Nightly Report for Mon February 1st 2010

Mon February 1st 2010
Bulls Regain Their Horns
by Jerome "Mel" Hickerson www.MarketsPath.com

A Monday morning gap upward, imagine that. The week began not a whole lot different than Friday’s session began. The big difference today was follow-through; there was no large 10:30 reversal today. Instead, the SPX rode a multi-wave move sideways with a higher bias into the close. A final surge ended the session at the highs for the day. The low was at the open and the high of the day came at 15:57. The bulls ruled this low volume affair.

The way the bulls ruled the tape today is as important as the fact that they ruled: The sectors that led the way today were Basic Materials, Financials, Energy, and Industrials. Any broad based rally is usually led by these sectors.

We continue to see a chart pattern of declining tops and declining bottoms; until this changes, bulls need to be cautious. But there is hope within the daily bar charts. Today’s inside day upward is a common signal of a short-term reversal; Tuesday needs to confirm a reversal by creating a higher bar on the chart. But the index did regain the 100 DMA and closed above it today; an important technical event.

I remain short-term bullish and intermediate-term bearish. Tuesday needs follow-through with increased volume to indicate that this pullback is really completed; conviction was obviously lacking today. Our signals for Tuesday are mixed; we have a swing signal long over a longer timeframe but a short signal for tomorrow as well as a zero indicator for Tuesday. My guess is that we see a low range choppy day of trading, with both bears and bulls having false starts. (The model suggested January 5th as the most recent example with similar data.)

SPX Summary for Monday, February 01, 2010

447 Advancers/48 Decliners

Today's SPX component winners and losers:
• Largest one day loser is GCI with -10.73%
• Largest three day loser is MOT with -14.46%
• Largest five day loser is X with -15.85%
• Largest ten day loser is X with -23.78%
• Largest one day winner is MEE with 8.41%
• Largest three day winner is EK with 29.16%
• Largest five day winner is EK with 39.43%
• Largest ten day winner is EK with 22.70%

*** SPX Technical Summary ***

The lowest 14 day RSI component is AYE; the highest 14 day RSI component is BNI. The average 14 day RSI of all 500 components is 38.

The greatest positive five day momentum component is EK; the greatest negative five day momentum component is X. The average five day momentum of all 500 components is -0.7.

9.80% of the SPX components are giving a crossover Buy signal; 76.60% of the SPX components are giving a Sell signal. This is a 7.8 to 1 ratio of Sell signals over Buy signals.

SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 11 components.
• From Buy to Neutral: 5 components.
• From Neutral to Sell: 18 components.
• From Neutral to Buy: 11 components.

Tuesday, February 2

Economics
10:00 Pending Home Sales

Earnings
Before: AMSC, ADM, ARM, BEAV, BP, COCO, CPO, DOW, DHI, EMR, HSY, KFT, LXK, MRO, MAN, OSTK, PTRY, PCX, PBG, SMG, SU, UPS, WHR
After: ACE,AFL, AGAM, ADS, CHRW, CTRP, SOLR, JDSU, MTW, MEE, MET, NYGN, NETL, NWSA, RVBD, VRSN, WBSN

Speeches
10:00 Tim Geithner
10:00 Paul Volcker

The National Association of Realtors' pending home sales index is due in the morning, while the nation's automakers will be releasing their January sales figures through the day. The Senate Budget Committee holds a hearing on the new budget in the morning. Former Federal Reserve Chairman and current economic advisor Paul Volcker testifies on financial reform before the Senate Banking Committee later in the day.

Mel’s Random Hits:

• Total tick for the day was 244,000. Breadth was positive the entire session with the exception of brief stretches around noon and 3:15.

• The day's range was 15.49 points.

• The day's volume was 74.06% of the average daily volume for the last year. Volume was 77.93% of the last 10 day average.

• 4% of the SPX stocks closed with two day RSI above 90. 13% closed with RSI above 80. 8% closed with RSI below 20 and 4% closed with RSI below 10. Numbers below 20 RSI moderated significantly while numbers over RSI 80 did not change much.

• 59.6% of the SPX are above their five day moving average, 23.6% are above their 10 day average, and 17.8% are above their 20 day moving average.

• 5% of the SPX stocks closed below their most recent previous lows.

• 19% of the SPX closed above their most recent previous high.

• 82.2% of stocks closed in the top half of the day's range. (17.8% closed in bottom half.)

• 1.6 of stocks closed in the bottom 20% of the day's range. Powerful evidence that we closed at the highs for the session.

• 36.6% of stocks closed in the top 10% of the day's range.

• 3.2% of stocks closed within 2% of their 52 week high. 13.0% of stocks closed within 5% of their 52 week high.

• 27.4% of stocks closed within 50% of their 52 week low. 9.2% of stocks closed within 25% of their 52 week low.

• 39.8% of stocks closed within ¼% of their high for the day.

• 0.4% of stocks closed within ¼% of their low for the day.

• 88.8% of the SPX closed up from the previous close; 76.0% closed higher than the open.

• Sectors weaker than the SPX for the day: Consumer Staples, Consumer Discretionary, Utilities, and Technology.

• Sectors stronger than the SPX for the day: Basic Materials, Energy, Industrials, Financials, and Health Care.

• The $SOX index strength was stronger than the SPX today.

• The 2 Day RSI of the SPX is 61. The Dow RSI is 67, NASDAQ is 43 and Russell 52. The NASDAQ and Russell were laggers today; let’s see if they lead the way tomorrow.

• Over the last five sessions, the average session closed 48% of the range above the low. Closing at the highs today brought the five day average up significantly.

• Downward momentum has slowed significantly from the -4.81 last Tuesday to the -0.70 currently. But the ratio of SPX components giving a crossover sell signal compared to buy signals remains at 7.82 to 1; lower today but still high.

• 162 SPX components moved upward and 281 components downward during the after hours with 150 million shares traded.


Have a great Tuesday everyone.
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"Mel"

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