Pre-Fed Market Snapshot

The Fed announcement is just hours away and the street seems to have its heart set on a 50 basis point cut, although personally I think it will be 25, if anything, given last week's panic-induced cut of 75 basis points.

If the cut is 25 points or nothing, then expect the homo-hammer of death to visit a stock portfolio near you.

But hey, I'm just a third tier blogger so what do I know? Same as everyone else...nada.

Before the Fed does the interest-rate tango tomorrow, though, I wanted to update the new highs and lows chart, as well as the percentage of stocks trading above their SMA(200), to find out where we are, because we'll be somewhere else tomorrow afternoon.

New 20-day lows have flat lined the last two days in the low 40s, (42 & 40), while new 20-day highs have dropped over the last three days from 100, to 89, to 48 today.

Raw Data

As for the 10-day moving averages, new 20-day lows peaked on January 24th at 564 and now sit at 436, while new 20-day highs have been stuck in the high 50s and low 60s for nearly two weeks, finishing today at 59.

SMA(10)

Finally, the percentage of stocks trading above their SMA(200) currently sits at 23 percent after hitting a low of 18 percent on January 22.

Percent Trading Above SMA(200)

In general, the market is stabilizing quite well and were it not for Wednesday's Fed announcement, this would be shaping up nicely as an interim bottom with upside potential. But, the risk of Fed disappointment is high, so I'm staying in cash until after the announcement.

Stocks Trading Above SMA(200)

The percentage of stocks above their SMA(200) rose to 20 percent today, up from 18 percent yesterday. Is the bear market bottom in or is this just a blip in a longer down trend?

20 Day Highs & Lows

Today's opening gap down and subsequent sell off spiked new 20-day lows up to 1,180 from yesterday's 739, while the afternoon's rally increased 20-day highs to 28 from yesterday's 19.

While everyone has been waiting for a massive, panic-driven capitulation-type sell off, which has not materialized, I wonder if today's spike in new lows, followed by the impressive rally, represents the long-awaited moment of capitulation.

Raw Data

SMA(10)

Stocks Trading Above SMA(200)

The percentage of stocks that closed above their SMA(200) dropped to 18 percent today, down from 20 percent on Friday.

20 Day Highs & Lows

Quite the interesting day!

I for one was very surprised at the market's ability to rally from the morning's gap down, although Apple's after hours meltdown might undo some of today's strength.

Courtesy of the morning gap down, new 20-day lows hit 739, up 105 from Friday, while new 20-day highs dropped to 19, down 16 from Friday. The 10-day average for new lows is at 514, while the average of new highs is now 58.

Raw Data

SMA(10)

Close Below SMA(200)

In a post today, Dr. Steenbarger shared some research indicating that bear market bottoms are not reached until only 20 percent or fewer of NYSE stocks are trading above their SMA(200). The 20 percent level was breeched on Thursday.

Out of curiosity, I put together a StockFetcher scan to find out how many stocks were trading above and below their SMA(200) without regard to a specific stock exchange.

For my purposes, I limited the stock universe to those issues with a price above $5 and average daily trading volume of 100,000 shares, of which there are 3,357.

What I found is that after today's close, only 686 stocks, or 20 percent, are trading above their SMA(200).

The chart below shows a 10-day moving average of the number of stocks closing above and below the SMA(200). The chart begins in October and ends with today's close.


UPDATE: Here is a chart showing the percentage of stocks closing above their SMA(200) beginning October 1, 2007.

20 Day Highs & Lows

New 20-day lows added another 70 to their ranks today with a total of 634, while new 20-day highs dropped 14 to 35. The 10-day average for new lows now stands at 520, while the new high average is at 60.

Anyone see a bounce? Has to be one around here somewhere!

Note that the market did rally a bit in November once the new highs average dipped below 50. Granted, one month does not a reliable indicator make, but I'll be watching to see if a dip below the 50 level marks a rebound.

Raw Data

SMA(10)

Day Trades: QLD & NQ

Trade 1: QLD

Bought 200 shares @ $78.85
Sold 200 shares @ $79.45

Per share profit of .60 cents or $120

Time in trade: 5 minutes, 22 seconds

After the morning's gap up, the Nasdaq and Nasdaq 100 bounced around their respective pivot points for several minutes before decisively breaking to the upside on strong buying at 10 a.m.

