Gary Townsend's Instablog Gary Townsend - Since 2007, a founding partner, CEO and Portfolio Manager of Hill-Townsend Capital LLC, a long/short equity financial sector fund based in Chevy Chase, Maryland. Mr. Townsend has 30 years banking, regulatory, and investment experience. He started his business career in 1978, as a consultant and advisor on anti-dumping trade issues primarily to foreign manufacturers based in Asia. In 1982, he began a 15 year career as a U.S. government banking regulator. In 1990,he was recruited to build out a new, independent federal regulatory agency, the Federal Housing Finance Board, regulator of the Federal Home Loan Bank System. As Chief Examiner and Director of Supervision and Examination, Mr. Townsend organized and implemented supervisory examinations of the 12 FHLBanks and Office of Finance with particular emphasis on their funding activities, use of derivatives, safety and soundness and regulatory compliance. In 1998, Townsend joined FBR Capital Markets as a sell-side analyst, applying his banking and regulatory experience to the investment analysis of commercial banks of all market capitalizations. In 2007, Forbes.com named him as "Best Brokerage Analyst" for commercial banks; also Starmine ranked him the #2 earnings estimator (out of 109 analysts) and in the top 10% of analysts for stock picking and earnings accuracy. Townsend left FBR in November 2007 to launch Hill-Townsend Capital LLC. He holds a CPA designation (1999) and a MBA from George Washington University (1979). Gary Townsend http://seekingalpha.com/author/gary-townsend/instablog U.S. Futures Ease Ahead Of FOMC Report, News Conference http://seekingalpha.com/instablog/179003-gary-townsend/1966432-u-s-futures-ease-ahead-of-fomc-report-news-conference?source=feed 1966432 This morning. On June 12, the U.S. equity market trend switched to correction, ending the uptrend that began on April 29th. Tuesday, for a 2nd consecutive session, major U.S. equity indexes closed higher, though on lower, below average volume. All major indexes recaptured their respective 20-day moving averages. Short-term SPX relative strength indicators (RSI) rose, but remained in a neutral range.

Today, in Asia, equity markets closed mixed, with strength in Japan, but weakness in China. The Nikkei 225 (NKY) rose +1.83% and managed its best close since June 4th. Tomorrow's NKY equity futures are -0.53% lower. In Europe, equity markets are modestly mixed, with somewhat greater strength in Frankfurt. Sovereign long-term interest rates are little changed. Commodities are mostly lower. Commentary focuses on this week's FOMC meeting, which commenced yesterday and concludes with a Bernanke press conference tomorrow afternoon.

U.S. Treasury 10-year yields are 2.1657%, compared to 2.1854% at the prior close. U.S. repo rates are 10 bps, up from 11 bps the prior day. Spanish and Italian 10-year debt yields are 4.55% and 4.30%, respectively, compared to 4.55% and 4.29%, the prior day. The U.S. dollar is mixed. U.S. options markets improved to neutral to bullish, from neutral the prior day. CBOE skew is in a neutral range.

The SPX closed at 1651.81, up +0.78% from 1639.04 the prior day and -0.94% below its May 17th record close. The index is up +4.40% since April 26th, when the prior corrective trend concluded, and +53.7% above the 1074.77 October 4, 2011, intraday low. This week, the SPX is up +1.54%. Last week, the SPX closed down -1.01%, compared to a gain of +0.78% the prior week. In June, the SPX is up +1.29%. In May, the index closed up +2.08%. In 2013, the SPX is up +15.8%. In 2012, the SPX closed up +16.0%. Next resistance is at 1657.41. First support is at 1642.99.

Wednesday, the BKX rose +0.81%, outperforming the SPX. This week, the BKX is up +1.58%. Last week, the BKX lost -2.31%, compared to a loss of -0.03% the prior week. In June, the BKX is down -0.80%, compared to a gain of +8.30% the prior month. This year, the BKX is up +19.2%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are higher, but near the bottom of middle of a 16431648 range. After a fair value adjustment of -0.29 points, SPX equity futures are at 1645.00, up +0.04 points. The SPX opens +0.72% and +2.15% above its respective 20- and 50-day moving averages, and +4.89%, and +9.89% above its respective 100- and 200-day moving averages.

Tuesday. On lower and below average volume, U.S. equity markets closed moderate gains. U.S. 10-year yields rose. The DJI rose +0.91%, followed by the Nasdaq, SPX, and NYSE composite, which rose +0.87%, +0.78%, and +0.66%, respectively. Market breadth was positive, with gainers 2.11:1 losing stocks. All SPX market segments closed at least +0.42% higher. Leaders were telecommunications, industrials, and consumer services, which rose at least +1.04%. Financials rose +0.64%. Laggards were oil and gas, basic materials, and consumer goods.

NYSE volume fell -4.86% to 646.03 million shares, from 679.04 million shares the prior day, 0.89x the 745.83 million shares 20-day moving average volume. The 10-year U.S. bond yield moved narrowly around 2.18 until late in the session, when bonds rallied.

Futures indicated a strong open. From its prior 1639.04 close, the SPX index opened above 1640 and rose through late afternoon to a 1654.19 intraday high. The index ended at 1651.81, -0.94% off its recent historical high. Market volatility fell. From its prior 16.80 close, the VIX moved narrowly through mid-afternoon, then fell to a 16.46 intraday low before ending at 16.61, down -1.13%. The all-time closing low was 11.26, set June 30, 1993.

On -23.3% lower volume, the DJ Transports (TRAN) rose +0.97%, compared to the DJI's +0.91% gain. The index opened slightly lower, but reversed higher by 10:00 and rose to an early 6,368.71 intraday high. The TRAN closed at 6,358.56, -2.91% below its 6,549.16 May 17th record close. The index closed +0.55% and +1.67% above its respective 20- and 50-day moving averages, and +3.57%, and +12.5% above its respective 100- and 200-day moving averages.

Technical factors improved. SPX relative strength (RSI) rose to 56.36, from 52.78 the prior day. The CBOE put/call skew rose +1.68% to 118.70, from 116.74 the prior day. U.S. Treasury bond prices fell, as the 10-year yield fell rose +0.37 bps to end at 2.1854%, from 2.18.17% the prior day.

This week, the SPX, DJI, Nasdaq, and NYSE composite are up +1.54%, +1.65%, +1.71%, and +1.47%, respectively. Last week, the SPX, DJI, Nasdaq, and NYSE composite closed -1.01%, -1.17%, -1.32%, and -0.98%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In June, the SPX, DJI, Nasdaq, and NYSE composite are up +1.29%, +1.34%, +0.76%, and +1.05%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +15.8%, +16.9%, +15.3%, +11.3%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX resistance is 1657. Immediate support is 1640 (20-day moving average), then 1633 (5-day moving average).

Distribution day count. The current corrective downtrend began on June 12th, following an uptrend that began on April 29th.

In Asia, equity markets closed mixed, with strength in Japan, but weakness in China. The Japanese Nikkei (NKY) closed up +1.83%, after a -0.20% loss the prior day. The Hang Seng (HSI) fell -1.13%, while the Shanghai composite (SHCOMP) fell -0.62%. Today's volumes are unavailable.

The NKY's relative strength index fell to 46.67, from 43.00 the prior day, in a neutral range and up from a low of 34.42 on June 13th, and down from an overbought 82.61 on May 22nd.

Commentary focused on this week's two-day FOMC meeting, and currency and sovereign bond rate volatility.

This week, the NKY is up +4.40%, the HSI is up +0.08%, and the SHCOMP is down -0.86%. Last week, the NKY closed down -1.48%, compared to a -6.51% loss the prior week. The HSI ended down -2.81%, compared to a loss of -3.65% the prior week. The SHCOMP closed off -2.21%, compared to a -3.90% loss the prior week. In June, the NKY is down -3.84%. The HSI is down -6.28%. The SHCOMP is down -6.83%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +27.4%. The HSI is down -7.37%. The SHCOMP is down -5.54%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 13,245.22, up from 13,007.28 the prior day. The index gapped higher to open above 13,230 and traded to an early 13,296.62 intraday high, but weakened in mid-session and traded as low as 13,107.65 moving into the session's final hour. The index rallied strongly into the close. The index ended -15.2% below its recent May 22nd 15,627.26 closing high, but up +56.7% above its 8,295.63 July 18, 2012 low. The index closed -2.52% and -4.11% below its respective 20- and 50-day moving averages, but +3.80% and +20.0% above its respective 100- and 200-day moving averages. All market segments closed at least +0.96%. Leaders were telecommunications, consumer services, and basic materials, which rose at least +1.93%. Financials added +1.56%. Laggards were oil and gas, consumer goods, and utilities.

In China, the HSI closed at 20,986.89, compared to 21,225.88 at the prior close. The index closed -11.9% below its January 30th 23,882.06 high, but +15.4% above its 18,185.59 June 4, 2012 low. The index opened below 21,200 and trended lower through the morning session to an early afternoon 20,896.22 intraday low. The index rallied through late afternoon back to 21,150 but eased again into the close, widening the day's loss. The index ended -5.10% and -5.91% below its respective 20- and 50-day moving averages. All market segments closed at least -0.47% lower. Leaders were technology, industrials, and consumer services, which lost at least -0.67%. Financials lost -1.20%. Laggards were oil and gas, telecommunications, and basic materials, which lost at least -1.24%.

In Shanghai, the SHCOMP closed at 2,143.45, compared to 2,159.29 at the prior close. The index opened at the 2,150.82 intraday high, fell to a late morning 2,115.90 intraday low, and rallied through the close to narrow the day's loss. The index closed -12.9% below its 2,434.48 February 5th high, but up +9.37% from its December 3rd 1,959.77 low. The SHCOMP closed -5.23% and -4.13% below its respective 20- and 50-day moving averages. Most market segments closed lower. Leaders were consumer goods, which rose +0.25%, and basic materials and industrials, which fell at least -0.30%. Financials fell -0.97%. Laggards were oil and gas, technology, and utilities, which fell at least -1.08%.

In Europe, the major equity indexes are moderately lower. The Euro Stoxx50, CAC 40, FTSE 100, and DAX, are down -0.53%, -0.53%, -0.67%, and -0.27%, respectively. The Spanish IBEX 35 is down -0.80%. The Italian FTSE MIB is down -0.32%. From its 2,700.93 prior day's close, the Euro Stoxx50 opened slightly higher, fell to an early 2,678.03 intraday low, but rallied higher to a late morning 2,709.41 intraday high. The index reversed lower into the afternoon session, and currently trades at 2,687.13. All market segments are at least -0.06% lower. Leaders are technology, consumer goods, and basic materials. Laggards are financials, oil and gas, and health care, which are down at least -0.69%.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.14%, +0.78%, +1.21%, and +1.40%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -2.08%, -1.62%, -1.74%, and -1.54%, respectively. The prior week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.60%, -3.43%, -2.47%, and -1.28%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.34%, +7.79%, +5.77%, and +8.27%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.12710%, down from 0.12830% the prior day. USD 3-month LIBOR is 0.27175%, down from 0.27225% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 15.825 bps, compared to 16.125 bps the prior day, and compares to the January 6th high of 50.050 bps. Euribor-OIS is 12.100 bps, up from 11.600 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -12.000 bps, compared to -11.750 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and at the lower end of a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields are 4.55%, unchanged from 4.55% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.30%, compared to 4.29% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.55%, compared to 1.57% the prior day. Japanese 10-year debt yields are 0.82%, compared to 0.84% the prior day.

· The U.S. government overnight repo rate is 10 bps, up from 11 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are higher, with 2- and 10-year maturities yielding 0.262% and 2.186%, respectively, compared to 0.262% and 2.185% Tuesday. The yield curve widened +0.10 bps with the 2- to 10-year spread at +1.924%, compared to 1.923% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.952% on June 11, 2013.

· The U.S. dollar is weaker compared to the euro, Japanese yen, and British pound. The dollar trades at US$80.655, compared to a US$80.656 intraday high and US$80.612 the prior day, and worse compared to its $82.542 50-day, US$82.147 100-day, and US$81.045 200-day averages. The euro trades at US$1.3391, compared to a US$1.3385 intraday low and US$1.3392 the prior day. The euro trades better compared to its US$1.3079 50-day and US$1.3100 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥95.15, compared to ¥94.33 the prior day. The yen trades better than its 50-day moving average ¥99.21, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index worsened to -14.80, from -14.00 the prior day. The index is better compared to its respective -23.30 and -27.07 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mixed, with higher energy, mixed precious metals, lower aluminum and copper, and mostly lower agriculture prices.

Volatility, Skew:

· The VIX closed at 16.61, down -1.13% from 16.80 at the prior close. The VIX is +5.37% above its 15.76 20-day moving average. Its 30-day high is 18.60. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 20.55, down -1.39% from 20.84 at the prior day's close. The V2X index trades +2.34% above its 20.08 20-day moving average, -13.7% below the 23.82 30-day high, and +30.4% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 21.09, up +6.25% from 19.85 the prior day. The VHSI index trades +16.6% above its 18.09 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 118.70, up +1.68% from 116.74 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· The latest week's MBA mortgage applications fell -3.3%, compared to +5.0% prior.

Overseas Economic Reporting and News:

· Australia - April Conference Board leading index rose +0.3%, compared to +0.1% prior.

· Japan - May adjusted merchandise trade balance was -¥821.0 billion, compared to -¥890.0 billion survey and -¥702.8 billion revised prior.

· Eurozone - April MoM construction output rose +2.0%, compared to -1.8% revised prior.

· United Kingdom - Bank of England release monetary policy committee minutes.

Company Ratings/News:

· None.

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 14th, the index closed down -1.01% at 1626.73, from 1643.38 the prior week and 1667.47 close four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. The subsequent trend is lower, but without strong momentum. On Tuesday, the SPX rose +0.78% to close at 1651.81, from 1639.04 the prior day and 1612.52 4 days prior. The June 17th sell setup progressed to 2. The 8 sell countdown associated with the May 14th is unchanged since June 10th. The index closed +2.69% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 10 sell countdown associated with the February 1st perfection is unchanged since May 31st. The index closed +5.67% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, on December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Tuesday, the index closed at 61.11, up +0.81% from 60.62 the prior day and 60.27 four days prior. The bullish price flip canceled the June 12th 4 buy setup and initiated a sell setup. The 10 May 15th sell countdown is unchanged since June 10th.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 14th, the VIX rose +13.3% to 17.15, from 15.14 the prior week, and 12.45 weeks prior. The May 24th sell setup progressed to 4.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Tuesday, the VIX fell -1.13% to 16.61, from 16.80 at the prior close and 18.59 at the 4 days' prior close. The bullish flip canceled the June 17th 1 sell setup and initiated a buy setup. The May 31st 4 sell countdown is unchanged since June 12th. The VIX closed +59.6% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of June 14th, the index rose +0.98% to end at 1.3347, from 1.3218 the prior week and 1.2839 4 weeks prior. The buy setup progressed to 3. The sell countdown associated with the September 28th perfection is a deferred 13, unchanged since June 7th. The cross closed +1.5% above the 1.1964 risk level.

On a daily basis, on February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection completed. The completion set a 1.3537 risk level, based on the June 6th 0.0231 trading range and 1.3306 intraday high. On June 11th, the May 29th sell setup perfected and initiated a sell countdown. With Tuesday's +0.19% higher close, the EURUSD cross ended at 1.3392, from 1.3367 the prior day and 1.3337 four days prior. The June 11th sell countdown progressed to 4. The cross closed -1.07% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1295%, from 2.1718% the prior Friday and 1.9506% four weeks prior. The May 3rd sell setup progressed to 7. The 6 sell countdown associated with the February 1st perfection was unchanged.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Tuesday, the rate ended at 2.1854%, from 2.1817% the prior day and 2.2280% four days prior. The June 13th buy setup progressed to 4. The May 20th sell countdown progressed to 9.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 14th, the index closed down -1.48% at 12,686.52, from 12,877.53 the prior week and 15,138.12 four weeks' prior. The June 7th buy setup progressed to 2. The index closed -13.4% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Wednesday, the index rose +1.83% to 13,245.22, from 13,007.28 the prior day and 12,445.38 four days prior. The bullish price flip canceled the June 13th 4 buy setup and initiated a sell setup. The 6 June 4th buy countdown was unchanged. The index closed -14.1% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 14th, the index closed at 20,969.14, down -2.81% from 21,575.26 the prior week and 23,082.68 four weeks prior. The May 31st buy setup progressed to 3. The April 5th buy countdown progressed to 5. The index closed 6.21% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Wednesday, the HSI fell fractionally to 20,986.89, from 21,225.88 the prior day and 20,887.04 four days prior. The bullish price flip canceled the June 4th 8 buy countdown. The index closed -12.1% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 14th, the index closed the week down -2.21% at 2,162.04, from 2,210.90 the prior week and 2,282.87 four weeks prior. The June 7th buy setup progressed to 2. The 5 sell countdown associated with the February 8th perfection is unchanged since May 31st.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. On June 7th, the April 9th buy countdown completed and set a 2,142.63 buy risk level. Wednesday, the index fell -0.62% to 2,143.45, from 2,159.29 at the prior close and 2,148.36 4 days prior. The June 3rd buy setup perfected and initiated a buy countdown. The index closed +0.04% above the risk level.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. On June 12th, the May 31st buy setup perfected and initiated a buy countdown. On June 17th, a bullish price flip initiated a sell setup. Tuesday, the index fell -0.07% to 2,700.93, from 2,702.69 the prior day and 2,666.52 at the prior 4 days' close. The June 17th sell setup progressed to 2. The 1 June 12th buy countdown is unchanged since June 12th. The index closed -3.07% below the 2,786.57 risk level.

1Q2013 Earnings. Of 497 reporting companies, 349 or 72.4% surprised positively on earnings, with a +5.02% surprise average. Of reporting companies, 241 or 48.6% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.50%.

Valuation. The SPX trades at 16.0x 2012 earnings ($103.41), 15.0x estimated 2013 earnings ($110.40), 13.4x estimated 2014 earnings ($122.92), and 12.2x estimated 2015 earnings ($135.17). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.81% and +11.3%, and +10.1%respectively.

Composite, index, and equity options. Options markets improved to neutral to bullish, from neutral the prior day. Composite options are bullish, index options are bullish, and equity options are neutral. The composite put/call ratio is 0.86, compared to 0.95 the prior day, and better compared to its 5- and 10-period moving averages of 1.03 and 1.07, respectively. The index put/call ratio is 0.84, compared to 1.04 the prior day, and better compared to its 5- and 10-period moving averages of 1.10 and 1.14, respectively. The equity put/call ratio closed the day at 0.86, compared to 0.90 the prior day, and better compared to its 5- and 10-period moving averages of 0.99 and 1.04, respectively.

NYSE Volume, Breadth Indicators. Volume fell -4.86% to 646.03 million shares, from 679.04 million shares the prior day, 0.87x the 745.83 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led decliners by +1,084 (compared to +1,012 the prior day), or 2.11:1. Up volume was 3.57:1 down volume.

KBW Bank Index (BKX). On lower and below average volume, the KBW bank index rose +0.81% to 61.11, from 60.62 at the prior day's close. The index opened higher and trended higher through late session to its 60.97 intraday high, but eased lower into the close. Volume fell -33.8% to 38.148 million shares, from 57.598 million shares the prior day, or 0.67:1x the 56.533 million share 15-day moving average.

Large cap banks underperformed the regional banks' performance, as the KRX fell rose +1.10%.

This week, the BKX is up +1.58%. Last week, the BKX closed down -2.31%, compared to a loss of -0.71% the prior week. In June, the index is down -0.80%. In May, the BKX closed up +8.30%. For the year, the BKX is up +19.2%, better than the SPX's +15.8% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +5.65% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +87.7% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +53.7% in the same period.

The BKX index closed -49.5% below its February 20, 2007, record 121.06 high.

Technical indicators improved modestly. For a 2nd consecutive session, the BKX closed above its respective 5- and 10-day moving averages, but for a 6th consecutive session, closed below its 20-day moving average. The index closed -0.04% below and +3.94% above its respective 20- and 50-day moving averages. The index closed +7.07% and +13.9% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. The 20-day moving average fell -2 bps. The 50-day moving average rose +11 bps. Its 100-day moving average rose +7 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.34 points) above the 50-day, and the gap narrowed -12 bps. The 50-day moving average closed (by +5.16 points) above the 200-day moving average, and the gap widened +4 bps. The 100-day moving average closed (by +3.44 points) above the 200-day moving average since March 19th, and the gap was unchanged.

The directional movement indicator widened to +3.5250, from +0.8340 the prior day. Relative strength rose to 54.69, from 51.96 the prior day, in the middle of a neutral 30-70 range. Next resistance is 61.38; next support is at 60.73.

]]> Wed, 19 Jun 2013 09:13:47 -0400 This morning. On June 12, the U.S. equity market trend switched to correction, ending the uptrend that began on April 29th. Tuesday, for a 2nd consecutive session, major U.S. equity indexes closed higher, though on lower, below average volume. All major indexes recaptured their respective 20-day moving averages. Short-term SPX relative strength indicators (RSI) rose, but remained in a neutral range.

Today, in Asia, equity markets closed mixed, with strength in Japan, but weakness in China. The Nikkei 225 (NKY) rose +1.83% and managed its best close since June 4th. Tomorrow's NKY equity futures are -0.53% lower. In Europe, equity markets are modestly mixed, with somewhat greater strength in Frankfurt. Sovereign long-term interest rates are little changed. Commodities are mostly lower. Commentary focuses on this week's FOMC meeting, which commenced yesterday and concludes with a Bernanke press conference tomorrow afternoon.

