|US Stock Service
17 September 2014 By John Gray
- Note John Gray is away for the remainder of the week so commentary will be lighter than normal. Regular service to resume on Monday.
- Stocks opened weak Tuesday but then recovered over the remainder of the session, with the S&P 500 gaining 0.7%. The DOW was up 0.6% and that was enough to recoup the past six weak sessions, an impressive comeback. The NASDAQ 100 was the strongest area, gaining 0.9%.
- Semiconductors were the standout performer on the session and below we highlight the index and also the breadth chart for the industry.
- Volume on the NYSE was higher by 13% compared to Monday's session and that is nice to see given the weak technicals of the past few weeks.
- The FOMC announcement this afternoon at 2pm is the big news event of the day and will likely cause volatility on its release; little should be expected until then.
- Follow-through is now imperative. Should yesterday's rally be fully retraced then it would suggest the correction was not over, with equities embarking on another leg lower.
- Large Caps 60% invested, Mid Caps 40% and Small Caps 25%.
- Bear Portfolio is 40% short.
|Short Term||Medium Term|
Short-term breadth indicators turned up yesterday, The short-term-composite remains in a downtrend but is effectively oversold and at trendline support.
No change to these indicators as yet. They remain weak. One strong up day is not enough, follow-through is necessary.
|Close||Volume||1-Day Change||P&F Signals||Support|
|Signal||Trend||Start Date||Trend Reversal|
|DJ Industrials||17,132||71.7m||+100.83||+0.6%||Bull||Up||3 Apr 2014||16,300.00||16312.7/16937.7|
|S&P 500 Index||1,998.98||434.2m||+14.85||+0.7%||Bull||Down||22 Apr 2014||1,900.00||1944.69/1904.78|
|NASDAQ Comp.||4,552.76||465.7m||+33.86||+0.7%||Bull||Down||18 Aug 2014||4,320.00||4284.53|
|NASDAQ 100||4,067.27||170.6m||+37.39||+0.9%||Bull||Down||13 Aug 2014||3,840.00||3751.69/3837.16|
|S&P Midcap 400||1,423.84||94.5m||+7.97||+0.6%||Bull||Down||14 Aug 2014||1,370.00|
|Russell 2000 Index||1,150.97||242.6m||+4.45||+0.4%||Bull||Down||15 Aug 2014||1,125.00|
|Closing prices through Tuesday September 16, 2014|
Chart Activity - Broad Index Moves
All indexes showed gains yesterday, largely erasing the losses from Monday. The S&P 500 has bounced off its 20-day exponential moving average, potentially similar to the reassertions seen May through to July. The recovery by the 14-day RSI off neutral is encouraging and the slack is there to allow the index to push to new all-time highs.
Chart Activity - Sector Indexes
The PHLX Semiconductor Index (SOX) was one of the stronger areas yesterday, rising by 1.7%. That was enough to reverse the chart up and increase the year-to-date gain to an impressive 20.2%. The uptrend is attempting to resume.
Chart Activity - Gold & Crude Oil
Crude Oil had a rare positive session yesterday, adding $1.96. That reversed the chart up from the $90 support shelf. Potential for a range trade here, returning to the $107 region. The strength in oil buoyed the energy sector.
|% 10 Week||Close||1-Day Change||P&F Trends|
|NYSE||44.14||+6.10||Bull||Correction||4 Sep 2014|
|Nasdaq Composite||44.72||+0.46||Bull||Correction||9 Sep 2014|
|S&P 500||61.57||+9.05||Bull||Confirmed||16 Sep 2014|
|Nasdaq 100||63.64||+9.09||Bear||Correction||16 Sep 2014|
|Option Stocks||51.48||+5.03||Bull||Correction||9 Sep 2014|
|% 30 Week||Close||1-Day Change||P&F Trends|
|NYSE||54.91||+3.92||Bear||Confirmed||9 Sep 2014|
|Nasdaq Composite||50.46||+0.92||Bull||Correction||15 Sep 2014|
|S&P 500||74.25||+5.64||Bull||Top||9 Sep 2014|
|Nasdaq 100||75.76||+2.02||Bull||Top||9 Sep 2014|
|Option Stocks||59.66||+2.86||Bear||Confirmed||12 Sep 2014|
|Bullish %||Close||1-Day Change||P&F Trends|
|NYSE||59.57||-0.24||Bear||Confirmed||1 Aug 2014|
|Nasdaq Composite||53.98||-0.20||Bear||Confirmed||1 Aug 2014|
|S&P 500||69.22||-0.40||Bear||Alert||6 Aug 2014|
|Nasdaq 100||70.71||-1.01||Bull||Confirmed||22 Aug 2014|
|Option Stocks||61.9||-0.49||Bear||Alert||31 Jul 2014|
The % 10-week moving average is short term, % 30-week moving average intermediate, and the bullish %s are longer term.
The S&P 500 and NASDAQ 100 10-week moving averages both turned up with yesterday's rally. They have the potential to return towards the 80% level should equities now follow-through on yesterday's move.
There was no movement on the 30-week moving averages yesterday, although all showed positive value gains. A couple more sessions like that will reverse some of these indicators up and that would be encouraging.
All bullish % charts were weak again yesterday. These charts are typically slow to move.
Short-term the situation is improving, if that can continue over the rest of the week, medium-term indicators will also improve. A market recovery is being attempted but overall we need to see where we are at the end of the week before making any bold predictions for the weeks ahead.
|Short term Composite Indicator||15.5||+1.70||Falling|
|NYSE High-Low Index||60.58||-5.53||Falling|
|Nasdaq High-Low Index||53.25||-5.47||Falling|
|NYSE On Balance Volume (by DJIA)||280,719||+648.00||Falling|
|NYSE On Balance Volume (by breadth)||541,150||+648.00||Falling|
|Nasdaq on Balance Volume by Composite||502.22||+1.96||Rising|
|Nasdaq on Balance Volume by Breadth||41.86||+1.96||Falling|
|NYSE Cumulative Advance/Decline||407,447||+909.00||Falling|
|NYSE Money Flow Index||45,616.1||-1178.43||Falling|
- The short-term-composite had a value gain of 1.7% yesterday, pushing the indicator up to 15.5%. 20% is needed to reverse the chart up and that could happen this week should strength continue. As it stands we would not chase the upside aggressively just yet.
- The NYSE high-low index dropped three boxes yesterday to test the 60% level. The NASDAQ high-low dropped the same number of boxes to near the neutral 50% level.
- Other indicators were quiet with no noteworthy action.
Copyright 2014 by Stockcube Research Ltd.