I went long 200 shares and then sold at the top of the 10 a.m. bar.

Trade 2: NQ

Sold one contract @ 1855.50
Bought one contract @ 1843

Gain of 12.5 points x $20 per point = $250 profit

Time in trade: 10 minutes, 42 seconds

I went short at the top of the 11:45 a.m. bar as the Naz slid below the S1-Pivot midpoint (white line), which told me the Naz was going straight to the S1 pivot.

Today's Total Profit: $370

Another View

Here is a MACD histogram view of new 20 day highs and lows.

No matter how you look at them, internal market dynamics are ugly!

20 Day Highs & Lows

Wow. Just wow. What a craptacular day!

Ouch.

Nuf said.

New 20 day lows hit 564 today, up 99 from yesterday, thus boosting the SMA(10) up to 497. New 20 day highs rose to 49, up 15 from yesterday, but the SMA(10) dropped to 68.

Raw Data

SMA(10)

20 Day Highs & Lows

New lows jumped to 465 from 139 yesterday, while new highs dropped to 34 from yesterday's 86. The SMA(10) for new lows is at 478 and the new highs average is 73.

Raw Data

SMA(10)

Day Trades: NQ & QID

Trade 1: NQ

Bought 1 contract @ 1889.50
Sold 1 contract @ 1896.25

Gain of 6.75 points x $20 per point = $135 profit

Time in trade: 4 minutes, 40 seconds

Bought the opening gap, which stopped at the S2 pivot. I was a bit jumpy this morning, so I took profits after the first significant move up. Could have made significantly more on this trade, but I needed a win.

Trade 2: QID

Bough 100 shares @ $46.20
Sold 100 shares @ $47.49

Per share profit of $1.29 x 100 shares = $129 profit

Time in trade: 53 minutes

Soon after exiting my first trade, the market started to reverse, so I went long QID at 9:56 a.m. Shorting is hard for me, I'm naturally wired to go long the market, but if I'm going to make money day trading, then I need to get comfortable with shorting the market, so I forced myself to take this trade.

Day Trade 3: NQ

Sold 1 contract @ 1877.50
Bought 1 contract @ 1867.00

Gain of 10.5 points x $20 per point = $210 profit

Time in trade: 19 minutes

I saw this trade setting up between 10:15 and 10:30 a.m. as the market bumped its head against the bottom of the S2 pivot point. On the five minute chart, price was returning to the EMA(8) and then reversing, so I went short and used the S3 pivot point as the profit target.

I sold just above the target for a nice profit.

The S3 pivot with an RSI(2) of 0.02 was a great opportunity to catch a bounce and possible reversal, but I didn't want to press it too much today so I took a pass on the trade.

Today's profit: $474

20 Day Highs & Lows

New lows dropped from 218 to 139 while new highs increased from 74 to 86. The number of new highs hasn't been at or above 100 since January 4 when 117 new 20-day highs were recorded.

Raw Data
SMA(10)

Swing Trade: UNG

Sold 100 shares @ $39.75

Per share profit of $4.61.

Looks like UNG may be slowing down so I sold for a 13 percent profit over about two weeks.

Write Down Per Employee

A classic from DealBreaker:

On the bright side, Citi has given us a datapoint in the "write down per employee" value that reigns on the street (1,200,000 per employee, apparently). Now you can calculate J.P. Morgan and UBS layoffs as easy as a few HP-12C keypresses. That, my friends, is news you can use.

20 Day Highs & Lows

No significant change in the number of new highs and lows today. New lows bumped up 18 to 218, while new highs dropped from 82 yesterday to 74 today.

The market was surprisingly strong today given Citibank's financial woes. According to a late report at MarketWatch, Citi will write down about $20 billion, receive a $10 billion cash infusion and substantially cut the dividend.

Today, the market shrugged off the news. Tomorrow, let's see if it can shrug off the reality.

Raw Data

SMA(10)

Tracking New 20-Day Highs and Lows

I was putzing around with my 20-day high and low scans over at StockFetcher tonight, when I decided to plug the number of stocks hitting those benchmarks into a spreadsheet.

