68%
      Largest ten day loser is SNDK with -14.01%
      Largest one day winner is JWN with 8.08%
      Largest three day winner is JWN with 14.07%
      Largest five day winner is LNC with 14.90%
      Largest ten day winner is CRM with 23.41%

In Late Trading:

222 SPX components moved upward and 113 components downward during the after hours with 103 million shares traded. Very light after hours trading this evening.

Friday, September 3

Economics
08:30 Nonfarm Payrolls -120k cons.
08:30 Nonfarm Payrolls- Private 44k cons.
08:30 Unemployment Rate 9.6% cons.
08:30 Hourly Earnings 0.1% cons.
08:30 Average Workweek 34.2 cons
10:00 ISM Services 53.0 cons.
German Retail Sales -0.9% cons.
Swiss Consumer Price Index -0.7% cons.
Euro-Zone Retail Sales 0.8% cons.

Earnings
Before: CPB

Speeches
10:00 Dennis Lockhart

The week ends with the government's widely anticipated monthly jobs report, which is forecast to show the U.S. economy lost 118,000 jobs in August after cutting payrolls by 131,000 in July. The unemployment rate is expected to tick up to 9.6% from 9.5%. Separately, the ISM services index is expected to have slipped to 53.2 in August from 54.3 in July.

Have a great Friday!

-Mel