U.S. Treasury 10-year yields are 2.1657%, compared to 2.1854% at the prior close. U.S. repo rates are 10 bps, up from 11 bps the prior day. Spanish and Italian 10-year debt yields are 4.55% and 4.30%, respectively, compared to 4.55% and 4.29%, the prior day. The U.S. dollar is mixed. U.S. options markets improved to neutral to bullish, from neutral the prior day. CBOE skew is in a neutral range.

The SPX closed at 1651.81, up +0.78% from 1639.04 the prior day and -0.94% below its May 17th record close. The index is up +4.40% since April 26th, when the prior corrective trend concluded, and +53.7% above the 1074.77 October 4, 2011, intraday low. This week, the SPX is up +1.54%. Last week, the SPX closed down -1.01%, compared to a gain of +0.78% the prior week. In June, the SPX is up +1.29%. In May, the index closed up +2.08%. In 2013, the SPX is up +15.8%. In 2012, the SPX closed up +16.0%. Next resistance is at 1657.41. First support is at 1642.99.

Wednesday, the BKX rose +0.81%, outperforming the SPX. This week, the BKX is up +1.58%. Last week, the BKX lost -2.31%, compared to a loss of -0.03% the prior week. In June, the BKX is down -0.80%, compared to a gain of +8.30% the prior month. This year, the BKX is up +19.2%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are higher, but near the bottom of middle of a 16431648 range. After a fair value adjustment of -0.29 points, SPX equity futures are at 1645.00, up +0.04 points. The SPX opens +0.72% and +2.15% above its respective 20- and 50-day moving averages, and +4.89%, and +9.89% above its respective 100- and 200-day moving averages.

Tuesday. On lower and below average volume, U.S. equity markets closed moderate gains. U.S. 10-year yields rose. The DJI rose +0.91%, followed by the Nasdaq, SPX, and NYSE composite, which rose +0.87%, +0.78%, and +0.66%, respectively. Market breadth was positive, with gainers 2.11:1 losing stocks. All SPX market segments closed at least +0.42% higher. Leaders were telecommunications, industrials, and consumer services, which rose at least +1.04%. Financials rose +0.64%. Laggards were oil and gas, basic materials, and consumer goods.

NYSE volume fell -4.86% to 646.03 million shares, from 679.04 million shares the prior day, 0.89x the 745.83 million shares 20-day moving average volume. The 10-year U.S. bond yield moved narrowly around 2.18 until late in the session, when bonds rallied.

Futures indicated a strong open. From its prior 1639.04 close, the SPX index opened above 1640 and rose through late afternoon to a 1654.19 intraday high. The index ended at 1651.81, -0.94% off its recent historical high. Market volatility fell. From its prior 16.80 close, the VIX moved narrowly through mid-afternoon, then fell to a 16.46 intraday low before ending at 16.61, down -1.13%. The all-time closing low was 11.26, set June 30, 1993.

On -23.3% lower volume, the DJ Transports (TRAN) rose +0.97%, compared to the DJI's +0.91% gain. The index opened slightly lower, but reversed higher by 10:00 and rose to an early 6,368.71 intraday high. The TRAN closed at 6,358.56, -2.91% below its 6,549.16 May 17th record close. The index closed +0.55% and +1.67% above its respective 20- and 50-day moving averages, and +3.57%, and +12.5% above its respective 100- and 200-day moving averages.

Technical factors improved. SPX relative strength (RSI) rose to 56.36, from 52.78 the prior day. The CBOE put/call skew rose +1.68% to 118.70, from 116.74 the prior day. U.S. Treasury bond prices fell, as the 10-year yield fell rose +0.37 bps to end at 2.1854%, from 2.18.17% the prior day.

This week, the SPX, DJI, Nasdaq, and NYSE composite are up +1.54%, +1.65%, +1.71%, and +1.47%, respectively. Last week, the SPX, DJI, Nasdaq, and NYSE composite closed -1.01%, -1.17%, -1.32%, and -0.98%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In June, the SPX, DJI, Nasdaq, and NYSE composite are up +1.29%, +1.34%, +0.76%, and +1.05%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +15.8%, +16.9%, +15.3%, +11.3%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX resistance is 1657. Immediate support is 1640 (20-day moving average), then 1633 (5-day moving average).

Distribution day count. The current corrective downtrend began on June 12th, following an uptrend that began on April 29th.

In Asia, equity markets closed mixed, with strength in Japan, but weakness in China. The Japanese Nikkei (NKY) closed up +1.83%, after a -0.20% loss the prior day. The Hang Seng (HSI) fell -1.13%, while the Shanghai composite (SHCOMP) fell -0.62%. Today's volumes are unavailable.

The NKY's relative strength index fell to 46.67, from 43.00 the prior day, in a neutral range and up from a low of 34.42 on June 13th, and down from an overbought 82.61 on May 22nd.

Commentary focused on this week's two-day FOMC meeting, and currency and sovereign bond rate volatility.

This week, the NKY is up +4.40%, the HSI is up +0.08%, and the SHCOMP is down -0.86%. Last week, the NKY closed down -1.48%, compared to a -6.51% loss the prior week. The HSI ended down -2.81%, compared to a loss of -3.65% the prior week. The SHCOMP closed off -2.21%, compared to a -3.90% loss the prior week. In June, the NKY is down -3.84%. The HSI is down -6.28%. The SHCOMP is down -6.83%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +27.4%. The HSI is down -7.37%. The SHCOMP is down -5.54%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 13,245.22, up from 13,007.28 the prior day. The index gapped higher to open above 13,230 and traded to an early 13,296.62 intraday high, but weakened in mid-session and traded as low as 13,107.65 moving into the session's final hour. The index rallied strongly into the close. The index ended -15.2% below its recent May 22nd 15,627.26 closing high, but up +56.7% above its 8,295.63 July 18, 2012 low. The index closed -2.52% and -4.11% below its respective 20- and 50-day moving averages, but +3.80% and +20.0% above its respective 100- and 200-day moving averages. All market segments closed at least +0.96%. Leaders were telecommunications, consumer services, and basic materials, which rose at least +1.93%. Financials added +1.56%. Laggards were oil and gas, consumer goods, and utilities.

In China, the HSI closed at 20,986.89, compared to 21,225.88 at the prior close. The index closed -11.9% below its January 30th 23,882.06 high, but +15.4% above its 18,185.59 June 4, 2012 low. The index opened below 21,200 and trended lower through the morning session to an early afternoon 20,896.22 intraday low. The index rallied through late afternoon back to 21,150 but eased again into the close, widening the day's loss. The index ended -5.10% and -5.91% below its respective 20- and 50-day moving averages. All market segments closed at least -0.47% lower. Leaders were technology, industrials, and consumer services, which lost at least -0.67%. Financials lost -1.20%. Laggards were oil and gas, telecommunications, and basic materials, which lost at least -1.24%.

In Shanghai, the SHCOMP closed at 2,143.45, compared to 2,159.29 at the prior close. The index opened at the 2,150.82 intraday high, fell to a late morning 2,115.90 intraday low, and rallied through the close to narrow the day's loss. The index closed -12.9% below its 2,434.48 February 5th high, but up +9.37% from its December 3rd 1,959.77 low. The SHCOMP closed -5.23% and -4.13% below its respective 20- and 50-day moving averages. Most market segments closed lower. Leaders were consumer goods, which rose +0.25%, and basic materials and industrials, which fell at least -0.30%. Financials fell -0.97%. Laggards were oil and gas, technology, and utilities, which fell at least -1.08%.

In Europe, the major equity indexes are moderately lower. The Euro Stoxx50, CAC 40, FTSE 100, and DAX, are down -0.53%, -0.53%, -0.67%, and -0.27%, respectively. The Spanish IBEX 35 is down -0.80%. The Italian FTSE MIB is down -0.32%. From its 2,700.93 prior day's close, the Euro Stoxx50 opened slightly higher, fell to an early 2,678.03 intraday low, but rallied higher to a late morning 2,709.41 intraday high. The index reversed lower into the afternoon session, and currently trades at 2,687.13. All market segments are at least -0.06% lower. Leaders are technology, consumer goods, and basic materials. Laggards are financials, oil and gas, and health care, which are down at least -0.69%.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.14%, +0.78%, +1.21%, and +1.40%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -2.08%, -1.62%, -1.74%, and -1.54%, respectively. The prior week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.60%, -3.43%, -2.47%, and -1.28%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.34%, +7.79%, +5.77%, and +8.27%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.12710%, down from 0.12830% the prior day. USD 3-month LIBOR is 0.27175%, down from 0.27225% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 15.825 bps, compared to 16.125 bps the prior day, and compares to the January 6th high of 50.050 bps. Euribor-OIS is 12.100 bps, up from 11.600 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -12.000 bps, compared to -11.750 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and at the lower end of a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields are 4.55%, unchanged from 4.55% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.30%, compared to 4.29% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.55%, compared to 1.57% the prior day. Japanese 10-year debt yields are 0.82%, compared to 0.84% the prior day.

· The U.S. government overnight repo rate is 10 bps, up from 11 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are higher, with 2- and 10-year maturities yielding 0.262% and 2.186%, respectively, compared to 0.262% and 2.185% Tuesday. The yield curve widened +0.10 bps with the 2- to 10-year spread at +1.924%, compared to 1.923% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.952% on June 11, 2013.

· The U.S. dollar is weaker compared to the euro, Japanese yen, and British pound. The dollar trades at US$80.655, compared to a US$80.656 intraday high and US$80.612 the prior day, and worse compared to its $82.542 50-day, US$82.147 100-day, and US$81.045 200-day averages. The euro trades at US$1.3391, compared to a US$1.3385 intraday low and US$1.3392 the prior day. The euro trades better compared to its US$1.3079 50-day and US$1.3100 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥95.15, compared to ¥94.33 the prior day. The yen trades better than its 50-day moving average ¥99.21, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index worsened to -14.80, from -14.00 the prior day. The index is better compared to its respective -23.30 and -27.07 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mixed, with higher energy, mixed precious metals, lower aluminum and copper, and mostly lower agriculture prices.

Volatility, Skew:

· The VIX closed at 16.61, down -1.13% from 16.80 at the prior close. The VIX is +5.37% above its 15.76 20-day moving average. Its 30-day high is 18.60. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 20.55, down -1.39% from 20.84 at the prior day's close. The V2X index trades +2.34% above its 20.08 20-day moving average, -13.7% below the 23.82 30-day high, and +30.4% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 21.09, up +6.25% from 19.85 the prior day. The VHSI index trades +16.6% above its 18.09 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 118.70, up +1.68% from 116.74 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· The latest week's MBA mortgage applications fell -3.3%, compared to +5.0% prior.

Overseas Economic Reporting and News:

· Australia - April Conference Board leading index rose +0.3%, compared to +0.1% prior.

· Japan - May adjusted merchandise trade balance was -¥821.0 billion, compared to -¥890.0 billion survey and -¥702.8 billion revised prior.

· Eurozone - April MoM construction output rose +2.0%, compared to -1.8% revised prior.

· United Kingdom - Bank of England release monetary policy committee minutes.

Company Ratings/News:

· None.

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 14th, the index closed down -1.01% at 1626.73, from 1643.38 the prior week and 1667.47 close four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. The subsequent trend is lower, but without strong momentum. On Tuesday, the SPX rose +0.78% to close at 1651.81, from 1639.04 the prior day and 1612.52 4 days prior. The June 17th sell setup progressed to 2. The 8 sell countdown associated with the May 14th is unchanged since June 10th. The index closed +2.69% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 10 sell countdown associated with the February 1st perfection is unchanged since May 31st. The index closed +5.67% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, on December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Tuesday, the index closed at 61.11, up +0.81% from 60.62 the prior day and 60.27 four days prior. The bullish price flip canceled the June 12th 4 buy setup and initiated a sell setup. The 10 May 15th sell countdown is unchanged since June 10th.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 14th, the VIX rose +13.3% to 17.15, from 15.14 the prior week, and 12.45 weeks prior. The May 24th sell setup progressed to 4.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Tuesday, the VIX fell -1.13% to 16.61, from 16.80 at the prior close and 18.59 at the 4 days' prior close. The bullish flip canceled the June 17th 1 sell setup and initiated a buy setup. The May 31st 4 sell countdown is unchanged since June 12th. The VIX closed +59.6% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of June 14th, the index rose +0.98% to end at 1.3347, from 1.3218 the prior week and 1.2839 4 weeks prior. The buy setup progressed to 3. The sell countdown associated with the September 28th perfection is a deferred 13, unchanged since June 7th. The cross closed +1.5% above the 1.1964 risk level.

On a daily basis, on February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection completed. The completion set a 1.3537 risk level, based on the June 6th 0.0231 trading range and 1.3306 intraday high. On June 11th, the May 29th sell setup perfected and initiated a sell countdown. With Tuesday's +0.19% higher close, the EURUSD cross ended at 1.3392, from 1.3367 the prior day and 1.3337 four days prior. The June 11th sell countdown progressed to 4. The cross closed -1.07% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1295%, from 2.1718% the prior Friday and 1.9506% four weeks prior. The May 3rd sell setup progressed to 7. The 6 sell countdown associated with the February 1st perfection was unchanged.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Tuesday, the rate ended at 2.1854%, from 2.1817% the prior day and 2.2280% four days prior. The June 13th buy setup progressed to 4. The May 20th sell countdown progressed to 9.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 14th, the index closed down -1.48% at 12,686.52, from 12,877.53 the prior week and 15,138.12 four weeks' prior. The June 7th buy setup progressed to 2. The index closed -13.4% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Wednesday, the index rose +1.83% to 13,245.22, from 13,007.28 the prior day and 12,445.38 four days prior. The bullish price flip canceled the June 13th 4 buy setup and initiated a sell setup. The 6 June 4th buy countdown was unchanged. The index closed -14.1% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 14th, the index closed at 20,969.14, down -2.81% from 21,575.26 the prior week and 23,082.68 four weeks prior. The May 31st buy setup progressed to 3. The April 5th buy countdown progressed to 5. The index closed 6.21% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Wednesday, the HSI fell fractionally to 20,986.89, from 21,225.88 the prior day and 20,887.04 four days prior. The bullish price flip canceled the June 4th 8 buy countdown. The index closed -12.1% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 14th, the index closed the week down -2.21% at 2,162.04, from 2,210.90 the prior week and 2,282.87 four weeks prior. The June 7th buy setup progressed to 2. The 5 sell countdown associated with the February 8th perfection is unchanged since May 31st.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. On June 7th, the April 9th buy countdown completed and set a 2,142.63 buy risk level. Wednesday, the index fell -0.62% to 2,143.45, from 2,159.29 at the prior close and 2,148.36 4 days prior. The June 3rd buy setup perfected and initiated a buy countdown. The index closed +0.04% above the risk level.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. On June 12th, the May 31st buy setup perfected and initiated a buy countdown. On June 17th, a bullish price flip initiated a sell setup. Tuesday, the index fell -0.07% to 2,700.93, from 2,702.69 the prior day and 2,666.52 at the prior 4 days' close. The June 17th sell setup progressed to 2. The 1 June 12th buy countdown is unchanged since June 12th. The index closed -3.07% below the 2,786.57 risk level.

1Q2013 Earnings. Of 497 reporting companies, 349 or 72.4% surprised positively on earnings, with a +5.02% surprise average. Of reporting companies, 241 or 48.6% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.50%.

Valuation. The SPX trades at 16.0x 2012 earnings ($103.41), 15.0x estimated 2013 earnings ($110.40), 13.4x estimated 2014 earnings ($122.92), and 12.2x estimated 2015 earnings ($135.17). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.81% and +11.3%, and +10.1%respectively.

Composite, index, and equity options. Options markets improved to neutral to bullish, from neutral the prior day. Composite options are bullish, index options are bullish, and equity options are neutral. The composite put/call ratio is 0.86, compared to 0.95 the prior day, and better compared to its 5- and 10-period moving averages of 1.03 and 1.07, respectively. The index put/call ratio is 0.84, compared to 1.04 the prior day, and better compared to its 5- and 10-period moving averages of 1.10 and 1.14, respectively. The equity put/call ratio closed the day at 0.86, compared to 0.90 the prior day, and better compared to its 5- and 10-period moving averages of 0.99 and 1.04, respectively.

NYSE Volume, Breadth Indicators. Volume fell -4.86% to 646.03 million shares, from 679.04 million shares the prior day, 0.87x the 745.83 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led decliners by +1,084 (compared to +1,012 the prior day), or 2.11:1. Up volume was 3.57:1 down volume.

KBW Bank Index (BKX). On lower and below average volume, the KBW bank index rose +0.81% to 61.11, from 60.62 at the prior day's close. The index opened higher and trended higher through late session to its 60.97 intraday high, but eased lower into the close. Volume fell -33.8% to 38.148 million shares, from 57.598 million shares the prior day, or 0.67:1x the 56.533 million share 15-day moving average.

Large cap banks underperformed the regional banks' performance, as the KRX fell rose +1.10%.

This week, the BKX is up +1.58%. Last week, the BKX closed down -2.31%, compared to a loss of -0.71% the prior week. In June, the index is down -0.80%. In May, the BKX closed up +8.30%. For the year, the BKX is up +19.2%, better than the SPX's +15.8% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +5.65% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +87.7% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +53.7% in the same period.

The BKX index closed -49.5% below its February 20, 2007, record 121.06 high.

Technical indicators improved modestly. For a 2nd consecutive session, the BKX closed above its respective 5- and 10-day moving averages, but for a 6th consecutive session, closed below its 20-day moving average. The index closed -0.04% below and +3.94% above its respective 20- and 50-day moving averages. The index closed +7.07% and +13.9% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. The 20-day moving average fell -2 bps. The 50-day moving average rose +11 bps. Its 100-day moving average rose +7 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.34 points) above the 50-day, and the gap narrowed -12 bps. The 50-day moving average closed (by +5.16 points) above the 200-day moving average, and the gap widened +4 bps. The 100-day moving average closed (by +3.44 points) above the 200-day moving average since March 19th, and the gap was unchanged.

The directional movement indicator widened to +3.5250, from +0.8340 the prior day. Relative strength rose to 54.69, from 51.96 the prior day, in the middle of a neutral 30-70 range. Next resistance is 61.38; next support is at 60.73.

]]> SPX DJI RTY TRAN CCMP NYA VIX SKEW NKY EURUSD USGG10YR HSI SHCOMP SX5E CAC DAX FTSE JPY GBP EUR U.S. Futures Gain As FOMC Starts 2-Day http://seekingalpha.com/instablog/179003-gary-townsend/1962832-u-s-futures-gain-as-fomc-starts-2-day?source=feed 1962832 This morning. On June 12, the U.S. equity market trend switched to correction, ending the uptrend that began on April 29th. Monday, major U.S. equity indexes closed higher, on higher, though below average volume. All major indexes recaptured their respective 5- and 10-day moving averages, but closed below their 20-day moving averages. Short-term SPX relative strength indicators (RSI) rose, but remained in a neutral range.

Today, in Asia, equity markets closed mixed, with better strength in Shanghai. The Nikkei 225 (NKY) fell -0.20%, but managed to close above 13,000 for a 2nd consecutive session. Tomorrow's NKY equity futures are +1.15% higher. In Europe, equity markets are modestly mixed, off their earlier highs, with somewhat greater strength in London and Milan. Sovereign long-term interest rates are little changed. Commodities are mostly lower. Commentary focuses on this week's FOMC meeting, which commences this morning and concludes with a Bernanke press conference tomorrow afternoon.

U.S. Treasury 10-year yields are 2.1960%, compared to 2.182% at the prior close. U.S. repo rates are 11 bps, up from 5 bps the prior day. Spanish and Italian 10-year debt yields are 4.58% and 4.28%, respectively, compared to 4.58% and 4.27%, the prior day. The U.S. dollar is mixed. U.S. options markets improved to neutral, from neutral to bearish the prior day. CBOE skew is in a neutral range.

The SPX closed at 1639.04, up +0.76% from 1626.73 the prior day. The index is up +3.59% since April 26th, when the prior corrective trend concluded, and +52.5% above the 1074.77 October 4, 2011, intraday low. Last week, the SPX closed down -1.01%, compared to a gain of +0.78% the prior week. In June, the SPX is up +0.51%. In May, the index closed up +2.08%. In 2013, the SPX is up +14.9%. In 2012, the SPX closed up +16.0%. Next resistance is at 1646.91. First support is at 1630.75.

Tuesday, the BKX rose +0.76%, slightly underperforming the SPX. Last week, the BKX lost -2.31%, compared to a loss of -0.03% the prior week. In June, the BKX is down -1.59%, compared to a gain of +8.30% the prior month. This year, the BKX is up +18.2%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are higher, but near the bottom of middle of a 1634-1639 range. After a fair value adjustment of -1.76 points, SPX equity futures are at 1637.00, up +5.01 points. The SPX opens -0.10% below and +1.47% above its respective 20- and 50-day moving averages, and +4.19%, and +9.13% above its respective 100- and 200-day moving averages.

Monday. On higher, but below average volume, U.S. equity markets closed moderately higher. U.S. 10-year yields rose. The Nasdaq rose +0.83%, followed by the NYSE composite, SPX, and DJI, which rose +0.80%, +0.76%, and +0.73%, respectively. Market breadth was positive, with gainers 0.93:1 losing stocks. Most SPX market segments closed higher. Leaders were oil and gas, technology, and basic materials, which rose at least +0.96%. Financials rose +0.94%. Laggards were utilities and health care, which rose at least +0.21%, and telecommunications, which lost -0.58%.

NYSE volume rose +7.13% to 679.04 million shares, from 633.87 million shares the prior day, 0.93x the 746.19 million shares 20-day moving average volume.