Not sure how useful this exercise will be, but using a spreadsheet to track new 20-day highs and lows may help me develop a better feel for the overall market. Or it could be a huge waste of time. Who knows.

And yes, I know there are advance/decline line charts already available for this type of study, but since I'm already running the scans, it only takes a few minutes to plug the raw numbers into a spreadsheet. Guess I have too much time on my hands!

The following chart shows the 10-day SMA for stocks making a new 20-day high and low. I started with the highs and lows on November 1, 2007, which is an arbitrary date used for no other purpose than getting enough data together to create stable moving averages.

My scans include those stocks priced between $10 and $250 with an average daily trading volume of at least 500,000 shares. According to StockFetcher, there are 1,499 stocks that meet these price and volume criteria as of Friday's market close.

If you find this chart useful, please let me know. If you have ideas for making it useful, clue me in and maybe we can develop something of value for the trading community. Or, feel free to ignore this as nothing more than idle spreadsheet doodling.


Here is a chart with the daily data plotted if you are interested in seeing the day-to-day swings without the smoothing effect of moving averages.

Can't Make This Stuff Up....

My state made some history today when the U.S. Supreme Court heard oral arguments on Indiana's voter ID law. Legal minds can head over to Volokh Conspiracy to debate the pros and cons of the law.

However, for a more interesting twist, head over to The Evening Star, which is reporting the following:

On the eve of a hearing before the U.S. Supreme Court, the Indiana Voter ID law has become a story with a twist: One of the individuals used by opponents to the law as an example of how the law hurts older Hoosiers is registered to vote in two states.

Faye Buis-Ewing, 72, who has been telling the media she is a 50-year resident of Indiana, at one point in the past few years also claimed two states as her primary residence and received a homestead exemption on her property taxes in both states.

Monday night from her Florida home, Ewing said she and her husband Kenneth “winter in Florida and summer in Indiana.” She admitted to registering to vote in both states, but stressed that she¹s never voted in Florida. She also has a Florida driver’s license, but when she tried to use it as her photo ID in the Indiana elections in November 2006, poll workers wouldn’t accept it.

Subsequently, Ewing became a sort-of poster child for the opposition when the Indiana League of Women Voters (ILWV) told media that the problems Ewing had voting that day shows why the high court should strike it down.

But Indiana Republican Secretary of State Todd Rokita said Monday that Ewing’s tale illustrates exactly why Indiana needs the law. “This shows that the Indiana ID law worked here, which also calls into question why the critics are so vehemently against this law, especially with persons like this, who may not have a legal right to vote in this election,” Rokita said.

More after the jump.

The phrase "hoisted by their own petard" comes to mind.

Stocks at 20-Day Low

The following 409 stocks made a new 20-day low on Friday. Each is priced between $10 and $250 with average daily trading volume of at least 500,000 shares.

