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Market Stage
(6/29/2009)
In our report from last Friday, we wrote that there were mixed chart readings. Likewise, today's session was mixed but ended in positive territory.
60-day charts with a 20-period SBV are showing flat SBV readings. By the end of today's session, the following SBV values were found: Plus 51% on the Nasdaq 100; plus 29% on S&P 500; plus 12% on the Dow. While we are seeing a solid accumulation of bullish volume on the Nasdaq 100, the build-up a bullish volume on the Dow is still quite small. Thus far, the Dow chart suggests a positive market; however, the flat SBV readings indicate the possibility of a coming trend change. We will continue to monitor the 60-day setting in order to determine at which point SBV oscillator readings start to decline; this might then suggest increasing odds of a correction
1.5-year charts with a 10-period SBV are showing advancing SBV readings, which is a bullish sign. The accumulation of bearish volume on this chart is the largest we have seen since March 2009; it may push the indexes higher. Overall, this chart is positive; however, the SBV readings are still at low negative levels, which suggests the market may still be weak at this time.
Market Status
(6/29/2009)
Market Performance:
| Last | Change | Volume | A/D Ratio | | S&P 500 | 927.10 |  | 8.73 (0.95%) |
| 3,194,197 | 2.78 | | NASDAQ 100 | 1,483.83 | | | 3.63 (0.25%) |
| 722,746 | 1.44 | | DJI | 8,529.68 | | | 97.26 (1.15%) |
| 848,919 | 29.00 |
Today, the NASDAQ 100 index rose 0.25%, the S&P 500 added 0.95%, and the Dow gained 1.15%.
Trading volume on the S&P 500 amounted to 3,194 million shares. This volume production is 33% below the index's average daily volume output over the past three months
NASDAQ 100 - 6/29/2009.
1-day Intraday, Modulated Volume.
Volume Analysis:
9:30 - 12:35: Over the first half hour of today's trading session, the market showed some weakness. During this time of decline, there was an accumulation of bearish volume (as evidenced by the predominantly red areas appearing on the SBV oscillator pane during this time). Using a five-day chart of the index, you can see a significant bearish volume surge peaking around 10:00. Note how the appearance of this bearish volume surge exhausted the selling power of the bears. The bulls then took charge and rallied to the market strongly until it peaked at 12:35. During this long upswing, the index output more and more bullish volume (as seen in green on the SBV oscillator pane). This steady buildup of bullish volume ultimately served to exhaust the power of the bulls, setting the stage for a downside reversal in the early afternoon.
12:35 - 16:00: We now saw a downside reversal following the steady accumulation of bullish volume discussed above. For the remainder of the session, the market retraced a good portion of its earlier, strong advance. Still, the index finished in the top third of its intraday range today, closing in the green for a third consecutive session.
Short Term (lasts a few hours to a few days): Today, the market fully confirmed our short-term outlook from last Friday, where we had stated that 'apart from the possibility of a brief intraday pullback, we...believe there still some potential for the major indexes to move modestly higher.' From a volume analysis perspective, today's action was somewhat divergent: Whereas the NASDAQ 100 showed a surplus of bearish volume (as discussed in the Volume Analysis section above), the S&P 500 recorded a surplus of bullish volume, as did the Dow. You can see this on five-day charts of the major indexes. Overall volume production has been trending lower over the past weeks; however, this is fairly typical for the summer season, with the current, holiday-shortened week being a typical example.
Our short-term outlook is still moderately positive; however, we now see an increased risk of sudden downside reversals, particularly if the market should first rise further. Given today's large bearish volume surge on the NASDAQ 100, we would not be surprised to see somewhat higher levels on that index, at least on an intraday-basis. However, as noted, we believe the current upswing may soon start to stall.
Analyst's Daily Tip:
Charts: Scroll history
At the very bottom of the chart, on the the both sides of the line where a date appears, you can find scrolling buttons that allow you to scroll back and forth in history. The history available goes back to June 1997 that includes 1-min intraday data.
Volume surges
Volume surges are evaluated according to their magnitude and duration. It is vital to appraise each particular volume surge before attempting to predict how it might impact future market direction. We categorize volume surges as short-, mid-, or long-term. We also classify intraday surges.
Financial Press Overview:
Bad karma today for Bernard Madoff who was sentenced to 150 years in prison for committing financial fraud. The press now speaks of him as a 'historic swindler', given that the trickery he committed was so extensive the sentencing judge said he needed to send a strong symbolic message to deter others. The 71-year old convicted Ponzi schemer Madoff in turn was quoted as saying that he lives 'in a tormented state now, knowing all the pain and suffering I've created.' Madoff's wife broke her long silence and issued a statement strongly denouncing her husband's actions. She was quoted as saying that 'Nothing I can say seems sufficient regarding the daily suffering that all those innocent people are enduring because of my husband. But if it matters to them at all, please know that not a day goes by when I don't ache over the stories that I have heard and read.'
News flow was very sparse today, giving investors little direction from an economic point of view. Still, all 10 economic sectors of the S&P 500 managed to close in the green today. Some market observers again attributed this to the end of the second quarter window dressing. Others note a positive effect of rising oil and commodity stocks on the broad market.
That next few days may bring more excitement as a number of economic news releases are scheduled. June consumer confidence data will be released on Tuesday; employment, manufacturing, as well as sales data are scheduled for release on Wednesday; on Thursday, we see the release of nonfarm payrolls data for June, initial jobless claims, as well as factory orders data for the month of May. On Friday, US markets will be closed in observance of Independence Day.
We are now trading in the summer doldrums where overall volume output is typically low. The current, holiday-shortened week is also normally a low-volume affair.
Key economic data for the week starting June 22nd, 2009. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Tuesday: |  | 9:00 AM S&P CASE SHILLER INDEX (May): n.a. / 140.0
S&P CASE SHILLER Y/Y (May): -18.8% / -18.7%
9:45 AM CHICAGO PMI (June): 38.8 / 34.9
10:00 AM CONF. BOARD CONSUMER CONFIDENCE (Jun):55.1 / 54.9 |
| Wednesday: | | NEW VEHICLE SALES (Jun): 9.8M / 9.9M
8:15 AM ADP EMPLOYMENT CHANGE (Jun): -372K / -532K
10:00 AM ISM - MANUFACTURING (Jun): 44.0 / 42.8
CONSTRUCTION SPENDING M/M (May): -0.5% / 0.8%
PENDING HOME SALES M/M (May): 1.1% / 6.7% |
| Thursday: | | 8:30 AM NON-FARM PAYROLLS (Jun): -375K / -345K
UNEMPLOYMENT RATE (Jun): 9.6% / 9.4%
MANUFACTURING PAYROLLS (Jun): -150K/ -156K
AVERAGE HOURLY EARNINGS M/M (Jun): 0.1% / 0.1%
CONTINUING CLAIMS Jun-20: n.a. / 6738K
INITIAL CLAIMS Jun-27 (H): 610K / 627K
10:00 AM FACTORY ORDERS M/M (May): 0.4% / 0.7% |
| Friday: | | Markets Closed |
Disclaimer: Individual
traders are responsible for making their own trades based on
our Market Outlook. |