Futures indicated a strong open, but opened slightly lower. From its prior 1626.73 close, the SPX index opened above 1637 and rose to a mid-morning 1646.50 intraday high. The index weakened to nearly 1630 in mid-afternoon as the 10-year U.S. bond yield spiked above 2.14%, but markets firmed into the close. The index ended at 1639.04, down -2.44% from its recent historical high. Market volatility fell. From its prior 17.15 close, the VIX fell to an early 16.33 intraday low, moved narrowly higher through mid-afternoon, then spiked with higher interest rates and weakening equity indexes to a late afternoon 17.62 intraday high. The VIX ended the session at 16.80, down -2.04%. The all-time closing low was 11.26, set June 30, 1993.

On +17.7% greater volume, the DJ Transports (TRAN) fell -0.19%, compared to the DJI's +0.73% gain. The index opened modestly higher, set an early 6,358.19 intraday high, traded narrowly higher through mid-afternoon, and then reversed lower to a late afternoon 6,249.71 intraday low. The TRAN closed at 6,297.21, -3.85% below its 6,549.16 May 17th record close. The index closed -0.54% below and +0.77% above its respective 20- and 50-day moving averages, and +2.66%, and +11.5% above its respective 100- and 200-day moving averages.

Technical factors improved. SPX relative strength (RSI) rose to 52.78, from 49.04 the prior day. The CBOE put/call skew rose +0.39% to 116.74, from 116.29 the prior day. U.S. Treasury bond prices rose, as the 10-year yield rose +6.22 bps to end at 2.1817%, from 2.1295% the prior day.

Last week, the SPX, DJI, Nasdaq, and NYSE composite closed -1.01%, -1.17%, -1.32%, and -0.98%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In June, the SPX, DJI, Nasdaq, and NYSE composite are up +0.76%, +0.73%, +0.83%, and +0.80%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +14.9%, +15.8%, +14.3%, +10.6%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX resistance is 1647. Immediate support is 1629 (10-day moving average), then 1615 (50-day moving average).

Distribution day count. The current corrective downtrend began on June 12th, following an uptrend that began on April 29th.

In Asia, equity markets closed mixed, with better strength in Shanghai. The Japanese Nikkei (NKY) closed down -0.20%, compared to a +2.73% gain the prior day. The Hang Seng (HSI) fell fractionally, while the Shanghai composite (SHCOMP) rose +0.41%. Today's volumes are unavailable.

The NKY's relative strength index fell to 43.00, from 43.28 the prior day, in a neutral range and up from a low of 34.42 on June 13th, and down from an overbought 82.61 on May 22nd.

Commentary focused on this week's two-day FOMC meeting, and currency and sovereign bond rate volatility.

This week, the NKY is up +2.53%, the HSI is up +1.22%, and the SHCOMP is down -0.13%. Last week, the NKY closed down -1.48%, compared to a -6.51% loss the prior week. The HSI ended down -2.81%, compared to a loss of -3.65% the prior week. The SHCOMP closed off -2.21%, compared to a -3.90% loss the prior week. In June, the NKY is down -5.57%. The HSI is down -5.21%. The SHCOMP is down -6.14%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +25.1%. The HSI is down -6.32%. The SHCOMP is down -4.84%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 13,007.28, down from 13,033.12 the prior day. In early trading, the index moved higher to its 13,139.48 intraday high, but reversed lower by mid-morning, falling to its 12,919.03 intraday low. The index improved in early afternoon, but traded narrowly lower through the close. The index ended -16.8% below its recent May 22nd 15,627.26 closing high, but up +55.5% above its 8,295.63 July 18, 2012 low. The index closed -5.10% and -5.78% below its respective 20- and 50-day moving averages, but +2.12% and +18.0% above its respective 100- and 200-day moving averages. Market segments closed mixed. Leaders were oil and gas, financials, and technology, which rose at least +0.19%. Laggards were basic materials, utilities, and health care, which fell at least -0.82%.

In China, the HSI closed at 21,225.88, compared to 21,225.90 at the prior close. The index closed -10.9% below its January 30th 23,882.06 high, but +16.7% above its 18,185.59 June 4, 2012 low. The index opened lower at 21,100, traded narrowly through early afternoon, then improved to narrow losses to immaterial by the close. The index ended -4.51% and -4.94% below its respective 20- and 50-day moving averages. Market segments closed mixed. Leaders were consumer services, oil and gas, and telecommunications, which gained at least +0.51%. Laggards were basic materials, utilities, and consumer goods, which lost at least -0.38%.

In Shanghai, the SHCOMP closed at 2,159.29, compared to 2,156.22 at the prior close. The index opened near 2,160, reversed lower to 2,139.47 in late morning, then reversed higher and rallied to a mid-afternoon 2,161.62 intraday high. The index closed -11.3% below its 2,434.48 February 5th high, but up +10.2% from its December 3rd 1,959.77 low. The SHCOMP closed -4.72% and -5.47% below its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were technology, consumer goods, and consumer services, which rose at least +0.55%. Financials gained +0.02%. Laggards were oil and gas, health care, and basic materials, which fell at least -0.66%.

In Europe, the major equity indexes are mixed, with better strength in the United Kingdom. The Euro Stoxx50, FTSE 100, and DAX, are up +0.06%, +0.83%, and +0.05%, respectively, while the CAC 40 is down -0.04%. The Spanish IBEX 35 is up +0.69%. The Italian FTSE MIB is up +0.61%. From its 2,702.69 prior day's close, the Euro Stoxx50 opened lower, fell to an early 2,686.21 intraday low, then rallied to breakeven by mid-session. The index currently trades at 2,703.58, fractionally higher on the day. Market segments are mixed. Leaders are financials, consumer services, and industrials, which are up at least +0.34%. Laggards are oil and gas, consumer goods, and health care, which are down at least -0.35%.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.37%, +1.21%, +1.49%, and +1.14%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -2.08%, -1.62%, -1.74%, and -1.54%, respectively. The prior week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.38%, -3.02%, -2.20%, and -1.53%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.58%, +8.25%, +6.06%, and +7.99%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.12830%, down from 0.13080% the prior day. USD 3-month LIBOR is 0.27225%, down from 0.27325% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 16.225 bps, compared to 17.375 bps the prior day, and compares to the January 6th high of 50.050 bps. Euribor-OIS is 11.95 bps, down from 12.200 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -11.630 bps, compared to -11.750 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and at the lower end of a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields are 4.58%, unchanged from 4.58% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.28%, compared to 4.27% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.56%, compared to 1.52% the prior day. Japanese 10-year debt yields are 0.84%, compared to 0.84% the prior day.

· The U.S. government overnight repo rate is 11 bps, up from 5 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are higher, with 2- and 10-year maturities yielding 0.270% and 2.196%, respectively, compared to 0.262% and 2.182% Monday. The yield curve widened +0.64 bps with the 2- to 10-year spread at +1.926%, compared to 1.920% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.952% on June 11, 2013.

· The U.S. dollar is mixed, weaker compared to the euro, but stronger compared to the Japanese yen and British pound. The dollar trades at US$80.718, compared to a US$80.870 intraday high and US$80.787 the prior day, and worse compared to its $82.582 50-day, US$82.135 100-day, and US$81.041 200-day averages. The euro trades at US$1.3377, compared to a US$1.3399 intraday high and US$1.3367 the prior day. The euro trades better compared to its US$1.3072 50-day and US$1.3102 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥95.33, compared to ¥94.51 the prior day. The yen trades better than its 50-day moving average ¥99.30, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index improved to -14.00, from -29.70 the prior day. The index is better compared to its respective -26.54 and -27.77 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mixed, with lower energy, lower precious metals, lower aluminum and copper, and mixed agriculture prices.

Volatility, Skew:

· The VIX closed at 16.80, down -2.04% from 17.15 at the prior close. The VIX is +7.80% above its 15.58 20-day moving average. Its 30-day high is 18.60. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 20.98, down -0.58% from 21.10 at the prior day's close. The V2X index trades +5.50% above its 19.89 20-day moving average, -11.9% below the 23.82 30-day high, and +33.1% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 19.85, down -0.20% from 19.89 the prior day. The VHSI index trades +10.7% above its 17.94 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 116.74, up +0.39% from 116.29 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· At 8:30, May MoM CPI rose 0.1%, compared to +0.2% survey and -0.4% revised prior. MoM ex food and energy rose +0.2%, compared to +0.2% survey and +0.1% prior.

· May MoM housing starts rose +6.8%, compared to +11.4% survey and -14.8% revised prior.

· May Mom building permits fell -3.1%, compared to -3.0% survey and +12.9% revised prior.

Overseas Economic Reporting and News:

· China - May YoY FDI rose +0.3%, compared to +0.4% prior.

· Japan - April final MoM industrial production rose +0.9%, compared to +1.7% prior. Capacity utilization rose +1.6%, compared to -0.8% prior. May final machine tool orders fell -7.4%, compared to -7.4% prior.

· Eurozone - June ZEW economic sentiment is 30.6, compared to 27.6 prior.

· Germany - June ZEW economic sentiment is 38.5, compared to 38.1 survey and 36.4 prior.

· United Kingdom - May MoM CPI rose +0.2%, compared to +0.1% survey and +0.2% prior.

Company Ratings/News:

· None.

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 14th, the index closed down -1.01% at 1626.73, from 1643.38 the prior week and 1667.47 close four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. The subsequent trend is lower, but without strong momentum. On Monday, the SPX rose +0.76% to close at 1639.04, from 1626.73 the prior day and 1626.13 4 days prior. The bullish price flip canceled the 3 June 12th buy setup and initiated a sell setup. The 8 sell countdown associated with the May 14th is unchanged since June 10th. The index closed +1.90% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 10 sell countdown associated with the February 1st perfection is unchanged since May 31st. The index closed +5.67% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, on December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Monday, the index closed at 60.62, up +0.76% from 60.16 the prior day and 60.91 four days prior. The June 12th buy setup progressed to 4. The 10 May 15th sell countdown is unchanged since June 10th.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 14th, the VIX rose +13.3% to 17.15, from 15.14 the prior week, and 12.45 weeks prior. The May 24th sell setup progressed to 4.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Monday, the VIX fell -2.04% to 16.80, from 17.15 at the prior close and 17.07 at the 4 days' prior close. The bearish flip canceled the 3 June 12th sell setup and initiated a buy setup. The 4 May 31st sell countdown is unchanged since June 12th. The VIX closed +61.3% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of June 14th, the index rose +0.98% to end at 1.3347, from 1.3218 the prior week and 1.2839 4 weeks prior. The buy setup progressed to 3. The sell countdown associated with the September 28th perfection is a deferred 13, unchanged since June 7th. The cross closed +1.5% above the 1.1964 risk level.

On a daily basis, on February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection completed. The perfection set a 1.3537 risk level, based on the June 6th 0.0231 trading range and 1.3306 intraday high. On June 11th, the May 29th sell setup perfected and initiated a sell countdown. With Monday's +0.15% higher close, the EURUSD cross ended at 1.3367, from 1.3347 the prior day and 1.3313 four days prior. The 3 June 11th sell countdown is unchanged since June 13th. The cross closed -1.26% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1295%, from 2.1718% the prior Friday and 1.9506% four weeks prior. The May 3rd sell setup progressed to 7. The 6 sell countdown associated with the February 1st perfection was unchanged.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Monday, the rate ended at 2.1817%, from 2.1295% the prior day and 2.1846% four days prior. The June 13th buy setup progressed to 3. The 8 May 20th sell countdown is unchanged since June 11th.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 14th, the index closed down -1.48% at 12,686.52, from 12,877.53 the prior week and 15,138.12 four weeks' prior. The June 7th buy setup progressed to 2. The index closed -13.4% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Tuesday, the index fell -0.20% to 13,007.28, from 13,033.12 the prior day and 13,289.32 four days prior. The June 13th buy setup progressed to 4. The 6 June 4th buy countdown was unchanged. The index closed -15.6% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 14th, the index closed at 20,969.14, down -2.81% from 21,575.26 the prior week and 23,082.68 four weeks prior. The May 31st buy setup progressed to 3. The April 5th buy countdown progressed to 5. The index closed 6.21% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Tuesday, the HSI fell fractionally to 21,225.88, from 21,225.90 the prior day and 21,354.66 four days prior. The 8 June 4th buy countdown was unchanged. The index closed -11.1% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 14th, the index closed the week down -2.21% at 2,162.04, from 2,210.90 the prior week and 2,282.87 four weeks prior. The June 7th buy setup progressed to 2. The 5 sell countdown associated with the February 8th perfection is unchanged since May 31st.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. On June 7th, the April 9th buy countdown completed and set a 2,142.63 buy risk level. Tuesday, the index rose +0.41% to 2,159.29, from 2,156.22 at the prior close and 2,210.90 4 days prior. The June 3rd buy setup progressed to 9. The index closed +0.78% above the risk level.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. On June 12th, the May 31st buy setup perfected and initiated a buy countdown. Monday, the index rose +1.33% to 2,702.69, from 2,667.32 the prior day and 2,683.20 at the prior 4 days' close. The bullish price flip initiated a sell setup. The 1 June 12th buy countdown is unchanged since June 12th. The index closed -3.01% below the 2,786.57 risk level.

1Q2013 Earnings. Of 497 reporting companies, 349 or 72.4% surprised positively on earnings, with a +5.02% surprise average. Of reporting companies, 241 or 48.6% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.50%.

Valuation. The SPX trades at 15.8x 2012 earnings ($103.41), 14.8x estimated 2013 earnings ($110.39), 13.2x estimated 2014 earnings ($122.90), and 12.0x estimated 2015 earnings ($135.35). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.81% and +11.3%, and +10.1%respectively.

Composite, index, and equity options. Options markets improved to neutral, from neutral to bearish the prior day. Composite options are neutral, index options are neutral, and equity options are neutral. The composite put/call ratio is 0.95, compared to 1.18 the prior day, and better compared to its 5- and 10-period moving averages of 1.06 and 1.10, respectively. The index put/call ratio is 1.04, compared to 1.31 the prior day, and better compared to its 5- and 10-period moving averages of 1.10 and 1.20, respectively. The equity put/call ratio closed the day at 0.90, compared to 1.11 the prior day, and better compared to its 5- and 10-period moving averages of 1.05 and 1.06, respectively.

NYSE Volume, Breadth Indicators. Volume rose +7.13% to 679.04 million shares, from 633.87 million shares the prior day, 0.91x the 746.19 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led decliners by +1,012 (compared to -237 the prior day), or 2.00:1. Up volume was 2.79:1 down volume.

KBW Bank Index (BKX). On lower and below average volume, the KBW bank index rose +0.76% to 60.62, from 60.16 at the prior day's close. The index traded narrowly lower through the first hour, then lost ground to 60.60 by mid-day and to a mid-afternoon 60.01 intraday low. Volume fell -8.26% to 44.169 million shares, from 48.144 million shares the prior day, or 0.78:1x the 56.799 million share 15-day moving average.

Large cap banks outperformed the regional banks' performance, as the KRX fell rose +1.59%.

This week, the BKX is up +0.76%. Last week, the BKX closed down -2.31%, compared to a loss of -0.71% the prior week. In June, the index is down -1.59%. In May, the BKX closed up +8.30%. For the year, the BKX is up +17.3%, better than the SPX's +14.1% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +4.61% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +86.2% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +52.5% in the same period.

The BKX index closed -50.0% below its March 30, 2007, record 121.16 high.

Technical indicators improved. The BKX recaptured its respective 5- and 10-day moving averages, but for a 5th consecutive session, closed below its 20-day moving average. The index closed -0.86% below and +3.30% above its respective 20- and 50-day moving averages. The index closed +6.35% and +13.2% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. Tuesday, the 20-day moving average fell -2 bps. The 50-day moving average rose +11 bps. Its 100-day moving average rose +7 bps, and the 200-day moving average rose +6 bps. The 20-day closed (by +2.46 points) above the 50-day, and the gap narrowed -14 bps. The 50-day moving average closed (by +5.12 points) above the 200-day moving average, and the gap widened +4 bps. The 100-day moving average closed (by +3.44 points) above the 200-day moving average since March 19th, and the gap was unchanged.

The directional movement indicator narrowed to +0.8340, from +0.8802 the prior day. Relative strength rose to 51.96, from 49.30 the prior day, in the middle of a neutral 30-70 range. Next resistance is 60.91; next support is at 60.32.

]]> Tue, 18 Jun 2013 09:17:58 -0400 This morning. On June 12, the U.S. equity market trend switched to correction, ending the uptrend that began on April 29th. Monday, major U.S. equity indexes closed higher, on higher, though below average volume. All major indexes recaptured their respective 5- and 10-day moving averages, but closed below their 20-day moving averages. Short-term SPX relative strength indicators (RSI) rose, but remained in a neutral range.

Today, in Asia, equity markets closed mixed, with better strength in Shanghai. The Nikkei 225 (NKY) fell -0.20%, but managed to close above 13,000 for a 2nd consecutive session. Tomorrow's NKY equity futures are +1.15% higher. In Europe, equity markets are modestly mixed, off their earlier highs, with somewhat greater strength in London and Milan. Sovereign long-term interest rates are little changed. Commodities are mostly lower. Commentary focuses on this week's FOMC meeting, which commences this morning and concludes with a Bernanke press conference tomorrow afternoon.

U.S. Treasury 10-year yields are 2.1960%, compared to 2.182% at the prior close. U.S. repo rates are 11 bps, up from 5 bps the prior day. Spanish and Italian 10-year debt yields are 4.58% and 4.28%, respectively, compared to 4.58% and 4.27%, the prior day. The U.S. dollar is mixed. U.S. options markets improved to neutral, from neutral to bearish the prior day. CBOE skew is in a neutral range.

The SPX closed at 1639.04, up +0.76% from 1626.73 the prior day. The index is up +3.59% since April 26th, when the prior corrective trend concluded, and +52.5% above the 1074.77 October 4, 2011, intraday low. Last week, the SPX closed down -1.01%, compared to a gain of +0.78% the prior week. In June, the SPX is up +0.51%. In May, the index closed up +2.08%. In 2013, the SPX is up +14.9%. In 2012, the SPX closed up +16.0%. Next resistance is at 1646.91. First support is at 1630.75.

Tuesday, the BKX rose +0.76%, slightly underperforming the SPX. Last week, the BKX lost -2.31%, compared to a loss of -0.03% the prior week. In June, the BKX is down -1.59%, compared to a gain of +8.30% the prior month. This year, the BKX is up +18.2%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are higher, but near the bottom of middle of a 1634-1639 range. After a fair value adjustment of -1.76 points, SPX equity futures are at 1637.00, up +5.01 points. The SPX opens -0.10% below and +1.47% above its respective 20- and 50-day moving averages, and +4.19%, and +9.13% above its respective 100- and 200-day moving averages.

Monday. On higher, but below average volume, U.S. equity markets closed moderately higher. U.S. 10-year yields rose. The Nasdaq rose +0.83%, followed by the NYSE composite, SPX, and DJI, which rose +0.80%, +0.76%, and +0.73%, respectively. Market breadth was positive, with gainers 0.93:1 losing stocks. Most SPX market segments closed higher. Leaders were oil and gas, technology, and basic materials, which rose at least +0.96%. Financials rose +0.94%. Laggards were utilities and health care, which rose at least +0.21%, and telecommunications, which lost -0.58%.

NYSE volume rose +7.13% to 679.04 million shares, from 633.87 million shares the prior day, 0.93x the 746.19 million shares 20-day moving average volume.

Futures indicated a strong open, but opened slightly lower. From its prior 1626.73 close, the SPX index opened above 1637 and rose to a mid-morning 1646.50 intraday high. The index weakened to nearly 1630 in mid-afternoon as the 10-year U.S. bond yield spiked above 2.14%, but markets firmed into the close. The index ended at 1639.04, down -2.44% from its recent historical high. Market volatility fell. From its prior 17.15 close, the VIX fell to an early 16.33 intraday low, moved narrowly higher through mid-afternoon, then spiked with higher interest rates and weakening equity indexes to a late afternoon 17.62 intraday high. The VIX ended the session at 16.80, down -2.04%. The all-time closing low was 11.26, set June 30, 1993.

On +17.7% greater volume, the DJ Transports (TRAN) fell -0.19%, compared to the DJI's +0.73% gain. The index opened modestly higher, set an early 6,358.19 intraday high, traded narrowly higher through mid-afternoon, and then reversed lower to a late afternoon 6,249.71 intraday low. The TRAN closed at 6,297.21, -3.85% below its 6,549.16 May 17th record close. The index closed -0.54% below and +0.77% above its respective 20- and 50-day moving averages, and +2.66%, and +11.5% above its respective 100- and 200-day moving averages.

Technical factors improved. SPX relative strength (RSI) rose to 52.78, from 49.04 the prior day. The CBOE put/call skew rose +0.39% to 116.74, from 116.29 the prior day. U.S. Treasury bond prices rose, as the 10-year yield rose +6.22 bps to end at 2.1817%, from 2.1295% the prior day.

Last week, the SPX, DJI, Nasdaq, and NYSE composite closed -1.01%, -1.17%, -1.32%, and -0.98%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In June, the SPX, DJI, Nasdaq, and NYSE composite are up +0.76%, +0.73%, +0.83%, and +0.80%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +14.9%, +15.8%, +14.3%, +10.6%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX resistance is 1647. Immediate support is 1629 (10-day moving average), then 1615 (50-day moving average).

Distribution day count. The current corrective downtrend began on June 12th, following an uptrend that began on April 29th.

