Weekend Update- 8/4/2012

Friday was session 1 to close above the 5 DMA, session 7 to close above the 10 DMA, session 7 to close above the 20 DMA, and session 16 to close above the 50 DMA. This was also session 5 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 24.13 points above the 10 DMA.

The SPX 5 DMA is 1379.19, 10 DMA is 1366.86, 20 DMA is 1361.24, 50 DMA is 1342.45, 100 DMA is 1360.2, and 200 DMA is 1322.33.

On Friday the SPX traded above the opening range but did not trade below the opening range. 87.6% of the SPX closed up from the previous close; 68.6% closed higher than the open. During Friday’s session the SPX gained 25.54 points from open to close. The SPX intraday trading range was 10.87 points. The 5-Day average intraday trading range is 11.74 points, the 10-Day average is 14.27 points, and the 20-Day average is 13.68 points. The trading range is contracting. The 5-Day SPX gain is 0.36%, the 10-Day gain is 2.08%, and the 15-Day gain is 2.52%.
The SPX gained 5.99 points during the week (.43%). The range for the week was 39.51, 2.85%. The four week RSI of the four indices (SPX, Dow, NASDAQ, and Russell 2000) is 69. Pullbacks often occur as this RSI reaches 80 and bounces near 20.

Total tick for the week was 86,000. On the NYSE, the advance/decline line decreased during the week by -102 and the 10 day average of Net Advancing decreased by -75. There were 904 New Highs and 168 New Lows.

For the week, Russell 2000 advancing issues (870) totaled 19,366,765 shares traded (22,261 average per stock) and declining issues (1,071) totaled 34,539,194 shares traded (32,249 average per stock.) 958 components are on a weekly uptrend (128 new uptrends this week) and 1,018 components are on a weekly downtrend (174 new downtrends this week.) There were 140 New Highs and 114 New Lows.

For the week, SPX advancing issues (249) totaled 73,216,812 shares traded (294,043 average per stock) and declining issues (244) totaled 55,733,886 shares traded (228,418 average per stock.) 270 components are on a weekly uptrend (31 new uptrends this week) and 227 components are on a weekly downtrend (28 new downtrends this week.) There were 79 New Highs and 17 New Lows.

For the week, NASDAQ Composite Index advancing issues (1,928) totaled 37,816,352 shares traded (19,614 average per stock) and declining issues (568) totaled 47,361,908 shares traded (83,384 average per stock.) There were 70 New Highs and 50 New Lows.

Our historical matrix tells us that when the market gaps up large on a Friday morning that the following first session of the week is typically a down day about two times out of three. While those odds are not as good as we’d like, they are pretty fair odds when considering that the average down percentage far exceeds the up percentage on the one third of following up sessions. So gains on the short-side have historically exceeded losses caused by further upside. For us, it is all about the risk/rewards and the odds. No certainties, ever, in this crazy game but if you consistently have odds in your favor you will win more than you lose. We just look for an edge, play the odds, and take our chances.

 

Week of August 06 – August 10 Overview

Date/Time Release/Consensus
08/07/12 15:00 Consumer Credit/$10.0B
08/08/12 7:00 MBA Mortgage Index/NA
08/08/12 8:30 Productivity-Prel/0.015
08/08/12 8:30 Unit Labor Costs -Prel/0.004
08/08/12 10:30 Crude Inventories/NA
08/09/12 8:30 Initial Claims/375k
08/09/12 8:30 Continuing Claims/3290K
08/09/12 8:30 Trade Balance/-$47.5B
08/09/12 10:00 Wholesale Inventories/0.003
08/10/12 8:30 Export Prices ex-ag./NA
08/10/12 8:30 Import Prices ex-oil/NA
08/10/12 14:00 Treasury Budget/NA

 
Monday, August 6

Economics
No major U.S. economic reports
11:00 Fed to purchase $4.5b-$5.5b notes in 8 to 10-year range
11:30 Treasury selling $32b 3-month bills, $28b 6-month bills
05:00 JPY Leading Index
06:30 EUR Eurozone Sentinx Investor Confidence
22:45 NZD Average Hourly Earnings
10:00 Netherlands to sell EU4b in bills
14:00 France to sell bills

Earnings
Before:
HCA Holdings (HCA) EPS 78c
After:
Chesapeake Energy (CHK) EPS 7c
Caesars (CZR) EPS -96c
CF Industries (CF) EPS $8.71

Non farm payrolls rose 163,000, better than the expected 100,000. The ISM Services index came in at 52.6, better than the anticipated 52.0. On Monday there are no important releases.

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