ABFS ACH ACS ADI ADP AEO AFG AIV AJG ALB ALK ALV AM AMAT AMB AMGN AMT AN ANF ANN AOC APH ASML AVB AXL AXP AXS AZO BAC BBBY BBD BBT BC BCSI BDC BDN BEE BER BIG BJ BLL BRE BRKS BSC BVF BWA BWS BX BXP BYD CA CAG CAKE CAL CAR CAT CBL CBRL CBST CCK CCL CECO CELL CIEN CINF CKR CLX CMC CMCSA CMCSK CMGI CMS CNI CNO CNP CNW CPA CPT CQB CRI CSC CSG CSGS CTB CVC CVG CVS CYMI D DAL DBRN DDR DDS DFS DHI DIS DISCA DLTR DOV DOW DPL DPZ DRH DRI DSL DST DSW DTE DTV DUG DVY EAT ED EDS EFII EFX EK ELX EMC EMN ENDP EV EWBC EXP EXPD EYE FAST FCH FCS FDO FFIV FHN FIC FIS FL FNF FTO FUL GAS GBM GES GGP GIS GM GNTX GOL GPC GPM GRM GRMN GT GWW GXP GYI GYMB HANS HAR HAS HBC HBI HCC HIG HLF HNZ HOT HPC HPQ HSP HTLD HTZ HUBG IAR IBM ICF ICON IDTI IFF IFN INFN INTC IRM ISIS ITB ITMN ITU IVGN IWN IYR IYT JAVA JBHT JBL JBX JCG JCP JDSU JEF JNJ JNS JNY JPM JWN K KBE KBH KFT KG KLAC KNX KNXA KRE KSS KSU LBTYA LCAPA LCC LEA LEE LEG LINTA LIZ LMT LNC LNT LOOP LPNT LPX LRCX LRY LSTR LTD LUK LUV LVS LXP M MAC MAS MAT MCD MCO MDC MER MGA MGI MGM MHP MI MIL MIR MLM MNI MNST MPEL MRVL MTG MTH MVSN MW NAL NCC NCT NCX NILE NT NUAN NUE NWA NWL NWS NWS.A O OC ODP OLN OMX OSIP OSK OVTI PAG PBY PETM PGN PHH PLCE PLD PNK PNM PNRA PNX POOL PPC PPG PPS PSS PSUN PSYS PTR PVH QCOM QLGC RCII RECN RGC RHD RHI RJF RKH RL ROH ROK ROST RSG RSH RSP RTH RYAAY SBIB SBUX SCG SEIC SFD SFI SHFL SHO SHPGY SKS SKX SLE SMH SNDK SONC SOV SPG SPLS STI STM STSA STX SUSQ SVU SWIR SWK SWY TBI TCB TCO TD TIF TMK TNB TOL TPX TRAK TRMB TSFG TUP TV TXN TXRH TXT TYC UAUA UBB UCBH UDR USB UST VAL VFC VLCM VMC VMED VRTX WAB WAG WB WBS WDC WEC WEN WERN WFC WFMI WGO WIN WMI WMT WNR WR WRI WRNC WSM WWY WYN WYNN XHB XLF XLK XLNX XLP XLY XRT XRX YRCW ZION ZLC ZRAN ZUMZ

Unemployment As Leading Indicator

Northwestern Law Professor Jim Lindgren examined historical unemployment data to determine its usefulness as a leading indicator of recessions.

Here is what he found:

Looking at the 10 recessions since 1948, this .6% indicator coincided with the start of the recession in one case (1980), with the 3d month in two cases (1970 & 1990), and with the 4th month of the recession in four cases (1953, 1981, 1974, & 2001). In three of the ten cases, the indicator preceded the recession: in 1957 the indicator month preceded the recession by 2 months, in 1959 the indicator month preceded the recession by 6 months, and in 1948 (the first year of the Labor data) the indicator month preceded the recession by 8 months.

More after the jump.

HOLP and LOHP

One of my favorite trading books is John Carter's Mastering the Trade, which has enough ideas to keep any day or swing trader happily occupied and potentially profitable.

Over the next several months, I am going to be exploring Carter's LOHP and HOLP swing trading strategies, which are price-based rather than indicator-based techniques.

In simple terms, LOHP entails shorting stocks or markets after the price hits a 20-day high and then on a subsequent day closes below the low of the high bar. HOLP entails going long after price hits a 20-day low and then on a subsequent day closes above the high of the low bar.

DE is a good example of LOHP. On January 3, DE hit a 20-day high and then on January 4, the price closed below the low set on January 3.


DUG is a good example of HOLP. On January 3, price hit a new 20-day low, then on January 4, the price closed above the high set on January 3.


The goal of the strategy is to catch reversals as they happen, rather than waiting for an indicator to give a signal after the move is well underway.

Not sure when I'll start pulling the trigger on trades, but I will keep you posted on my experiences with this technique as I implement it.

Oversold A Bit?

RSI(2) less than 2 is a good indicator of an oversold market or stock, and my StockFetcher filter found 524 such stocks or ETFs following Friday's sell off.

I don't remember the last time this filter produced such a large number of oversold candidates, but I'm sure such numbers will become somewhat routine over the next few weeks and months if the economy is truly sliding into recession.

Given the large number of oversold stocks, though, I would expect a bounce on anything remotely resembling good news. I wouldn't be surprised at all if the market stages a modest rally leading up to the Fed meeting at the end of January, although even a 50 basis point cut is probably too little too late to save the economy and financial markets from further pain.