In Asia, equity markets closed mixed, with better strength in Shanghai. The Japanese Nikkei (NKY) closed down -0.20%, compared to a +2.73% gain the prior day. The Hang Seng (HSI) fell fractionally, while the Shanghai composite (SHCOMP) rose +0.41%. Today's volumes are unavailable.

The NKY's relative strength index fell to 43.00, from 43.28 the prior day, in a neutral range and up from a low of 34.42 on June 13th, and down from an overbought 82.61 on May 22nd.

Commentary focused on this week's two-day FOMC meeting, and currency and sovereign bond rate volatility.

This week, the NKY is up +2.53%, the HSI is up +1.22%, and the SHCOMP is down -0.13%. Last week, the NKY closed down -1.48%, compared to a -6.51% loss the prior week. The HSI ended down -2.81%, compared to a loss of -3.65% the prior week. The SHCOMP closed off -2.21%, compared to a -3.90% loss the prior week. In June, the NKY is down -5.57%. The HSI is down -5.21%. The SHCOMP is down -6.14%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +25.1%. The HSI is down -6.32%. The SHCOMP is down -4.84%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 13,007.28, down from 13,033.12 the prior day. In early trading, the index moved higher to its 13,139.48 intraday high, but reversed lower by mid-morning, falling to its 12,919.03 intraday low. The index improved in early afternoon, but traded narrowly lower through the close. The index ended -16.8% below its recent May 22nd 15,627.26 closing high, but up +55.5% above its 8,295.63 July 18, 2012 low. The index closed -5.10% and -5.78% below its respective 20- and 50-day moving averages, but +2.12% and +18.0% above its respective 100- and 200-day moving averages. Market segments closed mixed. Leaders were oil and gas, financials, and technology, which rose at least +0.19%. Laggards were basic materials, utilities, and health care, which fell at least -0.82%.

In China, the HSI closed at 21,225.88, compared to 21,225.90 at the prior close. The index closed -10.9% below its January 30th 23,882.06 high, but +16.7% above its 18,185.59 June 4, 2012 low. The index opened lower at 21,100, traded narrowly through early afternoon, then improved to narrow losses to immaterial by the close. The index ended -4.51% and -4.94% below its respective 20- and 50-day moving averages. Market segments closed mixed. Leaders were consumer services, oil and gas, and telecommunications, which gained at least +0.51%. Laggards were basic materials, utilities, and consumer goods, which lost at least -0.38%.

In Shanghai, the SHCOMP closed at 2,159.29, compared to 2,156.22 at the prior close. The index opened near 2,160, reversed lower to 2,139.47 in late morning, then reversed higher and rallied to a mid-afternoon 2,161.62 intraday high. The index closed -11.3% below its 2,434.48 February 5th high, but up +10.2% from its December 3rd 1,959.77 low. The SHCOMP closed -4.72% and -5.47% below its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were technology, consumer goods, and consumer services, which rose at least +0.55%. Financials gained +0.02%. Laggards were oil and gas, health care, and basic materials, which fell at least -0.66%.

In Europe, the major equity indexes are mixed, with better strength in the United Kingdom. The Euro Stoxx50, FTSE 100, and DAX, are up +0.06%, +0.83%, and +0.05%, respectively, while the CAC 40 is down -0.04%. The Spanish IBEX 35 is up +0.69%. The Italian FTSE MIB is up +0.61%. From its 2,702.69 prior day's close, the Euro Stoxx50 opened lower, fell to an early 2,686.21 intraday low, then rallied to breakeven by mid-session. The index currently trades at 2,703.58, fractionally higher on the day. Market segments are mixed. Leaders are financials, consumer services, and industrials, which are up at least +0.34%. Laggards are oil and gas, consumer goods, and health care, which are down at least -0.35%.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.37%, +1.21%, +1.49%, and +1.14%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -2.08%, -1.62%, -1.74%, and -1.54%, respectively. The prior week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.38%, -3.02%, -2.20%, and -1.53%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.58%, +8.25%, +6.06%, and +7.99%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.12830%, down from 0.13080% the prior day. USD 3-month LIBOR is 0.27225%, down from 0.27325% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 16.225 bps, compared to 17.375 bps the prior day, and compares to the January 6th high of 50.050 bps. Euribor-OIS is 11.95 bps, down from 12.200 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -11.630 bps, compared to -11.750 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and at the lower end of a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields are 4.58%, unchanged from 4.58% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.28%, compared to 4.27% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.56%, compared to 1.52% the prior day. Japanese 10-year debt yields are 0.84%, compared to 0.84% the prior day.

· The U.S. government overnight repo rate is 11 bps, up from 5 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are higher, with 2- and 10-year maturities yielding 0.270% and 2.196%, respectively, compared to 0.262% and 2.182% Monday. The yield curve widened +0.64 bps with the 2- to 10-year spread at +1.926%, compared to 1.920% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.952% on June 11, 2013.

· The U.S. dollar is mixed, weaker compared to the euro, but stronger compared to the Japanese yen and British pound. The dollar trades at US$80.718, compared to a US$80.870 intraday high and US$80.787 the prior day, and worse compared to its $82.582 50-day, US$82.135 100-day, and US$81.041 200-day averages. The euro trades at US$1.3377, compared to a US$1.3399 intraday high and US$1.3367 the prior day. The euro trades better compared to its US$1.3072 50-day and US$1.3102 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥95.33, compared to ¥94.51 the prior day. The yen trades better than its 50-day moving average ¥99.30, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index improved to -14.00, from -29.70 the prior day. The index is better compared to its respective -26.54 and -27.77 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mixed, with lower energy, lower precious metals, lower aluminum and copper, and mixed agriculture prices.

Volatility, Skew:

· The VIX closed at 16.80, down -2.04% from 17.15 at the prior close. The VIX is +7.80% above its 15.58 20-day moving average. Its 30-day high is 18.60. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 20.98, down -0.58% from 21.10 at the prior day's close. The V2X index trades +5.50% above its 19.89 20-day moving average, -11.9% below the 23.82 30-day high, and +33.1% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 19.85, down -0.20% from 19.89 the prior day. The VHSI index trades +10.7% above its 17.94 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 116.74, up +0.39% from 116.29 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· At 8:30, May MoM CPI rose 0.1%, compared to +0.2% survey and -0.4% revised prior. MoM ex food and energy rose +0.2%, compared to +0.2% survey and +0.1% prior.

· May MoM housing starts rose +6.8%, compared to +11.4% survey and -14.8% revised prior.

· May Mom building permits fell -3.1%, compared to -3.0% survey and +12.9% revised prior.

Overseas Economic Reporting and News:

· China - May YoY FDI rose +0.3%, compared to +0.4% prior.

· Japan - April final MoM industrial production rose +0.9%, compared to +1.7% prior. Capacity utilization rose +1.6%, compared to -0.8% prior. May final machine tool orders fell -7.4%, compared to -7.4% prior.

· Eurozone - June ZEW economic sentiment is 30.6, compared to 27.6 prior.

· Germany - June ZEW economic sentiment is 38.5, compared to 38.1 survey and 36.4 prior.

· United Kingdom - May MoM CPI rose +0.2%, compared to +0.1% survey and +0.2% prior.

Company Ratings/News:

· None.

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 14th, the index closed down -1.01% at 1626.73, from 1643.38 the prior week and 1667.47 close four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. The subsequent trend is lower, but without strong momentum. On Monday, the SPX rose +0.76% to close at 1639.04, from 1626.73 the prior day and 1626.13 4 days prior. The bullish price flip canceled the 3 June 12th buy setup and initiated a sell setup. The 8 sell countdown associated with the May 14th is unchanged since June 10th. The index closed +1.90% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 10 sell countdown associated with the February 1st perfection is unchanged since May 31st. The index closed +5.67% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, on December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Monday, the index closed at 60.62, up +0.76% from 60.16 the prior day and 60.91 four days prior. The June 12th buy setup progressed to 4. The 10 May 15th sell countdown is unchanged since June 10th.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 14th, the VIX rose +13.3% to 17.15, from 15.14 the prior week, and 12.45 weeks prior. The May 24th sell setup progressed to 4.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Monday, the VIX fell -2.04% to 16.80, from 17.15 at the prior close and 17.07 at the 4 days' prior close. The bearish flip canceled the 3 June 12th sell setup and initiated a buy setup. The 4 May 31st sell countdown is unchanged since June 12th. The VIX closed +61.3% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of June 14th, the index rose +0.98% to end at 1.3347, from 1.3218 the prior week and 1.2839 4 weeks prior. The buy setup progressed to 3. The sell countdown associated with the September 28th perfection is a deferred 13, unchanged since June 7th. The cross closed +1.5% above the 1.1964 risk level.

On a daily basis, on February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection completed. The perfection set a 1.3537 risk level, based on the June 6th 0.0231 trading range and 1.3306 intraday high. On June 11th, the May 29th sell setup perfected and initiated a sell countdown. With Monday's +0.15% higher close, the EURUSD cross ended at 1.3367, from 1.3347 the prior day and 1.3313 four days prior. The 3 June 11th sell countdown is unchanged since June 13th. The cross closed -1.26% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1295%, from 2.1718% the prior Friday and 1.9506% four weeks prior. The May 3rd sell setup progressed to 7. The 6 sell countdown associated with the February 1st perfection was unchanged.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Monday, the rate ended at 2.1817%, from 2.1295% the prior day and 2.1846% four days prior. The June 13th buy setup progressed to 3. The 8 May 20th sell countdown is unchanged since June 11th.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 14th, the index closed down -1.48% at 12,686.52, from 12,877.53 the prior week and 15,138.12 four weeks' prior. The June 7th buy setup progressed to 2. The index closed -13.4% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Tuesday, the index fell -0.20% to 13,007.28, from 13,033.12 the prior day and 13,289.32 four days prior. The June 13th buy setup progressed to 4. The 6 June 4th buy countdown was unchanged. The index closed -15.6% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 14th, the index closed at 20,969.14, down -2.81% from 21,575.26 the prior week and 23,082.68 four weeks prior. The May 31st buy setup progressed to 3. The April 5th buy countdown progressed to 5. The index closed 6.21% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Tuesday, the HSI fell fractionally to 21,225.88, from 21,225.90 the prior day and 21,354.66 four days prior. The 8 June 4th buy countdown was unchanged. The index closed -11.1% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 14th, the index closed the week down -2.21% at 2,162.04, from 2,210.90 the prior week and 2,282.87 four weeks prior. The June 7th buy setup progressed to 2. The 5 sell countdown associated with the February 8th perfection is unchanged since May 31st.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. On June 7th, the April 9th buy countdown completed and set a 2,142.63 buy risk level. Tuesday, the index rose +0.41% to 2,159.29, from 2,156.22 at the prior close and 2,210.90 4 days prior. The June 3rd buy setup progressed to 9. The index closed +0.78% above the risk level.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. On June 12th, the May 31st buy setup perfected and initiated a buy countdown. Monday, the index rose +1.33% to 2,702.69, from 2,667.32 the prior day and 2,683.20 at the prior 4 days' close. The bullish price flip initiated a sell setup. The 1 June 12th buy countdown is unchanged since June 12th. The index closed -3.01% below the 2,786.57 risk level.

1Q2013 Earnings. Of 497 reporting companies, 349 or 72.4% surprised positively on earnings, with a +5.02% surprise average. Of reporting companies, 241 or 48.6% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.50%.

Valuation. The SPX trades at 15.8x 2012 earnings ($103.41), 14.8x estimated 2013 earnings ($110.39), 13.2x estimated 2014 earnings ($122.90), and 12.0x estimated 2015 earnings ($135.35). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.81% and +11.3%, and +10.1%respectively.

Composite, index, and equity options. Options markets improved to neutral, from neutral to bearish the prior day. Composite options are neutral, index options are neutral, and equity options are neutral. The composite put/call ratio is 0.95, compared to 1.18 the prior day, and better compared to its 5- and 10-period moving averages of 1.06 and 1.10, respectively. The index put/call ratio is 1.04, compared to 1.31 the prior day, and better compared to its 5- and 10-period moving averages of 1.10 and 1.20, respectively. The equity put/call ratio closed the day at 0.90, compared to 1.11 the prior day, and better compared to its 5- and 10-period moving averages of 1.05 and 1.06, respectively.

NYSE Volume, Breadth Indicators. Volume rose +7.13% to 679.04 million shares, from 633.87 million shares the prior day, 0.91x the 746.19 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led decliners by +1,012 (compared to -237 the prior day), or 2.00:1. Up volume was 2.79:1 down volume.

KBW Bank Index (BKX). On lower and below average volume, the KBW bank index rose +0.76% to 60.62, from 60.16 at the prior day's close. The index traded narrowly lower through the first hour, then lost ground to 60.60 by mid-day and to a mid-afternoon 60.01 intraday low. Volume fell -8.26% to 44.169 million shares, from 48.144 million shares the prior day, or 0.78:1x the 56.799 million share 15-day moving average.

Large cap banks outperformed the regional banks' performance, as the KRX fell rose +1.59%.

This week, the BKX is up +0.76%. Last week, the BKX closed down -2.31%, compared to a loss of -0.71% the prior week. In June, the index is down -1.59%. In May, the BKX closed up +8.30%. For the year, the BKX is up +17.3%, better than the SPX's +14.1% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +4.61% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +86.2% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +52.5% in the same period.

The BKX index closed -50.0% below its March 30, 2007, record 121.16 high.

Technical indicators improved. The BKX recaptured its respective 5- and 10-day moving averages, but for a 5th consecutive session, closed below its 20-day moving average. The index closed -0.86% below and +3.30% above its respective 20- and 50-day moving averages. The index closed +6.35% and +13.2% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. Tuesday, the 20-day moving average fell -2 bps. The 50-day moving average rose +11 bps. Its 100-day moving average rose +7 bps, and the 200-day moving average rose +6 bps. The 20-day closed (by +2.46 points) above the 50-day, and the gap narrowed -14 bps. The 50-day moving average closed (by +5.12 points) above the 200-day moving average, and the gap widened +4 bps. The 100-day moving average closed (by +3.44 points) above the 200-day moving average since March 19th, and the gap was unchanged.

The directional movement indicator narrowed to +0.8340, from +0.8802 the prior day. Relative strength rose to 51.96, from 49.30 the prior day, in the middle of a neutral 30-70 range. Next resistance is 60.91; next support is at 60.32.

]]> SPX DJI RTY TRAN CCMP NYA VIX SKEW NKY EURUSD USGG10YR HSI SHCOMP SX5E CAC DAX FTSE JPY GBP EUR U.S. Futures Follow Japan, Europe Higher http://seekingalpha.com/instablog/179003-gary-townsend/1959112-u-s-futures-follow-japan-europe-higher?source=feed 1959112 This morning. On June 12, the U.S. equity market trend switched to correction, ending the uptrend that began on April 29th. Friday, major U.S. equity indexes closed lower, though on lower and below average volume. All major indexes surrendered their respective 5- and 10-day moving averages, and also closed below their 20-day moving averages. Short-term SPX relative strength indicators (RSI) fell but remained in a neutral range.

Today, in Asia, equity markets closed mixed, but Japanese equities rose markedly. The Nikkei 225 (NKY) rose +2.73% and closed above 13,000, which proved resistance the prior session. Tomorrow's Japanese equity futures are modestly higher. In Europe, equity markets are moderately higher, with somewhat greater strength in Paris and Frankfurt. Sovereign long-term interest rates are slightly lower. Commodities are mixed. Commentary focuses on this week's FOMC meeting, which commences tomorrow and reports on June 19th.

U.S. Treasury 10-year yields are 2.1260%, compared to 2.1295% at the prior close. U.S. repo rates are 5 bps, unchanged from 5 bps the prior day. Spanish and Italian 10-year debt yields are 4.58% and 4.25%, respectively, compared to 4.59% and 4.28%, the prior day. The U.S. dollar is mixed. U.S. options markets worsened to neutral to bearish, from neutral the prior day. CBOE skew fell to 116.29, from 117.28 the prior day, but remained in a neutral range.

The SPX closed at 1626.73, down -0.59% from 1636.36 the prior day. The index is up +2.81% since April 26th, when the prior corrective trend concluded, and +51.4% above the 1074.77 October 4, 2011, intraday low. Last week, the SPX closed down -1.01%, compared to a gain of +0.78% the prior week. In June, the SPX is down -0.25%. In May, the index closed up +2.08%. In 2013, the SPX is up +14.1%. In 2012, the SPX closed up +16.0%. Next resistance is at 1637.03. First support is at 1620.19.

Friday, the BKX fell -1.60%, underperforming the SPX. Last week, the BKX lost -2.31%, compared to a loss of -0.03% the prior week. In June, the BKX is down -2.34%, compared to a gain of +8.30% the prior month. This year, the BKX is up +17.3%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are higher, but near the bottom of middle of a 1630-1633 range. After a fair value adjustment of +1.30 points, SPX equity futures are at 1630.50, up +10.7 points. The SPX opens -0.94% below and +0.82% above its respective 20- and 50-day moving averages, and +3.50%, and +8.40% above its respective 100- and 200-day moving averages.

Friday. On lower and below average volume, U.S. equity markets closed moderately lower. rebounded after closing lower the prior 3 consecutive sessions. U.S. 10-year yields fell. The NYSE composite fell -0.73%, followed by the DJI, Nasdaq, and SPX, Nasdaq, and DJI, which fell -0.70%, -0.63%, and -0.59%, respectively. Market breadth was negative, with gainers 0.85:1 losing stocks. Most SPX market segments closed lower. Leaders were utilities, which rose +0.14%, and telecommunications and health care which fell at least -0.14%. Laggards were technology, oil and gas, and financials, which lost at least -0.82%.

NYSE volume fell -16.1% to 633.87 million shares, from 755.88 million shares the prior day, 0.87x the 754.64 million shares 20-day moving average volume.

Futures indicated a modestly higher open, but opened slightly lower. The index briefly reversed higher, setting a 1640.80 intraday high, but reversed lower by mid-morning and fell to a mid-afternoon 1623.96 intraday low. The index ended at 1626.73, down -2.44% from its recent historical high. Market volatility rose. From its prior 16.41 close, the VIX fell to an early 16.03 intraday low, but moved higher to a mid-afternoon 17.26 intraday high. The VIX ended the session at 17.15, up +4.51%. The all-time closing low was 11.26, set June 30, 1993.

On -9.26% lower volume, the DJ Transports fell -0.50%, compared to the DJI's -0.70% loss. The index opened modestly lower, reversed higher to an early 6,397.88 intraday high, but reversed lower in early afternoon to a mid-afternoon 6,299.91 intraday low. The TRAN closed at 6,309.48, -3.66% below its 6,549.16 May 17th record close. The index closed -0.54% below and +1.05% above its respective 20- and 50-day moving averages, and +2.95%, and +11.8% above its respective 100- and 200-day moving averages.

Technical factors worsened. SPX relative strength (RSI) fell to 49.04, from 52.03 the prior day. The CBOE put/call skew fell -0.84% to 116.29, from 117.28 the prior day. U.S. Treasury bond prices rose, as the 10-year yield fell -1.94 bps to end at 2.1295%, from 2.1489% the prior day.

Last week, the SPX, DJI, Nasdaq, and NYSE composite closed -1.01%, -1.17%, -1.32%, and -0.98%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In June, the SPX, DJI, Nasdaq, and NYSE composite are down -0.25%, -0.30%, -0.94%, and -0.41%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +14.1%, +15.0%, +13.4%, +9.71%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX support is 1620. Resistance is 1629 (10-day moving average), followed by 1642 (20-day moving average).

Distribution day count. The current corrective downtrend began on June 12th, following an uptrend that began on April 29th.

In Asia, equity markets closed mixed, though Japanese markets continued to rebounded from their oversold condition mid-week last. The Japanese Nikkei (NKY) closed up +2.73%, compared to a +1.94% gain the prior day. The Hang Seng (HSI) rose +1.22%, but the Shanghai composite (SHCOMP) fell -0.25%, respectively, following prior day losses of -2.19% and -2.74%, respectively. Today's volumes are unavailable.

The NKY's relative strength index rose to 43.28, from 38.21 the prior day, up from a low of 34.42 on June 13th, but down from an overbought 82.61 on May 22nd.

Commentary focused on this week's FOMC meeting, and currency and sovereign bond rate volatility.

Last week, the NKY closed down -1.48%, compared to a -6.51% loss the prior week. The HSI ended down -2.81%, compared to a loss of -3.65% the prior week. The SHCOMP closed off -2.21%, compared to a -3.90% loss the prior week. In June, the NKY is down -5.38%. The HSI is down -5.21%. The SHCOMP is down -6.28%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +25.4%. The HSI is down -6.32%. The SHCOMP is down -4.98%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 13,033.12, up from 12,686.52 the prior day. The index opened below 12,600, set an early 12,549.82 intraday low, but reversed higher during the first hour. The index trended higher through the session's remainder and closed at the intraday high. The index ended -16.6% below its recent high, but up +55.8% above its 8,295.63 July 18, 2012 low. The index closed -5.71% and -5.50% below its respective 20- and 50-day moving averages, but +2.51% and +18.4% above its respective 100- and 200-day moving averages. All market segments closed at least +1.13% higher. Leaders were basic materials, oil and gas, and telecommunications, which rose at least +3.33%. Laggards were industrials, technology, and financials.

In China, the HSI closed at 21,225.90, compared to 20,969.14 at the prior close. The index closed -10.9% below its January 30th yearly high, but +16.7% above its 18,185.59 June 4, 2012 low. The index opened above 21,000 and rose to a mid-session 21,272.75 intraday high. The index traded narrowly through late afternoon, the eased into the close. The index ended -4.90% and -5.03% below its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were oil and gas, industrials, and utilities, which gained +2.21%. Financials gained +0.97%. Laggards were technology, which gained +0.02%, and consumer services and consumer goods, which lost at least -0.21%.

In Shanghai, the SHCOMP closed at 2,156.22, compared to 2,162.04 at the prior close. The index opened above 2,165, but reversed lower to a mid-morning 2,147.35 intraday low. The index rallied to breakeven by mid-session, then traded narrowly through the afternoon session, ending with a modest loss. The index closed -11.4% below its 2,434.48 February 5th high, but up +10.0% from its December 3rd 1,959.77 low. The SHCOMP closed -5.00% and -3.75% below its respective 20- and 50-day moving averages. Most market segments closed lower. Leaders were health care, technology, and oil and gas, which rose at least +0.18%. Financials lost -0.52%. Laggards were basic materials, telecommunications, and consumer goods, which fell at least -0.66%.

In Europe, the major equity indexes are posting generally strong gains. The Euro Stoxx50, FTSE 100, CAC 40, and DAX, are up +1.38%, +0.68%, +1.51%, and +0.88%, respectively. The Spanish IBEX 35 is up +0.87%. The Italian FTSE MIB is up +0.48%. From its 2,667.32 prior day's close, the Euro Stoxx50 opened at 2,680, and rose to 22,715.50 by mid-session. The index currently trades at 2,704.27. All market segments are at least +0.56% higher. Leaders are health care, telecommunications, and utilities, which are up at least +1.71%. Laggards are financials, technology, and oil and gas.

Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -2.08%, -1.62%, -1.74%, and -1.54%, respectively. The prior week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.06%, -3.34%, -1.88%, and -1.23%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.91%, +7.89%, +6.40%, and +8.32%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.13080%, up from 0.12900% the prior day. USD 3-month LIBOR is 0.27375%, down from 0.27275% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 17.525 bps, compared to 16.625 bps the prior day, and compares to the January 6th high of 50.050 bps. Euribor-OIS is 12.22 bps, down from 12.30 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -11.630 bps, compared to -12.000 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and at the lower end of a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields are 4.59%, unchanged from 4.59% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.25%, compared to 4.28% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.51%, compared to 1.51% the prior day. Japanese 10-year debt yields are 0.84%, compared to 0.82% the prior day.

· The U.S. government overnight repo rate is 5 bps, unchanged from 5 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are lower, with 2- and 10-year maturities yielding 0.262% and 2.122%, respectively, compared to 0.270% and 2.130% Friday. The yield curve widened with the 2- to 10-year spread at +1.860%, compared to 1.859% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.952% on June 11, 2013.

· The U.S. dollar is mixed, weaker compared to the British pound, but stronger compared to euro and Japanese yen. The dollar trades at US$80.729, compared to a US$80.583 intraday high and US$80.670 the prior day, and worse compared to its $82.612 50-day, US$82.123 100-day, and US$81.036 200-day averages. The euro trades at US$1.3338, compared to a US$1.3319 intraday low and US$1.3347 the prior day. The euro trades better compared to its US$1.3065 50-day and US$1.3102 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥94.78, compared to 94.31 the prior day. The yen trades better than its 50-day moving average ¥99.38, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index worsened to -29.70, from -28.00 the prior day. The index is mixed compared to its respective -30.32 and -28.63 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mixed, with mixed energy, lower precious metals, mixed aluminum and copper, and mixed agriculture prices.

Volatility, Skew:

· The VIX closed at 17.15, up +4.51% from 16.41 at the prior close. The VIX is +11.6% above its 15.37 20-day moving average. Its 30-day high is 18.60. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 20.56, down -3.31% from 21.26 at the prior day's close. The V2X index trades +4.56% above its 19.66 20-day moving average, -13.7% below the 23.82 30-day high, and +30.5% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 19.89, down -2.83% from 20.47 the prior day. The VHSI index trades +12.2% above its 17.73 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 116.29, down -0.84% from 117.28 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· At 8:30, June Empire manufacturing, was 7.84, compared to 0.00 survey and -1.43% prior.

· At 10:00, the June NAHB housing market index, with 45 survey and 44 prior.

· The 2-day June FOMC meeting begins June 18, reporting on the 19th.

Overseas Economic Reporting and News:

· Japan - May Tokyo YoY condominium sales rose +49.2%, from -2.8% prior.

· Eurozone - YoY 1Q2013 labor costs rose +1.6%, compared to +1.3% prior.

Company Ratings/News:

· None.

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 14th, the index closed down -1.01% at 1626.73, from 1643.38 the prior week and 1667.47 close four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. On Friday, the SPX fell -0.59% to close at 1626.73., from 1636.36 the prior day and 1642.81 4 days prior. The June 12th buy setup progressed to 3. The 8 sell countdown associated with the May 14th is unchanged since June 10th. The index closed +1.13% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 10 sell countdown associated with the February 1st perfection is unchanged since May 31st. The index closed +5.67% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, the BKX signaled selling exhaustion on June 4th, then rallied to 44.65 on June 19th, when it perfected a sell setup. The index completed a sell countdown on August 8th, and on August 15th, perfected a daily follow-on sell setup. On September 6th, the BKX initiated a new setup with its +2.93% gain, which broke through resistance at 47.75. On September 14th, the index completed a sell countdown, followed on September 19th, with an unperfected sell setup. A sell countdown began on September 28th. On December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Friday, the index closed at 60.16, down -1.60% from 61.14 the prior day and 61.93 four days prior. The June 12th buy setup progressed to 3. The 10 May 15th sell countdown is unchanged since June 10th.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 14th, the VIX rose +13.3% to 17.15, from 15.14 the prior week, and 12.45 weeks prior. The May 24th sell setup progressed to 4.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Friday, the VIX rose +4.51% to 17.15, from 16.41 at the prior close and 15.44 at the 4 days' prior close. The June 12th sell setup progressed to 3. The 4 May 31st sell countdown is unchanged since June 12th. The VIX closed +64.8% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of June 14th, the index rose +0.98% to end at 1.3347, from 1.3218 the prior week and 1.2839 4 weeks prior. The buy setup progressed to 3. The sell countdown associated with the September 28th perfection is a deferred 13, unchanged since June 7th. The cross closed +1.5% above the 1.1964 risk level.

On a daily basis, the EURUSD cross perfected a sell setup on September 12th. The subsequent trend was lower until a buy setup initiated on November 2nd and perfected on November 14th with a 1.2736 close. The index initiated a buy setup the following day and perfected the setup on November 27th at 1.2943. On January 11th, the sell countdown stemming from the November 27th completed, setting a 1.3393 risk level. On January 24th, a bullish price flip initiated a sell setup which rose to an unperfected 9 on February 5th. On February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection completed. On June 11th, the May 29th sell setup perfected and initiated a sell countdown. With Friday's -0.21% lower close, the EURUSD cross ended at 1.3347, from 1.3375 the prior day and 1.3257 four days prior. The June 11th sell countdown progressed to 4. The cross closed -0.34% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1295%, from 2.1718% the prior Friday and 1.9506% four weeks prior. The May 3rd sell setup progressed to 7. The 6 sell countdown associated with the February 1st perfection was unchanged.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Friday, the rate ended at 2.1295%, from 2.1489% the prior day and 2.2097% four days prior. The June 13th buy setup progressed to 2. The 8 May 20th sell countdown is unchanged since June 11th.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 14th, the index closed down -1.48% at 12,686.52, from 12,877.53 the prior week and 15,138.12 four weeks' prior. The June 7th buy setup progressed to 2. The index closed -13.4% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Monday, the index rose +2.73% to 13,033.12, from 12,686.52 the prior day and 13,514.20 four days prior. The June 13th buy setup progressed to 3. The 6 June 4th buy countdown was unchanged. The index closed -15.4% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 14th, the index closed at 20,969.14, down -2.81% from 21,575.26 the prior week and 23,082.68 four weeks prior. The May 31st buy setup progressed to 3. The April 5th buy countdown progressed to 5. The index closed 6.21% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Monday, the HSI rose +1.22% to 21,225.90, from 20,969.14 the prior day and 21,615.09 four days prior. The 8 June 4th buy countdown was unchanged. The index closed -11.1% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 14th, the index closed the week down -2.21% at 2,162.04, from 2,210.90 the prior week and 2,282.87 four weeks prior. The June 7th buy setup progressed to 2. The 5 sell countdown associated with the February 8th perfection is unchanged since May 31st.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. On June 7th, the April 9th buy countdown completed and set a 2,142.63 buy risk level. Monday, the index fell -0.25% to 2,156.22, from 2,162.04 at the prior close and 2,242.11 4 days prior. The June 3rd buy setup progressed to 8. The index closed +0.63% above the risk level.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. On June 12th, the May 31st buy setup perfected and initiated a buy countdown. Friday, the index rose +0.21% to 2,667.32, from 2,661.71 the prior day and 2,719.40 at the prior 4 days' close. The June 12th buy countdown is unchanged since June 12th. The index closed -4.28% below the 2,786.57 risk level.

1Q2013 Earnings. Of 497 reporting companies, 349 or 72.4% surprised positively on earnings, with a +5.02% surprise average. Of reporting companies, 241 or 48.6% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.50%.

Valuation. The SPX trades at 15.8x 2012 earnings ($103.41), 14.8x estimated 2013 earnings ($110.39), 13.2x estimated 2014 earnings ($122.90), and 12.0x estimated 2015 earnings ($135.35). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.81% and +11.3%, and +10.1%respectively.

Options. Options markets worsened to neutral to bearish, from neutral the prior day. Composite options are neutral, index options are neutral, and equity options are bearish. The composite put/call ratio is 1.18, compared to 0.97 the prior day, and worse compared to its 5- and 10-period moving averages of 1.08 and 1.10, respectively. The index put/call ratio is 1.31, compared to 1.15 the prior day, and worse compared to its 5- and 10-period moving averages of 1.12 and 1.19, respectively. The equity put/call ratio closed the day at 1.11, compared to 0.86 the prior day, and better compared to its 5- and 10-period moving averages of 1.08 and 1.06, respectively.

NYSE Volume, Breadth Indicators. Volume fell -16.1% to 633.87 million shares, from 755.88 million shares the prior day, 0.84x the 754.64 million share 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged decliners by -237 (compared to +2,126 the prior day), or 0.85:1. Up volume was 0.49:1 down volume.

BKX. On lower and below average volume, the KBW bank index fell -1.60% to 60.16, from 61.14 at the prior day's close. The index traded narrowly lower through the first hour, then lost ground to 60.60 by mid-day and to a mid-afternoon 60.01 intraday low. Volume fell -8.26% to 44.169 million shares, from 48.144 million shares the prior day, or 0.78:1x the 56.799 million share 15-day moving average.

Large cap banks outperformed the regional banks' performance, as the KRX fell rose +1.59%.

Last week, the BKX closed down -2.31%, compared to a loss of -0.71% the prior week. In June, the index is down -2.34%. In May, the BKX closed up +8.30%. For the year, the BKX is up +17.3%, better than the SPX's +14.1% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +3.81% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +84.8% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +51.4% in the same period.

The BKX index closed -50.4% below its March 30, 2007, record 121.16 high.

Technical indicators worsened. The BKX surrendered its 10-day moving average, and for a 4th consecutive day, the index also closed below its 5- and 20-day moving averages. The index closed -1.01% below and +4.20% above its respective 20- and 50-day moving averages. The index closed +5.67% and +12.5.0% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. Friday, the 20-day moving average was unchanged. The 50-day moving average rose +10 bps. Its 100-day moving average rose +6 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.60 points) above the 50-day, and the gap narrowed -10 bps. The 50-day moving average closed (by +5.08 points) above the 200-day moving average, and the gap widened +4 bps. The 100-day moving average closed (by +3.44 points) above the 200-day moving average since March 19th, and the gap was unchanged.

The directional movement indicator narrowed to +0.8802, from +1.5700 the prior day. Relative strength fell to 49.30, from 55.36 the prior day, in the middle of a neutral 30-70 range. Next resistance is 60.85; next support is at 59.74.

]]> Mon, 17 Jun 2013 09:17:23 -0400 This morning. On June 12, the U.S. equity market trend switched to correction, ending the uptrend that began on April 29th. Friday, major U.S. equity indexes closed lower, though on lower and below average volume. All major indexes surrendered their respective 5- and 10-day moving averages, and also closed below their 20-day moving averages. Short-term SPX relative strength indicators (RSI) fell but remained in a neutral range.

Today, in Asia, equity markets closed mixed, but Japanese equities rose markedly. The Nikkei 225 (NKY) rose +2.73% and closed above 13,000, which proved resistance the prior session. Tomorrow's Japanese equity futures are modestly higher. In Europe, equity markets are moderately higher, with somewhat greater strength in Paris and Frankfurt. Sovereign long-term interest rates are slightly lower. Commodities are mixed. Commentary focuses on this week's FOMC meeting, which commences tomorrow and reports on June 19th.

U.S. Treasury 10-year yields are 2.1260%, compared to 2.1295% at the prior close. U.S. repo rates are 5 bps, unchanged from 5 bps the prior day. Spanish and Italian 10-year debt yields are 4.58% and 4.25%, respectively, compared to 4.59% and 4.28%, the prior day. The U.S. dollar is mixed. U.S. options markets worsened to neutral to bearish, from neutral the prior day. CBOE skew fell to 116.29, from 117.28 the prior day, but remained in a neutral range.

The SPX closed at 1626.73, down -0.59% from 1636.36 the prior day. The index is up +2.81% since April 26th, when the prior corrective trend concluded, and +51.4% above the 1074.77 October 4, 2011, intraday low. Last week, the SPX closed down -1.01%, compared to a gain of +0.78% the prior week. In June, the SPX is down -0.25%. In May, the index closed up +2.08%. In 2013, the SPX is up +14.1%. In 2012, the SPX closed up +16.0%. Next resistance is at 1637.03. First support is at 1620.19.

Friday, the BKX fell -1.60%, underperforming the SPX. Last week, the BKX lost -2.31%, compared to a loss of -0.03% the prior week. In June, the BKX is down -2.34%, compared to a gain of +8.30% the prior month. This year, the BKX is up +17.3%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are higher, but near the bottom of middle of a 1630-1633 range. After a fair value adjustment of +1.30 points, SPX equity futures are at 1630.50, up +10.7 points. The SPX opens -0.94% below and +0.82% above its respective 20- and 50-day moving averages, and +3.50%, and +8.40% above its respective 100- and 200-day moving averages.

Friday. On lower and below average volume, U.S. equity markets closed moderately lower. rebounded after closing lower the prior 3 consecutive sessions. U.S. 10-year yields fell. The NYSE composite fell -0.73%, followed by the DJI, Nasdaq, and SPX, Nasdaq, and DJI, which fell -0.70%, -0.63%, and -0.59%, respectively. Market breadth was negative, with gainers 0.85:1 losing stocks. Most SPX market segments closed lower. Leaders were utilities, which rose +0.14%, and telecommunications and health care which fell at least -0.14%. Laggards were technology, oil and gas, and financials, which lost at least -0.82%.

NYSE volume fell -16.1% to 633.87 million shares, from 755.88 million shares the prior day, 0.87x the 754.64 million shares 20-day moving average volume.

Futures indicated a modestly higher open, but opened slightly lower. The index briefly reversed higher, setting a 1640.80 intraday high, but reversed lower by mid-morning and fell to a mid-afternoon 1623.96 intraday low. The index ended at 1626.73, down -2.44% from its recent historical high. Market volatility rose. From its prior 16.41 close, the VIX fell to an early 16.03 intraday low, but moved higher to a mid-afternoon 17.26 intraday high. The VIX ended the session at 17.15, up +4.51%. The all-time closing low was 11.26, set June 30, 1993.

On -9.26% lower volume, the DJ Transports fell -0.50%, compared to the DJI's -0.70% loss. The index opened modestly lower, reversed higher to an early 6,397.88 intraday high, but reversed lower in early afternoon to a mid-afternoon 6,299.91 intraday low. The TRAN closed at 6,309.48, -3.66% below its 6,549.16 May 17th record close. The index closed -0.54% below and +1.05% above its respective 20- and 50-day moving averages, and +2.95%, and +11.8% above its respective 100- and 200-day moving averages.

Technical factors worsened. SPX relative strength (RSI) fell to 49.04, from 52.03 the prior day. The CBOE put/call skew fell -0.84% to 116.29, from 117.28 the prior day. U.S. Treasury bond prices rose, as the 10-year yield fell -1.94 bps to end at 2.1295%, from 2.1489% the prior day.

Last week, the SPX, DJI, Nasdaq, and NYSE composite closed -1.01%, -1.17%, -1.32%, and -0.98%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In June, the SPX, DJI, Nasdaq, and NYSE composite are down -0.25%, -0.30%, -0.94%, and -0.41%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +14.1%, +15.0%, +13.4%, +9.71%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX support is 1620. Resistance is 1629 (10-day moving average), followed by 1642 (20-day moving average).

Distribution day count. The current corrective downtrend began on June 12th, following an uptrend that began on April 29th.

In Asia, equity markets closed mixed, though Japanese markets continued to rebounded from their oversold condition mid-week last. The Japanese Nikkei (NKY) closed up +2.73%, compared to a +1.94% gain the prior day. The Hang Seng (HSI) rose +1.22%, but the Shanghai composite (SHCOMP) fell -0.25%, respectively, following prior day losses of -2.19% and -2.74%, respectively. Today's volumes are unavailable.

The NKY's relative strength index rose to 43.28, from 38.21 the prior day, up from a low of 34.42 on June 13th, but down from an overbought 82.61 on May 22nd.

Commentary focused on this week's FOMC meeting, and currency and sovereign bond rate volatility.

Last week, the NKY closed down -1.48%, compared to a -6.51% loss the prior week. The HSI ended down -2.81%, compared to a loss of -3.65% the prior week. The SHCOMP closed off -2.21%, compared to a -3.90% loss the prior week. In June, the NKY is down -5.38%. The HSI is down -5.21%. The SHCOMP is down -6.28%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +25.4%. The HSI is down -6.32%. The SHCOMP is down -4.98%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 13,033.12, up from 12,686.52 the prior day. The index opened below 12,600, set an early 12,549.82 intraday low, but reversed higher during the first hour. The index trended higher through the session's remainder and closed at the intraday high. The index ended -16.6% below its recent high, but up +55.8% above its 8,295.63 July 18, 2012 low. The index closed -5.71% and -5.50% below its respective 20- and 50-day moving averages, but +2.51% and +18.4% above its respective 100- and 200-day moving averages. All market segments closed at least +1.13% higher. Leaders were basic materials, oil and gas, and telecommunications, which rose at least +3.33%. Laggards were industrials, technology, and financials.

In China, the HSI closed at 21,225.90, compared to 20,969.14 at the prior close. The index closed -10.9% below its January 30th yearly high, but +16.7% above its 18,185.59 June 4, 2012 low. The index opened above 21,000 and rose to a mid-session 21,272.75 intraday high. The index traded narrowly through late afternoon, the eased into the close. The index ended -4.90% and -5.03% below its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were oil and gas, industrials, and utilities, which gained +2.21%. Financials gained +0.97%. Laggards were technology, which gained +0.02%, and consumer services and consumer goods, which lost at least -0.21%.

In Shanghai, the SHCOMP closed at 2,156.22, compared to 2,162.04 at the prior close. The index opened above 2,165, but reversed lower to a mid-morning 2,147.35 intraday low. The index rallied to breakeven by mid-session, then traded narrowly through the afternoon session, ending with a modest loss. The index closed -11.4% below its 2,434.48 February 5th high, but up +10.0% from its December 3rd 1,959.77 low. The SHCOMP closed -5.00% and -3.75% below its respective 20- and 50-day moving averages. Most market segments closed lower. Leaders were health care, technology, and oil and gas, which rose at least +0.18%. Financials lost -0.52%. Laggards were basic materials, telecommunications, and consumer goods, which fell at least -0.66%.

In Europe, the major equity indexes are posting generally strong gains. The Euro Stoxx50, FTSE 100, CAC 40, and DAX, are up +1.38%, +0.68%, +1.51%, and +0.88%, respectively. The Spanish IBEX 35 is up +0.87%. The Italian FTSE MIB is up +0.48%. From its 2,667.32 prior day's close, the Euro Stoxx50 opened at 2,680, and rose to 22,715.50 by mid-session. The index currently trades at 2,704.27. All market segments are at least +0.56% higher. Leaders are health care, telecommunications, and utilities, which are up at least +1.71%. Laggards are financials, technology, and oil and gas.

Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -2.08%, -1.62%, -1.74%, and -1.54%, respectively. The prior week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.06%, -3.34%, -1.88%, and -1.23%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.91%, +7.89%, +6.40%, and +8.32%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.13080%, up from 0.12900% the prior day. USD 3-month LIBOR is 0.27375%, down from 0.27275% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 17.525 bps, compared to 16.625 bps the prior day, and compares to the January 6th high of 50.050 bps. Euribor-OIS is 12.22 bps, down from 12.30 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -11.630 bps, compared to -12.000 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and at the lower end of a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields are 4.59%, unchanged from 4.59% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.25%, compared to 4.28% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.51%, compared to 1.51% the prior day. Japanese 10-year debt yields are 0.84%, compared to 0.82% the prior day.

· The U.S. government overnight repo rate is 5 bps, unchanged from 5 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are lower, with 2- and 10-year maturities yielding 0.262% and 2.122%, respectively, compared to 0.270% and 2.130% Friday. The yield curve widened with the 2- to 10-year spread at +1.860%, compared to 1.859% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.952% on June 11, 2013.