Here are the oversold issues alphabetical by symbol. Each has a price between $10 and $250 with average daily volume of at least 500,000 shares:

AAPL ABB ABD ABFS ABG ABH ACAS ACLI ACN ACXM ADP ADRE ADSK AEIS AF AGN AHG AIN AIV AJG ALEX ALJ ALK ALKS AMAT AMT ANF ANR ANSS AOB AOC APKT ARW ASBC ASML ATHR AVCT AVID AVT AW AXL AYR BARE BBD BBT BBY BC BDC BEBE BEE BEN BGG BHE BJ BKC BKD BLC BLL BMY BNI BPFH BRKS BSC BT BWA BWS BX BYD CA CACB CAI CAKE CAT CATY CBE CBG CBRL CCK CCL CDNS CELL CHU CIEN CINF CKR CLWR CLX CMA CMC CMCSA CMCSK CMG CMGI CMVT CNP CNS COGT COH COLM COST CPB CQB CRBC CRI CRS CSC CSGS CSX CTB CTV CTX CVG CYMI CZN DAI DBD DBRN DCI DDM DDS DDUP DECK DELL DF DFS DHI DHT DIOD DIS DLB DLTR DLX DOW DRE DSL DTV DVY DWA ECL EK ELY EMC EME EMN ENI ENR EQR ERTS ETH ETM EV EWBC EXPE FAF FAST FCH FCS FDRY FFIV FIC FII FLO FMBI FMD FMER FNB FNF FO FORM FOSL FR FTBK FUL FXI GAS GBCI GBM GES GET GGG GLBC GLW GM GME GNA GNTX GOL GPC GPI GPM GPRO GRA GRMN GSIC GT GTI GVA GWW GXP HAIN HANS HAR HAS HBAN HBC HBI HES HIBB HIG HOG HPC HPQ HSP HTCH HUBG HXM IACI IAR IBKR ICON IDTI IFF IGT IJR IKN IMCL IN INFY ININ INTC IO IPCR IR IRC IRF IT ITW IVAC IVE IVV IWB IWD IWF IWM IWN IWO IWP IWS IWV IYR IYT IYW IYZ JAVA JBHT JBX JCG JDSU JEF JNY JRJC KBE KEX KEY KFT KFY KLAC KMT KRE KSU KTC LBTYA LBTYK LCAV LCC LEA LEAP LFC LFG LH LINTA LLTC LNCR LNDC LOW LRCX LSTR LTM LULU LUV LVS LXK MAC MAN MAS MAT MCHP MCO MDC MDRX MDTL MDU MDY MFC MFE MGA MGI MGM MHK MHP MI MIL MIR MKSI MLHR MLM MMM MNI MNST MOLX MOT MRK MRVL MS MTB MTH MTW MVSN MW MWV NAL NCC NCR NCT NFLX NILE NITE NKE NOVN NSC NT NTGR NTY NUAN NUE NVDA NVLS NWL NWS O OEF OMTR OMX ORLY OSK OVTI OZM PAG PAY PBI PBY PCBC PCL PCS PEI PER PETM PFS PGJ PGNX PHH PII PKI PLAB PLCE PLXS PMC PMI PNC PNK PNR PNW POOL PPC PPG PSUN PVH PWR QCOM QLGC R RCL RDN RECN RF RHD RIMM RJF RKH RL RMBS ROH ROP RRGB RS RSG RSH RSP RTH RYL RYN S SAP SEE SFD SFI SFLY SGMS SHFL SHW SI SIVB SKT SLAB SLE SMG SMH SMTC SNDK SPG SPY SRP SRZ SSI SSO STAR STJ STM STZ SUG SUSQ SWIR SWK SYNT TAM TASR TBI TBL TCB TCO TECD TEF TEX THQI TIE TIF TIN TKR TLEO TOL TPX TRAD TRMB TRW TSFG TSN TSO TTWO TUP TV TWTC TXI TXN TYC UB UBS UNP USB UWM VAL VECO VFC VLO VLY VMED VOD VOLVY VPRT VRSN VSCN VSEA VSH VTI WAG WB WBS WDC WEN WERN WFC WFMI WFR WFSL WGO WL WLK WLT WMI WNR WOR WR WRNC WSM WWY WYN XLF XLNX XLY XRT XRX YRCW ZGEN ZUMZ ZZ