· The U.S. dollar is mixed, weaker compared to the British pound, but stronger compared to euro and Japanese yen. The dollar trades at US$80.729, compared to a US$80.583 intraday high and US$80.670 the prior day, and worse compared to its $82.612 50-day, US$82.123 100-day, and US$81.036 200-day averages. The euro trades at US$1.3338, compared to a US$1.3319 intraday low and US$1.3347 the prior day. The euro trades better compared to its US$1.3065 50-day and US$1.3102 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥94.78, compared to 94.31 the prior day. The yen trades better than its 50-day moving average ¥99.38, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index worsened to -29.70, from -28.00 the prior day. The index is mixed compared to its respective -30.32 and -28.63 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mixed, with mixed energy, lower precious metals, mixed aluminum and copper, and mixed agriculture prices.

Volatility, Skew:

· The VIX closed at 17.15, up +4.51% from 16.41 at the prior close. The VIX is +11.6% above its 15.37 20-day moving average. Its 30-day high is 18.60. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 20.56, down -3.31% from 21.26 at the prior day's close. The V2X index trades +4.56% above its 19.66 20-day moving average, -13.7% below the 23.82 30-day high, and +30.5% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 19.89, down -2.83% from 20.47 the prior day. The VHSI index trades +12.2% above its 17.73 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 116.29, down -0.84% from 117.28 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· At 8:30, June Empire manufacturing, was 7.84, compared to 0.00 survey and -1.43% prior.

· At 10:00, the June NAHB housing market index, with 45 survey and 44 prior.

· The 2-day June FOMC meeting begins June 18, reporting on the 19th.

Overseas Economic Reporting and News:

· Japan - May Tokyo YoY condominium sales rose +49.2%, from -2.8% prior.

· Eurozone - YoY 1Q2013 labor costs rose +1.6%, compared to +1.3% prior.

Company Ratings/News:

· None.

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 14th, the index closed down -1.01% at 1626.73, from 1643.38 the prior week and 1667.47 close four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. On Friday, the SPX fell -0.59% to close at 1626.73., from 1636.36 the prior day and 1642.81 4 days prior. The June 12th buy setup progressed to 3. The 8 sell countdown associated with the May 14th is unchanged since June 10th. The index closed +1.13% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The bearish price flip canceled the 7 April 26th sell setup and initiated a buy setup. The 10 sell countdown associated with the February 1st perfection is unchanged since May 31st. The index closed +5.67% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, the BKX signaled selling exhaustion on June 4th, then rallied to 44.65 on June 19th, when it perfected a sell setup. The index completed a sell countdown on August 8th, and on August 15th, perfected a daily follow-on sell setup. On September 6th, the BKX initiated a new setup with its +2.93% gain, which broke through resistance at 47.75. On September 14th, the index completed a sell countdown, followed on September 19th, with an unperfected sell setup. A sell countdown began on September 28th. On December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Friday, the index closed at 60.16, down -1.60% from 61.14 the prior day and 61.93 four days prior. The June 12th buy setup progressed to 3. The 10 May 15th sell countdown is unchanged since June 10th.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 14th, the VIX rose +13.3% to 17.15, from 15.14 the prior week, and 12.45 weeks prior. The May 24th sell setup progressed to 4.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Friday, the VIX rose +4.51% to 17.15, from 16.41 at the prior close and 15.44 at the 4 days' prior close. The June 12th sell setup progressed to 3. The 4 May 31st sell countdown is unchanged since June 12th. The VIX closed +64.8% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of June 14th, the index rose +0.98% to end at 1.3347, from 1.3218 the prior week and 1.2839 4 weeks prior. The buy setup progressed to 3. The sell countdown associated with the September 28th perfection is a deferred 13, unchanged since June 7th. The cross closed +1.5% above the 1.1964 risk level.

On a daily basis, the EURUSD cross perfected a sell setup on September 12th. The subsequent trend was lower until a buy setup initiated on November 2nd and perfected on November 14th with a 1.2736 close. The index initiated a buy setup the following day and perfected the setup on November 27th at 1.2943. On January 11th, the sell countdown stemming from the November 27th completed, setting a 1.3393 risk level. On January 24th, a bullish price flip initiated a sell setup which rose to an unperfected 9 on February 5th. On February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection completed. On June 11th, the May 29th sell setup perfected and initiated a sell countdown. With Friday's -0.21% lower close, the EURUSD cross ended at 1.3347, from 1.3375 the prior day and 1.3257 four days prior. The June 11th sell countdown progressed to 4. The cross closed -0.34% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1295%, from 2.1718% the prior Friday and 1.9506% four weeks prior. The May 3rd sell setup progressed to 7. The 6 sell countdown associated with the February 1st perfection was unchanged.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Friday, the rate ended at 2.1295%, from 2.1489% the prior day and 2.2097% four days prior. The June 13th buy setup progressed to 2. The 8 May 20th sell countdown is unchanged since June 11th.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 14th, the index closed down -1.48% at 12,686.52, from 12,877.53 the prior week and 15,138.12 four weeks' prior. The June 7th buy setup progressed to 2. The index closed -13.4% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Monday, the index rose +2.73% to 13,033.12, from 12,686.52 the prior day and 13,514.20 four days prior. The June 13th buy setup progressed to 3. The 6 June 4th buy countdown was unchanged. The index closed -15.4% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 14th, the index closed at 20,969.14, down -2.81% from 21,575.26 the prior week and 23,082.68 four weeks prior. The May 31st buy setup progressed to 3. The April 5th buy countdown progressed to 5. The index closed 6.21% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Monday, the HSI rose +1.22% to 21,225.90, from 20,969.14 the prior day and 21,615.09 four days prior. The 8 June 4th buy countdown was unchanged. The index closed -11.1% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 14th, the index closed the week down -2.21% at 2,162.04, from 2,210.90 the prior week and 2,282.87 four weeks prior. The June 7th buy setup progressed to 2. The 5 sell countdown associated with the February 8th perfection is unchanged since May 31st.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. On June 7th, the April 9th buy countdown completed and set a 2,142.63 buy risk level. Monday, the index fell -0.25% to 2,156.22, from 2,162.04 at the prior close and 2,242.11 4 days prior. The June 3rd buy setup progressed to 8. The index closed +0.63% above the risk level.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. On June 12th, the May 31st buy setup perfected and initiated a buy countdown. Friday, the index rose +0.21% to 2,667.32, from 2,661.71 the prior day and 2,719.40 at the prior 4 days' close. The June 12th buy countdown is unchanged since June 12th. The index closed -4.28% below the 2,786.57 risk level.

1Q2013 Earnings. Of 497 reporting companies, 349 or 72.4% surprised positively on earnings, with a +5.02% surprise average. Of reporting companies, 241 or 48.6% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.50%.

Valuation. The SPX trades at 15.8x 2012 earnings ($103.41), 14.8x estimated 2013 earnings ($110.39), 13.2x estimated 2014 earnings ($122.90), and 12.0x estimated 2015 earnings ($135.35). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.81% and +11.3%, and +10.1%respectively.

Options. Options markets worsened to neutral to bearish, from neutral the prior day. Composite options are neutral, index options are neutral, and equity options are bearish. The composite put/call ratio is 1.18, compared to 0.97 the prior day, and worse compared to its 5- and 10-period moving averages of 1.08 and 1.10, respectively. The index put/call ratio is 1.31, compared to 1.15 the prior day, and worse compared to its 5- and 10-period moving averages of 1.12 and 1.19, respectively. The equity put/call ratio closed the day at 1.11, compared to 0.86 the prior day, and better compared to its 5- and 10-period moving averages of 1.08 and 1.06, respectively.

NYSE Volume, Breadth Indicators. Volume fell -16.1% to 633.87 million shares, from 755.88 million shares the prior day, 0.84x the 754.64 million share 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged decliners by -237 (compared to +2,126 the prior day), or 0.85:1. Up volume was 0.49:1 down volume.

BKX. On lower and below average volume, the KBW bank index fell -1.60% to 60.16, from 61.14 at the prior day's close. The index traded narrowly lower through the first hour, then lost ground to 60.60 by mid-day and to a mid-afternoon 60.01 intraday low. Volume fell -8.26% to 44.169 million shares, from 48.144 million shares the prior day, or 0.78:1x the 56.799 million share 15-day moving average.

Large cap banks outperformed the regional banks' performance, as the KRX fell rose +1.59%.

Last week, the BKX closed down -2.31%, compared to a loss of -0.71% the prior week. In June, the index is down -2.34%. In May, the BKX closed up +8.30%. For the year, the BKX is up +17.3%, better than the SPX's +14.1% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +3.81% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +84.8% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +51.4% in the same period.

The BKX index closed -50.4% below its March 30, 2007, record 121.16 high.

Technical indicators worsened. The BKX surrendered its 10-day moving average, and for a 4th consecutive day, the index also closed below its 5- and 20-day moving averages. The index closed -1.01% below and +4.20% above its respective 20- and 50-day moving averages. The index closed +5.67% and +12.5.0% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. Friday, the 20-day moving average was unchanged. The 50-day moving average rose +10 bps. Its 100-day moving average rose +6 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.60 points) above the 50-day, and the gap narrowed -10 bps. The 50-day moving average closed (by +5.08 points) above the 200-day moving average, and the gap widened +4 bps. The 100-day moving average closed (by +3.44 points) above the 200-day moving average since March 19th, and the gap was unchanged.

The directional movement indicator narrowed to +0.8802, from +1.5700 the prior day. Relative strength fell to 49.30, from 55.36 the prior day, in the middle of a neutral 30-70 range. Next resistance is 60.85; next support is at 59.74.

]]> SPX DJI RTY TRAN CCMP NYA VIX SKEW NKY EURUSD USGG10YR HSI SHCOMP SX5E CAC DAX FTSE JPY GBP EUR U.S. Futures Rise Modestly; Asia Rebounds http://seekingalpha.com/instablog/179003-gary-townsend/1952932-u-s-futures-rise-modestly-asia-rebounds?source=feed 1952932 This morning. On June 12, the U.S. equity market trend switched to correction, ending the uptrend that began on April 29th. Thursday, major U.S. equity indexes rebounded from oversold condition. Volume rose, but was slightly below its 20-day average. All major indexes recaptured their respective 5- and 10-day moving averages, but below their 20-day moving averages. Short-term SPX relative strength indicators (RSI) rose but remain in a neutral range.

Today, in Asia, equity markets rebounded from recent losses, with greater strength in Tokyo, but less than indicated in pre-market futures activity. Japanese equity markets opened higher, but the Nikkei 225 (NKY) found resistance at 12,900 through the session. lower, sold down to intraday lows by late morning, and traded narrowly through the close. The NKY closed below its 50- and 100-day moving averages. In Europe, equity markets are modestly higher, with somewhat greater strength in Frankfurt. Sovereign long-term interest rates are lower. Commodities are mostly higher. Commentary focuses on latest economic data, and recent currency and interest rate volatility.

U.S. Treasury 10-year yields are 2.1169%, compared to 2.1489% at the prior close. U.S. repo rates are 5 bps, unchanged from 5 bps the prior day. Spanish and Italian 10-year debt yields are 4.54% and 4.27%, respectively, compared to 4.62% and 4.36%, the prior day. The U.S. dollar is mixed. U.S. options markets improved to neutral, from bearish to neutral the prior day. CBOE skew rose to 117.28, from 115.56 the prior day, but remained in a neutral range.

The SPX closed at 1636.36, up +1.48% from 1612.52 the prior day, ending a decline in the prior 3 consecutive sessions. The index is up +3.42% since April 26th, the when the prior corrective trend concluded, and +52.3% above the 1074.77 October 4, 2011, intraday low. This week, the SPX is down -0.43%. Last week, the SPX rose +0.78%, compared to a loss of -1.14% the prior week. In June, the SPX is up +0.34%. In May, the index closed up +2.08%. In 2013, the SPX is up +14.7%. In 2012, the SPX closed up +16.0%. Next resistance is at 1647.72. First support is at 1616.54.

Thursday, the BKX rose +1.44%, underperforming the SPX. This week, the BKX is down -0.71%, compared to a loss of -0.03% the prior week. In June, the BKX is down -0.75%, compared to a gain of +8.30% the prior month. This year, the BKX is up +19.2%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are slightly higher, but near the middle of a 1626-1631 range. After a fair value adjustment of -2.34 points, SPX equity futures are at 1629.00, up +0.34 points. The SPX opens -0.42% below and +1.50% above its respective 20- and 50-day moving averages, and +4.20%, and +9.12% above its respective 100- and 200-day moving averages.

Thursday. On greater, but slightly below average volume, U.S. equity markets rebounded after closing lower the prior 3 consecutive sessions. U.S. 10-year yields fell. The NYSE composite rose +1.54%, followed by the SPX, Nasdaq, and DJI, which rose +1.48%, +1.32%, and +1.21%, respectively. Market breadth was positive, with gainers 5.46:1 losing stocks. All SPX market segments closed at least +1.01% higher. Leaders were financials, oil and gas, and utilities, which rose at least +1.64%. Laggards were health care, consumer goods, and technology.

NYSE volume rose +9.24% to 755.88 million shares, from 691.94 million shares the prior day, 1.00x the 757.16 million shares 20-day moving average volume.

Futures indicated a higher open, but from its 1612.52 prior day close, the SPX opened modestly lower, touching a 1608.07 intraday low. The index reversed higher before 10:00, and trended higher through late session to its 1639.25 intraday high. The index ended at 1636.36, down -1.87% from its recent historical high. Market volatility declined. From its prior 18.59 close, the VIX opened lower and generally mirrored the market trend, ending just better than its late 16.37 intraday low. The VIX ended the session at 16.41, down -11.7%. The all-time closing low was 11.26, set June 30, 1993.

On +22.4% greater volume, the DJ Transports rose +1.90%, compared to the DJI's +1.21% gain. The index opened modestly lower, fell to a 6,203.91 intraday low, reversed higher by 10:00 and rallied through the session to a late 6,355.10 intraday high. The TRAN closed at 6,341.39, -3.17% below its 6,549.16 May 17th record close. The index closed -0.16% below and +1.66% above its respective 20- and 50-day moving averages, and +3.56%, and +12.5% above its respective 100- and 200-day moving averages.

Technical factors were little changed. SPX relative strength (RSI) rose to 52.03, from 44.20 the prior day. The CBOE put/call skew rose +1.49% to 117.28, from 115.56 the prior day. U.S. Treasury bond prices rose, as the 10-year yield fell -7.91 bps to end at 2.1489%, from 2.2280% the prior day.

This week, the SPX, DJI, Nasdaq, and NYSE composite are down -0.43%, -0.47%, -0.69%, and -0.26%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In June, the SPX, DJI, and NYSE composite are up +0.34%, +0.40%, and +0.31%, respectively, while the Nasdaq is down -0.31%. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +14.7%, +15.8%, +14.1%, +10.5%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX support is 1632 (5-day moving average). Resistance is 1643 (20-day moving average).

Distribution day count. The current corrective downtrend began on June 12th, following an uptrend that began on April 29th.

In Asia, equity markets rebounded from oversold conditions. The Japanese Nikkei (NKY) closed up +1.94%, compared to the prior day's -6.35% loss. The Hang Seng (HSI) and Shanghai composite (SHCOMP) rose +0.39% and +0.65%, respectively, after prior day losses of -2.19% and -2.74%, respectively. Volumes rose in yesterday's sell-off. Today's are unavailable.

The NKY's relative strength index rose to 38.21, from 34.42 the prior day, down from an overbought 82.61 on May 22nd.

Commentary focused on improving U.S. economic data, and currency and sovereign bond rate volatility.

This week, the NKY closed down -1.48%, compared to a -6.51% loss the prior week. The HSI ended down -2.81%, compared to a loss of -3.65% the prior week. The SHCOMP closed off -2.21%, compared to a -3.90% loss the prior week. In June, the NKY is down -7.90%. The HSI is down -6.35%. The SHCOMP is down -6.02%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +22.0%. The HSI is down -7.45%. The SHCOMP is down -4.72%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 12,686.52, up from 12,445.38 the prior day. The index opened above 12,650 and traded as high as 12,900.65 late in the session, but sold off in the final hour. The index ended -18.8% below its recent high, but up +52.9% above its 8,295.63 July 18, 2012 low. The index closed -9.03% and -7.92% below its respective 20- and 50-day moving averages, but +-0.08% below and +15.5% above its respective 100- and 200-day moving averages. All market segments closed at least +1.94% higher. Leaders were utilities, health care, and financials, which rose at least +2.20%. Laggards were oil and gas, technology, and consumer goods.

In China, the HSI closed at 20,969.14, compared to 20,887.04 at the prior close. The index closed -12.0% below its January 30th yearly high, but +15.3% above its 18,185.59 June 4, 2012 low. The index opened above 21,050 and rose to a mid-morning 21,164.68 intraday high, then eased through the session to end just better than its 20,954.66 intraday low. The index ended -6.49% and -6.29% below its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were consumer goods, utilities, and consumer services, which gained +1.01%. Financials gained +0.29%. Laggards were telecommunications, which rose +0.03%, and industrials and basic materials, which lost at least -0.04%.

In Shanghai, the SHCOMP closed at 2,162.04, compared to 2,148.03 at the prior close. The index traded narrowly through the morning session, then rallied and trended higher through the afternoon session to end just short of its 2,163.63 intraday high. The index closed -11.2% below its 2,434.48 February 5th high, but up +10.3% from its December 3rd 1,959.77 low. The SHCOMP closed -4.86% and -3.61% below its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were health care, technology, and consumer services, which rose at least +1.74%. Laggards were financials and basic materials, which rose at least +0.25%, and oil and gas, which fell at least -0.09%.

In Europe, the major equity indexes are modestly higher. The Euro Stoxx50, FTSE 100, CAC 40, and DAX, are up +0.32%, +0.08%, +0.28%, and +0.51%, respectively. The Spanish IBEX 35 is up +0.18%. The Italian FTSE MIB is down -0.19%. From its 2,661.71 prior day's close, the Euro Stoxx50 has traded narrowly, reaching an early 2,682.74 intraday high, but dropping back to breakeven twice before mid-session. The index currently trades at 2,671.84. Most market segments are higher. Leaders are technology, financials, and consumer goods, which are up at least +0.64%. Laggards are telecommunications, utilities, and consumer services, which are down at least -0.06%.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.04%, -1.71%, -1.69%, and -1.41%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively, compared to the prior week, when the Euro Stoxx50, CAC 40, and DAX closed up +0.41%, +0.78%, and +0.48%, respectively. The FTSE 100 closed down -0.10%. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -3.65%, -4.26%, -3.58%, and -2.52%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.24%, +6.86%, +4.56%, and +6.91%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.12900%, down from 0.13050% the prior day. USD 3-month LIBOR is 0.27275%, down from 0.27325% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 16.875 bps, compared to 16.375 bps the prior day, and compares to the January 6th high of 50.050 bps. Euribor-OIS is 12.25 bps, up from 11.95 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -12.250 bps, compared to -12.596 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and within a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields surged to 4.54%, from 4.62% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.27%, compared to 4.36% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.52%, compared to 1.56% the prior day. Japanese 10-year debt yields are 0.82%, compared to 0.86% the prior day.

· The U.S. government overnight repo rate is 5 bps, unchanged from 5 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are lower, with 2- and 10-year maturities yielding 0.274% and 2.112%, respectively, compared to 0.282% and 2.149% Wednesday. The yield curve narrowed with the 2- to 10-year spread at +1.838%, compared to 1.867% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.952% on June 11, 2013.

· The U.S. dollar is mixed, stronger compared to the euro and British pound, but weaker compared to Japanese yen. The dollar trades at US$80.848, compared to a US$80.918 intraday high and US$80.752 the prior day, and worse compared to its $82.657 50-day, US$82.115 100-day, and US$81.035 200-day averages. The euro trades at US$1.3321, compared to a US$1.3314 intraday low and US$1.3375 the prior day. The euro trades better compared to its US$1.3058 50-day and US$1.3103 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥94.89, compared to 95.37 the prior day. The yen trades better than its 50-day moving average ¥99.48, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index improved to -28.00, from -30.00 the prior day. The index is mixed compared to its respective -31.04 and -26.21 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mixed, with higher energy, lower precious metals, lower aluminum and copper, and mixed agriculture prices.

Volatility, Skew:

· The VIX closed at 16.41, down -11.7% from 18.59 at the prior close. The VIX is +8.22% above its 15.16 20-day moving average. Its 30-day high is 18.60. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 21.21, down -4.05% from 22.11 at the prior day's close. The V2X index trades +9.25% above its 19.42 20-day moving average, -11.0% below the 23.82 30-day high, and +34.6% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 20.47, down -4.691% from 21.46 the prior day. The VHSI index trades +17.3% above its 17.46 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 117.28, up +1.49% from 115.56 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· At 8:30, May MoM producer prices rose 0.5%, compared to +0.1% survey and -0.7% prior. Ex food and energy PPI rose +0.1%, with +0.1% survey and prior.

· At 9:15, May industrial production, with +0.2% survey and -0.5% prior.

· May capacity utilization with 77.8 survey and prior.

· At 10:00, June preliminary University of Michigan confidence, with 84.5 survey and prior.

Overseas Economic Reporting and News:

· Hong Kong - 1Q2013 YoY industrial production rose +0.5%, compared to +1.3% prior. Producer YoY prices rose +0.6%, compared to -1.0 revised prior.

· Eurozone - QoQ employment fell -0.5%, compared to -0.3% prior.

· United Kingdom - YoY construction output fell -1.1%, compared to -7.2% revised prior.

Company Ratings/News:

· None.

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 7th, the index closed up +0.78% at 1643.38, from 1630.74 the prior week and 1633.70 close four weeks prior. The April 26th sell setup progressed to 7. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. On Thursday, the SPX rose +1.48% to close at 1636.36, from 1612.52 the prior day and 1643.38 4 days prior. The June 12th buy setup progressed to 2. The 8 sell countdown associated with the May 14th is unchanged since June 10th. The index closed +1.73% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The April 26th sell setup progressed to 7. The 10 sell countdown associated with the February 1st perfection was unchanged. The index closed +8.17% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, the BKX signaled selling exhaustion on June 4th, then rallied to 44.65 on June 19th, when it perfected a sell setup. The index completed a sell countdown on August 8th, and on August 15th, perfected a daily follow-on sell setup. On September 6th, the BKX initiated a new setup with its +2.93% gain, which broke through resistance at 47.75. On September 14th, the index completed a sell countdown, followed on September 19th, with an unperfected sell setup. A sell countdown began on September 28th. On December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Thursday, the index closed at 61.14, up +1.44% from 60.27 the prior day and 61.58 four days prior. The June 12th buy setup progressed to 2. The 10 May 15th sell countdown is unchanged since June 10th.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 7th, the VIX fell -7.12% to 15.14, from 16.30 the prior week, and 12.59 weeks prior. The May 24th sell setup progressed to 3.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Thursday, the VIX fell -11.7% to 16.41, from 18.59 at the prior close and 15.14 at the 4 days' prior close. The June 12th sell setup progressed to 2. The 4 May 31st sell countdown is unchanged. The VIX closed +57.6% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of May 31st, the index rose +0.52% to end at 1.2999, from 1.2932 the prior week and 1.3114 4 weeks prior. The buy setup progressed to 4. The 11 sell countdown associated with the September 28th perfection was unchanged. The cross closed +9.24% above the 1.1964 risk level.

On a daily basis, the EURUSD cross perfected a sell setup on September 12th. The subsequent trend was lower until a buy setup initiated on November 2nd and perfected on November 14th with a 1.2736 close. The index initiated a buy setup the following day and perfected the setup on November 27th at 1.2943. On January 11th, the sell countdown stemming from the November 27th completed, setting a 1.3393 risk level. On January 24th, a bullish price flip initiated a sell setup which rose to an unperfected 9 on February 5th. On February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection completed. On June 11th, the May 29th sell setup perfected and initiated a sell countdown. With Thursday's +0.28% higher close, the EURUSD cross ended at 1.3375, from 1.3337 the prior day and 1.3218 four days prior. The June 11th sell countdown progressed to 3. The cross closed -0.13% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1718%, from 2.1282% the prior Friday and 1.8973% four weeks prior. The May 3rd sell setup progressed to 6. The sell countdown associated with the February 1st perfection progressed to 6.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Thursday, the rate ended at 2.1489%, from 2.2280% the prior day and 2.1718% four days prior. The bearish rate flip canceled the 5 June 7th sell setup and initiated a buy setup. The 8 May 20th sell countdown is unchanged since June 11th.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 14th, the index closed down -1.48% at 12,686.52, from 12,877.53 the prior week and 15,138.12 four weeks' prior. The June 7th buy setup progressed to 2. The index closed -13.4% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Friday, the index rose +1.94% to 12,686.52, from 12,445.38 the prior day and 13,514.20 four days prior. The June 13th buy setup progressed to 2. The June 4th buy countdown progressed to 6. The index closed -17.7% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 14th, the index closed at 20,969.14, down -2.81% from 21,575.26 the prior week and 23,082.68 four weeks prior. The May 31st buy setup progressed to 3. The April 5th buy countdown progressed to 5. The index closed 6.21% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Friday, the HSI rose +0.39% to 20,969.14, from 20,887.04 the prior day and 21,575.26 four days prior. The June 4th buy countdown progressed to 8. The index closed -12.2% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 14th, the index closed the week down -2.21% at 2,162.04, from 2,210.90 the prior week and 2,282.87 four weeks prior. The June 7th buy setup progressed to 2. The 5 sell countdown associated with the February 8th perfection is unchanged since May 31st.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. On June 7th, the April 9th buy countdown completed. Friday, the index rose +0.65% to 2,162.04, from 2,148.36 at the prior close and 2,270.93 4 days prior. The June 3rd buy setup progressed to 7.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. The perfection initiated a sell countdown. On June 12th, the May 31st buy setup perfected and initiated a buy countdown. Thursday, the index fell -0.18%, to 2,661.71, from 2,666.52 the prior day and 2,724.08 at the prior 4 days' close. The June 12th buy countdown is unchanged since June 12th. The index closed -4.48% below the 2,786.57 risk level.

1Q2013 Earnings. Of 497 reporting companies, 349 or 70.2% surprised positively on earnings, with a +4.83% surprise average. Of reporting companies, 234 or 47.2% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.67%.

Valuation. The SPX trades at 15.8x 2012 earnings ($103.41), 14.8x estimated 2013 earnings ($110.45), 13.3x estimated 2014 earnings ($122.91), and 12.1x estimated 2015 earnings ($135.36). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.81% and +11.3%, and +10.1%respectively.

Options. Options markets improved to neutral, from bearish to neutral the prior day. Composite options are neutral, index options are neutral, and equity options are neutral. The composite put/call ratio is 0.97, compared to 1.19 the prior day, and better compared to its 5- and 10-period moving averages of 1.07 and 1.10, respectively. The index put/call ratio is 1.00, compared to 1.50 the prior day, and worse compared to its 5- and 10-period moving averages of 1.11 and 1.20, respectively. The equity put/call ratio closed the day at 0.86, compared to 1.21 the prior day, and better compared to its 5- and 10-period moving averages of 1.07 and 1.06, respectively.

NYSE Volume, Breadth Indicators. Volume rose +9.54% to 755.88 million shares, from 691.94 million shares the prior day, 1.00x the 757.16 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led decliners by +2,126 (compared to -1,995 the prior day), or 5.46:1. Up volume was 9.85:1 down volume.

BKX. On greater, but below average volume, the KBW bank index rose +1.44% to 61.14, from 60.27 at the prior day's close. The index traded narrowly higher through the morning session, but rallied after mid-afternoon to a late 61.21 intraday high. Volume fell -10.9% to 48.143 million shares, from 54.027 million shares the prior day, or 0.82:1x the 58.551 million share 15-day moving average.

Large cap banks outperformed the regional banks' performance, as the KRX fell rose +1.59%.

This week, the BKX is down -0.71%. Last week, the BKX closed down -0.03%, compared to a gain of +1.18% the prior week. In June, the index is down -0.75%. In May, the BKX closed up +8.30%. For the year, the BKX is up +19.2%, better than the SPX's +14.7% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +5.50% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +87.8% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +52.3% in the same period.

The BKX index closed -49.5% below its March 30, 2007, record 121.16 high.

Technical indicators improved. The BKX recaptured its 10-day moving average, but for a 3rd consecutive day, the index closed below its 5- and 20-day moving averages. The index closed -0.05% below and +4.56% above its respective 20- and 50-day moving averages. The index closed +7.51% and +14.4.0% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. Yesterday, the 20-day moving average rose +3 bps. The 50-day moving average rose +13 bps. Its 100-day moving average rose +8 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.70 points) above the 50-day, and the gap narrowed -10 bps. The 50-day moving average closed (by +5.04 points) above the 200-day moving average, and the gap widened +6 bps. The 100-day moving average closed (by +3.44 points) above the 200-day moving average since March 19th, and the gap widened 1 bp.

The directional movement indicator narrowed to +1.5700, from +1.8607 the prior day. Relative strength rose to 55.36, from 50.33 the prior day, in the middle of a neutral 30-70 range. Next resistance is 61.54; next support is at 60.42.

]]> Fri, 14 Jun 2013 09:29:37 -0400 This morning. On June 12, the U.S. equity market trend switched to correction, ending the uptrend that began on April 29th. Thursday, major U.S. equity indexes rebounded from oversold condition. Volume rose, but was slightly below its 20-day average. All major indexes recaptured their respective 5- and 10-day moving averages, but below their 20-day moving averages. Short-term SPX relative strength indicators (RSI) rose but remain in a neutral range.

Today, in Asia, equity markets rebounded from recent losses, with greater strength in Tokyo, but less than indicated in pre-market futures activity. Japanese equity markets opened higher, but the Nikkei 225 (NKY) found resistance at 12,900 through the session. lower, sold down to intraday lows by late morning, and traded narrowly through the close. The NKY closed below its 50- and 100-day moving averages. In Europe, equity markets are modestly higher, with somewhat greater strength in Frankfurt. Sovereign long-term interest rates are lower. Commodities are mostly higher. Commentary focuses on latest economic data, and recent currency and interest rate volatility.

U.S. Treasury 10-year yields are 2.1169%, compared to 2.1489% at the prior close. U.S. repo rates are 5 bps, unchanged from 5 bps the prior day. Spanish and Italian 10-year debt yields are 4.54% and 4.27%, respectively, compared to 4.62% and 4.36%, the prior day. The U.S. dollar is mixed. U.S. options markets improved to neutral, from bearish to neutral the prior day. CBOE skew rose to 117.28, from 115.56 the prior day, but remained in a neutral range.

The SPX closed at 1636.36, up +1.48% from 1612.52 the prior day, ending a decline in the prior 3 consecutive sessions. The index is up +3.42% since April 26th, the when the prior corrective trend concluded, and +52.3% above the 1074.77 October 4, 2011, intraday low. This week, the SPX is down -0.43%. Last week, the SPX rose +0.78%, compared to a loss of -1.14% the prior week. In June, the SPX is up +0.34%. In May, the index closed up +2.08%. In 2013, the SPX is up +14.7%. In 2012, the SPX closed up +16.0%. Next resistance is at 1647.72. First support is at 1616.54.

Thursday, the BKX rose +1.44%, underperforming the SPX. This week, the BKX is down -0.71%, compared to a loss of -0.03% the prior week. In June, the BKX is down -0.75%, compared to a gain of +8.30% the prior month. This year, the BKX is up +19.2%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are slightly higher, but near the middle of a 1626-1631 range. After a fair value adjustment of -2.34 points, SPX equity futures are at 1629.00, up +0.34 points. The SPX opens -0.42% below and +1.50% above its respective 20- and 50-day moving averages, and +4.20%, and +9.12% above its respective 100- and 200-day moving averages.

Thursday. On greater, but slightly below average volume, U.S. equity markets rebounded after closing lower the prior 3 consecutive sessions. U.S. 10-year yields fell. The NYSE composite rose +1.54%, followed by the SPX, Nasdaq, and DJI, which rose +1.48%, +1.32%, and +1.21%, respectively. Market breadth was positive, with gainers 5.46:1 losing stocks. All SPX market segments closed at least +1.01% higher. Leaders were financials, oil and gas, and utilities, which rose at least +1.64%. Laggards were health care, consumer goods, and technology.

NYSE volume rose +9.24% to 755.88 million shares, from 691.94 million shares the prior day, 1.00x the 757.16 million shares 20-day moving average volume.

Futures indicated a higher open, but from its 1612.52 prior day close, the SPX opened modestly lower, touching a 1608.07 intraday low. The index reversed higher before 10:00, and trended higher through late session to its 1639.25 intraday high. The index ended at 1636.36, down -1.87% from its recent historical high. Market volatility declined. From its prior 18.59 close, the VIX opened lower and generally mirrored the market trend, ending just better than its late 16.37 intraday low. The VIX ended the session at 16.41, down -11.7%. The all-time closing low was 11.26, set June 30, 1993.

On +22.4% greater volume, the DJ Transports rose +1.90%, compared to the DJI's +1.21% gain. The index opened modestly lower, fell to a 6,203.91 intraday low, reversed higher by 10:00 and rallied through the session to a late 6,355.10 intraday high. The TRAN closed at 6,341.39, -3.17% below its 6,549.16 May 17th record close. The index closed -0.16% below and +1.66% above its respective 20- and 50-day moving averages, and +3.56%, and +12.5% above its respective 100- and 200-day moving averages.

Technical factors were little changed. SPX relative strength (RSI) rose to 52.03, from 44.20 the prior day. The CBOE put/call skew rose +1.49% to 117.28, from 115.56 the prior day. U.S. Treasury bond prices rose, as the 10-year yield fell -7.91 bps to end at 2.1489%, from 2.2280% the prior day.

This week, the SPX, DJI, Nasdaq, and NYSE composite are down -0.43%, -0.47%, -0.69%, and -0.26%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In June, the SPX, DJI, and NYSE composite are up +0.34%, +0.40%, and +0.31%, respectively, while the Nasdaq is down -0.31%. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +14.7%, +15.8%, +14.1%, +10.5%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX support is 1632 (5-day moving average). Resistance is 1643 (20-day moving average).

Distribution day count. The current corrective downtrend began on June 12th, following an uptrend that began on April 29th.

In Asia, equity markets rebounded from oversold conditions. The Japanese Nikkei (NKY) closed up +1.94%, compared to the prior day's -6.35% loss. The Hang Seng (HSI) and Shanghai composite (SHCOMP) rose +0.39% and +0.65%, respectively, after prior day losses of -2.19% and -2.74%, respectively. Volumes rose in yesterday's sell-off. Today's are unavailable.

The NKY's relative strength index rose to 38.21, from 34.42 the prior day, down from an overbought 82.61 on May 22nd.

Commentary focused on improving U.S. economic data, and currency and sovereign bond rate volatility.

This week, the NKY closed down -1.48%, compared to a -6.51% loss the prior week. The HSI ended down -2.81%, compared to a loss of -3.65% the prior week. The SHCOMP closed off -2.21%, compared to a -3.90% loss the prior week. In June, the NKY is down -7.90%. The HSI is down -6.35%. The SHCOMP is down -6.02%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +22.0%. The HSI is down -7.45%. The SHCOMP is down -4.72%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 12,686.52, up from 12,445.38 the prior day. The index opened above 12,650 and traded as high as 12,900.65 late in the session, but sold off in the final hour. The index ended -18.8% below its recent high, but up +52.9% above its 8,295.63 July 18, 2012 low. The index closed -9.03% and -7.92% below its respective 20- and 50-day moving averages, but +-0.08% below and +15.5% above its respective 100- and 200-day moving averages. All market segments closed at least +1.94% higher. Leaders were utilities, health care, and financials, which rose at least +2.20%. Laggards were oil and gas, technology, and consumer goods.

In China, the HSI closed at 20,969.14, compared to 20,887.04 at the prior close. The index closed -12.0% below its January 30th yearly high, but +15.3% above its 18,185.59 June 4, 2012 low. The index opened above 21,050 and rose to a mid-morning 21,164.68 intraday high, then eased through the session to end just better than its 20,954.66 intraday low. The index ended -6.49% and -6.29% below its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were consumer goods, utilities, and consumer services, which gained +1.01%. Financials gained +0.29%. Laggards were telecommunications, which rose +0.03%, and industrials and basic materials, which lost at least -0.04%.

In Shanghai, the SHCOMP closed at 2,162.04, compared to 2,148.03 at the prior close. The index traded narrowly through the morning session, then rallied and trended higher through the afternoon session to end just short of its 2,163.63 intraday high. The index closed -11.2% below its 2,434.48 February 5th high, but up +10.3% from its December 3rd 1,959.77 low. The SHCOMP closed -4.86% and -3.61% below its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were health care, technology, and consumer services, which rose at least +1.74%. Laggards were financials and basic materials, which rose at least +0.25%, and oil and gas, which fell at least -0.09%.

In Europe, the major equity indexes are modestly higher. The Euro Stoxx50, FTSE 100, CAC 40, and DAX, are up +0.32%, +0.08%, +0.28%, and +0.51%, respectively. The Spanish IBEX 35 is up +0.18%. The Italian FTSE MIB is down -0.19%. From its 2,661.71 prior day's close, the Euro Stoxx50 has traded narrowly, reaching an early 2,682.74 intraday high, but dropping back to breakeven twice before mid-session. The index currently trades at 2,671.84. Most market segments are higher. Leaders are technology, financials, and consumer goods, which are up at least +0.64%. Laggards are telecommunications, utilities, and consumer services, which are down at least -0.06%.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.04%, -1.71%, -1.69%, and -1.41%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively, compared to the prior week, when the Euro Stoxx50, CAC 40, and DAX closed up +0.41%, +0.78%, and +0.48%, respectively. The FTSE 100 closed down -0.10%. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -3.65%, -4.26%, -3.58%, and -2.52%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.24%, +6.86%, +4.56%, and +6.91%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.12900%, down from 0.13050% the prior day. USD 3-month LIBOR is 0.27275%, down from 0.27325% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 16.875 bps, compared to 16.375 bps the prior day, and compares to the January 6th high of 50.050 bps. Euribor-OIS is 12.25 bps, up from 11.95 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -12.250 bps, compared to -12.596 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and within a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields surged to 4.54%, from 4.62% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.27%, compared to 4.36% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.52%, compared to 1.56% the prior day. Japanese 10-year debt yields are 0.82%, compared to 0.86% the prior day.

· The U.S. government overnight repo rate is 5 bps, unchanged from 5 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are lower, with 2- and 10-year maturities yielding 0.274% and 2.112%, respectively, compared to 0.282% and 2.149% Wednesday. The yield curve narrowed with the 2- to 10-year spread at +1.838%, compared to 1.867% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.952% on June 11, 2013.

· The U.S. dollar is mixed, stronger compared to the euro and British pound, but weaker compared to Japanese yen. The dollar trades at US$80.848, compared to a US$80.918 intraday high and US$80.752 the prior day, and worse compared to its $82.657 50-day, US$82.115 100-day, and US$81.035 200-day averages. The euro trades at US$1.3321, compared to a US$1.3314 intraday low and US$1.3375 the prior day. The euro trades better compared to its US$1.3058 50-day and US$1.3103 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥94.89, compared to 95.37 the prior day. The yen trades better than its 50-day moving average ¥99.48, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index improved to -28.00, from -30.00 the prior day. The index is mixed compared to its respective -31.04 and -26.21 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mixed, with higher energy, lower precious metals, lower aluminum and copper, and mixed agriculture prices.

Volatility, Skew:

· The VIX closed at 16.41, down -11.7% from 18.59 at the prior close. The VIX is +8.22% above its 15.16 20-day moving average. Its 30-day high is 18.60. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 21.21, down -4.05% from 22.11 at the prior day's close. The V2X index trades +9.25% above its 19.42 20-day moving average, -11.0% below the 23.82 30-day high, and +34.6% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 20.47, down -4.691% from 21.46 the prior day. The VHSI index trades +17.3% above its 17.46 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 117.28, up +1.49% from 115.56 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· At 8:30, May MoM producer prices rose 0.5%, compared to +0.1% survey and -0.7% prior. Ex food and energy PPI rose +0.1%, with +0.1% survey and prior.

· At 9:15, May industrial production, with +0.2% survey and -0.5% prior.

· May capacity utilization with 77.8 survey and prior.

· At 10:00, June preliminary University of Michigan confidence, with 84.5 survey and prior.

Overseas Economic Reporting and News:

· Hong Kong - 1Q2013 YoY industrial production rose +0.5%, compared to +1.3% prior. Producer YoY prices rose +0.6%, compared to -1.0 revised prior.

· Eurozone - QoQ employment fell -0.5%, compared to -0.3% prior.

· United Kingdom - YoY construction output fell -1.1%, compared to -7.2% revised prior.

Company Ratings/News:

· None.

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 7th, the index closed up +0.78% at 1643.38, from 1630.74 the prior week and 1633.70 close four weeks prior. The April 26th sell setup progressed to 7. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. On Thursday, the SPX rose +1.48% to close at 1636.36, from 1612.52 the prior day and 1643.38 4 days prior. The June 12th buy setup progressed to 2. The 8 sell countdown associated with the May 14th is unchanged since June 10th. The index closed +1.73% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The April 26th sell setup progressed to 7. The 10 sell countdown associated with the February 1st perfection was unchanged. The index closed +8.17% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, the BKX signaled selling exhaustion on June 4th, then rallied to 44.65 on June 19th, when it perfected a sell setup. The index completed a sell countdown on August 8th, and on August 15th, perfected a daily follow-on sell setup. On September 6th, the BKX initiated a new setup with its +2.93% gain, which broke through resistance at 47.75. On September 14th, the index completed a sell countdown, followed on September 19th, with an unperfected sell setup. A sell countdown began on September 28th. On December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Thursday, the index closed at 61.14, up +1.44% from 60.27 the prior day and 61.58 four days prior. The June 12th buy setup progressed to 2. The 10 May 15th sell countdown is unchanged since June 10th.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 7th, the VIX fell -7.12% to 15.14, from 16.30 the prior week, and 12.59 weeks prior. The May 24th sell setup progressed to 3.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Thursday, the VIX fell -11.7% to 16.41, from 18.59 at the prior close and 15.14 at the 4 days' prior close. The June 12th sell setup progressed to 2. The 4 May 31st sell countdown is unchanged. The VIX closed +57.6% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of May 31st, the index rose +0.52% to end at 1.2999, from 1.2932 the prior week and 1.3114 4 weeks prior. The buy setup progressed to 4. The 11 sell countdown associated with the September 28th perfection was unchanged. The cross closed +9.24% above the 1.1964 risk level.

On a daily basis, the EURUSD cross perfected a sell setup on September 12th. The subsequent trend was lower until a buy setup initiated on November 2nd and perfected on November 14th with a 1.2736 close. The index initiated a buy setup the following day and perfected the setup on November 27th at 1.2943. On January 11th, the sell countdown stemming from the November 27th completed, setting a 1.3393 risk level. On January 24th, a bullish price flip initiated a sell setup which rose to an unperfected 9 on February 5th. On February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection completed. On June 11th, the May 29th sell setup perfected and initiated a sell countdown. With Thursday's +0.28% higher close, the EURUSD cross ended at 1.3375, from 1.3337 the prior day and 1.3218 four days prior. The June 11th sell countdown progressed to 3. The cross closed -0.13% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1718%, from 2.1282% the prior Friday and 1.8973% four weeks prior. The May 3rd sell setup progressed to 6. The sell countdown associated with the February 1st perfection progressed to 6.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Thursday, the rate ended at 2.1489%, from 2.2280% the prior day and 2.1718% four days prior. The bearish rate flip canceled the 5 June 7th sell setup and initiated a buy setup. The 8 May 20th sell countdown is unchanged since June 11th.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 14th, the index closed down -1.48% at 12,686.52, from 12,877.53 the prior week and 15,138.12 four weeks' prior. The June 7th buy setup progressed to 2. The index closed -13.4% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Friday, the index rose +1.94% to 12,686.52, from 12,445.38 the prior day and 13,514.20 four days prior. The June 13th buy setup progressed to 2. The June 4th buy countdown progressed to 6. The index closed -17.7% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 14th, the index closed at 20,969.14, down -2.81% from 21,575.26 the prior week and 23,082.68 four weeks prior. The May 31st buy setup progressed to 3. The April 5th buy countdown progressed to 5. The index closed 6.21% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Friday, the HSI rose +0.39% to 20,969.14, from 20,887.04 the prior day and 21,575.26 four days prior. The June 4th buy countdown progressed to 8. The index closed -12.2% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 14th, the index closed the week down -2.21% at 2,162.04, from 2,210.90 the prior week and 2,282.87 four weeks prior. The June 7th buy setup progressed to 2. The 5 sell countdown associated with the February 8th perfection is unchanged since May 31st.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. On June 7th, the April 9th buy countdown completed. Friday, the index rose +0.65% to 2,162.04, from 2,148.36 at the prior close and 2,270.93 4 days prior. The June 3rd buy setup progressed to 7.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. The perfection initiated a sell countdown. On June 12th, the May 31st buy setup perfected and initiated a buy countdown. Thursday, the index fell -0.18%, to 2,661.71, from 2,666.52 the prior day and 2,724.08 at the prior 4 days' close. The June 12th buy countdown is unchanged since June 12th. The index closed -4.48% below the 2,786.57 risk level.

1Q2013 Earnings. Of 497 reporting companies, 349 or 70.2% surprised positively on earnings, with a +4.83% surprise average. Of reporting companies, 234 or 47.2% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.67%.

Valuation. The SPX trades at 15.8x 2012 earnings ($103.41), 14.8x estimated 2013 earnings ($110.45), 13.3x estimated 2014 earnings ($122.91), and 12.1x estimated 2015 earnings ($135.36). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.81% and +11.3%, and +10.1%respectively.

Options. Options markets improved to neutral, from bearish to neutral the prior day. Composite options are neutral, index options are neutral, and equity options are neutral. The composite put/call ratio is 0.97, compared to 1.19 the prior day, and better compared to its 5- and 10-period moving averages of 1.07 and 1.10, respectively. The index put/call ratio is 1.00, compared to 1.50 the prior day, and worse compared to its 5- and 10-period moving averages of 1.11 and 1.20, respectively. The equity put/call ratio closed the day at 0.86, compared to 1.21 the prior day, and better compared to its 5- and 10-period moving averages of 1.07 and 1.06, respectively.

NYSE Volume, Breadth Indicators. Volume rose +9.54% to 755.88 million shares, from 691.94 million shares the prior day, 1.00x the 757.16 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led decliners by +2,126 (compared to -1,995 the prior day), or 5.46:1. Up volume was 9.85:1 down volume.

BKX. On greater, but below average volume, the KBW bank index rose +1.44% to 61.14, from 60.27 at the prior day's close. The index traded narrowly higher through the morning session, but rallied after mid-afternoon to a late 61.21 intraday high. Volume fell -10.9% to 48.143 million shares, from 54.027 million shares the prior day, or 0.82:1x the 58.551 million share 15-day moving average.

Large cap banks outperformed the regional banks' performance, as the KRX fell rose +1.59%.

This week, the BKX is down -0.71%. Last week, the BKX closed down -0.03%, compared to a gain of +1.18% the prior week. In June, the index is down -0.75%. In May, the BKX closed up +8.30%. For the year, the BKX is up +19.2%, better than the SPX's +14.7% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +5.50% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +87.8% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +52.3% in the same period.

The BKX index closed -49.5% below its March 30, 2007, record 121.16 high.

Technical indicators improved. The BKX recaptured its 10-day moving average, but for a 3rd consecutive day, the index closed below its 5- and 20-day moving averages. The index closed -0.05% below and +4.56% above its respective 20- and 50-day moving averages. The index closed +7.51% and +14.4.0% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. Yesterday, the 20-day moving average rose +3 bps. The 50-day moving average rose +13 bps. Its 100-day moving average rose +8 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.70 points) above the 50-day, and the gap narrowed -10 bps. The 50-day moving average closed (by +5.04 points) above the 200-day moving average, and the gap widened +6 bps. The 100-day moving average closed (by +3.44 points) above the 200-day moving average since March 19th, and the gap widened 1 bp.

The directional movement indicator narrowed to +1.5700, from +1.8607 the prior day. Relative strength rose to 55.36, from 50.33 the prior day, in the middle of a neutral 30-70 range. Next resistance is 61.54; next support is at 60.42.

]]> SPX DJI RTY TRAN CCMP NYA VIX SKEW NKY EURUSD USGG10YR HSI SHCOMP SX5E CAC DAX FTSE JPY GBP EUR U.S. Futures Rebound As "Tumult" Fears Fade http://seekingalpha.com/instablog/179003-gary-townsend/1945402-u-s-futures-rebound-as-tumult-fears-fade?source=feed 1945402 This morning. The U.S. equity market uptrend, which resumed on April 29th, remains under pressure. Tuesday, major U.S. equity indexes distributed. Notably, though volume rose, it was well short of the 20-day average. Major indexes surrendered their respective 5-, 10-, and 20-day moving averages. Short-term SPX relative strength indicators (RSI) are in a neutral range.

Commentary focused on civil unrest in Istanbul. The Wall Street Journal this morning headlines, "Global Tumult Grips Markets".

Today, in Asia, Chinese equity markets were closed. Japanese equity markets opened lower, but narrowed losses by late in the session. Commentary focused on BOJ policy. In Europe, equity markets are modestly higher, with better strength in Italy. Sovereign long-term interest rates are lower. Commodities are mixed. Commentary focuses on currency and interest rate volatility.

U.S. Treasury 10-year yields are 2.1883%, compared to 2.1846% at the prior close. U.S. repo rates are 5 bps, down from 9 bps the prior day. Spanish and Italian 10-year debt yields are 4.55% and 4.66%, respectively, compared to 4.30% and 4.37%, the prior day. The U.S. dollar is mixed. U.S. options markets improved to bearish to bullish, from bearish to neutral. CBOE skew rose to 116.98, but remained in a neutral range.

The SPX closed at 1626.13, down -1.02% from 1642.81 the prior day. The index is up +2.77% since April 26th, and +51.3% above the 1074.77 October 4, 2011, intraday low. This week, the SPX is down -1.05%. Last week, the SPX rose +0.78%, compared to a loss of -1.14% the prior week. In June, the SPX is down -0.28%. In May, the index closed up +2.08%. In 2013, the SPX is up +14.0%. In 2012, the SPX closed up +16.0%. Next resistance is at 1636.53. First support is at 1619.32.

Tuesday, the BKX fell -1.65%, underperforming the SPX. This week, the BKX is down -1.09%, compared to a loss of -0.03% the prior week. In June, the BKX is down -1.12%, compared to a gain of +8.30% the prior month. This year, the BKX is up +18.8%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are higher, but near the middle of a 1634-1637 range. After a fair value adjustment of -1.87 points, SPX equity futures are at 1635.00, up +9.87 points. The SPX opens -0.34% below and +4.56% above its respective 20- and 50-day moving averages, and +7.37%, and +14.3% above its respective 100- and 200-day moving averages.

Tuesday. On greater, but notably below average volume, U.S. equity markets distributed. U.S. 10-year yields fell. The NYSE composite fell -1.10%, followed by the Nasdaq, SPX, and DJI, which fell -1.06^, -1.02%, and -0.77%, respectively. Market breadth was negative, with gainers 0.15:1 losing stocks. All SPX market segments closed at least -0.46% lower. Leaders were health care, telecommunications, and consumer goods, which fell at least -0.56%. Laggards were oil and gas, basic materials, and financials, which fell at least -1.40%.

NYSE volume rose +15.8% to 689.18 million shares, from 595.34 million shares the prior day, 0.94x the 20-day moving average volume.

From its 1642.81 prior day close, the SPX gapped lower to an early 1622.92 intraday low, then rallied back to a late morning 1640.13 intraday high. The index eased back to 1635 in early afternoon, then weakened through the close. Market volatility rose. From its prior 15.44 close, the VIX opened at 16.90, fell to 16.00 by mid-day, then rose to end at 17.07, up +10.6%. The all-time closing low was 11.26, set June 30, 1993.

On -4.45% lower volume, the DJ Transports fell -1.01%, compared to the DJI's -0.76% loss. The index gapped lower and fell to an early 6,234.28 intraday low, but by mid-day rallied nearly to breakeven, with a 6,328.54 intraday high. The index traded narrowly until mid-afternoon, then weakened in the final hour. The TRAN closed at 6,266.51, -4.32% off its 6,549.16 May 17th record close. The index closed -1.67% below and +0.61% above its respective 20- and 50-day moving averages, and +3.69%, and +12.7% above its respective 100- and 200-day moving averages.

Technical factors were little changed. SPX relative strength (RSI) fell to 48.38, from 54.23 the prior day. The CBOE put/call skew rose +0.67% to 116.98, from 116.20 the prior day. U.S. Treasury bond prices rose, as the 10-year yield fell -2.51 bps to end at 2.1846%, from 2.2097% the prior day.

This week, the SPX, DJI, Nasdaq, and NYSE composite are down -1.05%, -0.83%, -0.93%, and -1.07%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In June, the DJI is up +0.04%, while the SPX, DJI, Nasdaq, and NYSE composite are down -0.28%, -0.55%, -0.50%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +14.0%, +15.4%, +13.8%, +9.62%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX support is 1634 (10-day moving average). Resistance is 1628 (5-day moving average).

Distribution day count. The current uptrend began on April 29th. The SPX, DJI, Nasdaq, and NYSE composite have distribution counts of three.

In Asia, Chinese equity markets are closed. The Japanese Nikkei (NKY) closed down -0.21%, but significantly narrowed losses through the afternoon session. The Hang Seng (HSI) and Shanghai composite (SHCOMP) were closed for the Tuen Ng Festival. Volumes are unavailable.

The NKY's relative strength index fell to 42.98, from 43.31 the prior day, but down from an overbought 82.61 on May 22nd.

Commentary focused on BOJ policy, which hesitated at extending favorable terms on bank loans.

This week, the NKY is up +3.20%, compared to a -3.32% loss the prior week. The HSI is down -1.02%, compared to a loss of -4.63% the prior week. The SHCOMP has yet to open this week. In June, the NKY is down -3.52%. The HSI is down -3.32%. The SHCOMP is down -3.90%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +27.8%. The HSI is down -5.75%. The SHCOMP is down -2.57%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 13,2889.32, from 13,317.62 the prior day. The index gapped lower to test support at 13,000, traded narrowly through the morning session, broke through 13,100 resistance in early afternoon and rallied to a late 13,332.72 intraday high. The index ended -15.0% below its recent high. The index closed -6.18% and -3.38% below its respective 20- and 50-day moving averages, but +5.04% and +21.4% above its respective 100- and 200-day moving averages. Market segments closed mixed. Leaders were technology, consumer services, and utilities, which rose at least +0.34%. Laggards were consumer goods, health care and financials, which lost at least -0.85%.

In China, the HSI closed Tuesday at 21,354.66, compared to 21,615.09 at the prior close. The index closed -10.4% below its January 30th yearly high, but +17.4% above its 18,185.59 June 4, 2012 low. The index opened narrowly lower, but fell on sovereign bond weakness to 21,400 by mid-morning, where it traded narrowly until the final hour, when the index traded to a 21,307.99 intraday low. The index ended -5.54% and -4.79% below its respective 20- and 50-day moving averages. All market segments lost were no better than unchanged. Leaders were telecommunications, technology, and industrials. Financials lost -1.34%. Laggards were consumer services, consumer goods, and basic materials, which lost at least -1.85%.

In Shanghai, the SHCOMP closed Friday at 2,210.90, compared to 2,242.11 at the prior close. The index traded narrowly higher through mid-morning, but reversed lower by late morning and trended lower to a late 2,205.07 intraday low. The index closed -9.18% below its 2,434.48 February 5th high, but up +12.8% from its December 3rd 1,959.77 low. The SHCOMP closed -2.98% and -1.69% below its respective 20- and 50-day moving averages. All market segments closed at least -1.04% lower. Leaders were financials, oil and gas, and utilities. Laggards were basic materials, consumer goods, and technology, which fell at least -1.70%.

In Europe, the major equity indexes are modestly mixed. The Euro Stoxx50, FTSE 100, and CAC 40, are up +0.31%, +0.16%, +0.32%, respectively, and the DAX is down -0.16%. The Spanish IBEX 35 is up +1.59%. The Italian FTSE MIB is down -0.29%. From its 2,683.20 prior day's close, the Euro Stoxx50 has traded narrowly, from a 2,677.31 mid-morning intraday low to a 2,701.22 intraday high. The index currently trades at 2,691.16. Most market segments are higher. Leaders are consumer services, health care, and utilities, which are up at least +1.10%. Laggards are oil and gas and technology, which are up at least +0.07%, and consumer goods, which are -0.22% lower.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -0.95%, -0.99%, -1.07%, and -0.32%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively, compared to the prior week, when the Euro Stoxx50, CAC 40, and DAX closed up +0.41%, +0.78%, and +0.48%, respectively. The FTSE 100 closed down -0.10%. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.58%, -3.56%, -2.97%, and -1.44%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.37%, +7.65%, +5.22%, and +8.09%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.13140%, unchanged from 0.13140% the prior day. USD 3-month LIBOR is 0.27325%, up from 0.27225% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 16.325 bps, compared to 16.525 bps the prior day, and compares to the January 6th high of 50.05 bps. Euribor-OIS is 11.65 bps, up from 1050 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -12.9778 bps, compared to -12.912 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and within a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields eased to 4.55%, from 4.66% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.30%, compared to 4.37% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.59%, compared to 1.60% the prior day. Japanese 10-year debt yields are 0.88%, compared to 0.89% the prior day.

· The U.S. government overnight repo rate is 5 bps, down from 9 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are lower, with 2- and 10-year maturities yielding 0.314% and 2.178%, respectively, compared to 0.322% and 2.185% Tuesday. The yield curve narrowed -0.08 bps with the 2- to 10-year spread at +1.864%, compared to 1.863% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.952% on June 11, 2013.

· The U.S. dollar is mixed, stronger compared to the euro and Japanese yen, but weaker compared to the British pound. The dollar trades at US$81.255, compared to a US$81.073 intraday low and US$81.113 the prior day, and worse compared to its $82.734 50-day, US$82.099 100-day, and US$81.035 200-day averages. The euro trades at US$1.3280, compared to a US$1.3335 intraday high and US$1.3313 the prior day. The euro trades better compared to its US$1.3042 50-day and US$1.3104 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥96.61, compared to 96.03 the prior day. The yen trades worse than its 50-day moving average ¥96.61, and worse than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index improved to -31.00, from -32.90 the prior day. The index is worse compared to its respective -29.00 and -23.09 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mixed, with mixed energy, mixed precious metals, lower aluminum and copper, and mostly lower agriculture prices.

Volatility, Skew:

· The VIX closed at 17.07, up +10.6% from 15.44 at the prior close. The VIX is +16.2% above its 14.69 20-day moving average. Its 30-day high is 18.51. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 20.60, down -1.95% from 21.78 at the prior day's close. The V2X index trades +9.15% above its 18.87 20-day moving average, -8.03% below the 22.39 30-day high, and +30.7% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed Tuesday at 19.04, up +1.55% from 18.75 the prior day. The VHSI index trades +12.1% above its 16.98 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 116.98, up +0.67% from 116.20 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· MBA mortgage applications rose +5.0%, compared to -11.5% prior.

Overseas Economic Reporting and News:

· Australia - June Westpac consumer confidence rose +4.7%, compared to -7.0% prior.

· Japan - April MoM machine orders fell -8.8%, compared to -8.1% survey and +14.2% prior.

· Eurozone - April MoM industrial production rose +0.4%, compared to +0.0% survey and +0.9% revised prior.

· United Kingdom - April 3 mma unemployment was +7.8%, unchanged from survey and prior.

Company Ratings/News:

· None

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 7th, the index closed up +0.78% at 1643.38, from 1630.74 the prior week and 1633.70 close four weeks prior. The April 26th sell setup progressed to 7. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. On Tuesday, the SPX fell -1.02% to close at 1626.13, from 1642.81 the prior day and 1608.90 4 days prior. The June 7th sell setup progressed to 3. The 8 sell countdown associated with the May 14th was unchanged. The index closed +1.09% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The April 26th sell setup progressed to 7. The 10 sell countdown associated with the February 1st perfection was unchanged. The index closed +8.17% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, the BKX signaled selling exhaustion on June 4th, then rallied to 44.65 on June 19th, when it perfected a sell setup. The index completed a sell countdown on August 8th, and on August 15th, perfected a daily follow-on sell setup. On September 6th, the BKX initiated a new setup with its +2.93% gain, which broke through resistance at 47.75. On September 14th, the index completed a sell countdown, followed on September 19th, with an unperfected sell setup. A sell countdown began on September 28th. On December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Monday, the index closed at 60.91, down -1.65% from 61.93 the prior day and 59.95 four days prior. The June 10th sell setup progressed to 2. The 10 May 15th sell countdown was unchanged.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 7th, the VIX fell -7.12% to 15.14, from 16.30 the prior week, and 12.59 weeks prior. The May 24th sell setup progressed to 3.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Tuesday, the VIX rose +10.6% to 17.07, from 15.44 at the prior close and 17.50 at the 4 days' prior close. The June 7th sell setup progressed to 3. The May 31st sell countdown progressed to 3. The VIX closed +64.0% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of May 31st, the index rose +0.52% to end at 1.2999, from 1.2932 the prior week and 1.3114 4 weeks prior. The buy setup progressed to 4. The 11 sell countdown associated with the September 28th perfection was unchanged. The cross closed +9.24% above the 1.1964 risk level.

On a daily basis, the EURUSD cross perfected a sell setup on September 12th. The subsequent trend was lower until a buy setup initiated on November 2nd and perfected on November 14th with a 1.2736 close. The index initiated a buy setup the following day and perfected the setup on November 27th at 1.2943. On January 11th, the sell countdown stemming from the November 27th completed, setting a 1.3393 risk level. On January 24th, a bullish price flip initiated a sell setup which rose to an unperfected 9 on February 5th. On February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection perfected. With Tuesday's +0.42% higher close, the EURUSD cross ended at 1.3315, from 1.3257 the prior day and 1.3246 four days prior. The May 29th sell setup perfected and initiated a sell countdown. The cross closed -0.60% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1718%, from 2.1282% the prior Friday and 1.8973% four weeks prior. The May 3rd sell setup progressed to 6. The sell countdown associated with the February 1st perfection progressed to 6.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Tuesday, the rate ended at 2.1846%, from 2.2097% the prior day and 2.0892% four days prior. The June 7th sell setup progressed to 3. The May 20th sell countdown progressed to 8.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 7th, the index closed down -6.51% at 12,877.53, from 13,774.54 the prior week and 14,607.54 four weeks' prior. The index closed -12.1% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Wednesday, the index fell -0.21% to 13,289.32, from 13,317.62 the prior day and 12,904.02 four days prior. The June 11th sell setup progressed to 2. The 4 June 4th buy countdown was unchanged. The index closed -13.8% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 7th, the index closed at 21,575.26, down -3.65% from 22,392.16 the prior week and 23,321.22 four weeks prior. The May 31st buy setup progressed to 2. The April 5th buy countdown progressed to 4. The index closed -3.50% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Tuesday, the HSI fell -1.20% to 21,354.66, from 21,615.09 the prior day and 22,069.24 four days prior. The 5 June 4th buy countdown was unchanged. The index closed -10.6% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 7th, the index closed the week down -3.90% at 2,210.90, from 2,300.60 the prior week and 2,246.83 four weeks prior. The bearish price flip initiated a buy setup. The 5 sell countdown associated with the February 8th perfection was unchanged.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. Monday, the index fell -1.33% to 2,210.90, from 2,242.11 at the prior close and 2,299.25 4 days prior. The June 3rd buy setup progressed to 5. The April 9th buy countdown completed.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. The perfection initiated a sell countdown. Tuesday, the index fell -1.33%, to 2,683.20, from 2,719.40 the prior day and 2,709.33 at the prior 4 days' close. The May 31st buy setup progressed to 8. The 11 sell countdown associated with the May 3rd perfection is unchanged since May 28th. The index closed -3.71% below the 2,786.57 risk level.

1Q2013 Earnings. Of 494 reporting companies, 347 or 70.2% surprised positively on earnings, with a +4.84% surprise average. Of reporting companies, 233 or 47.3% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.66%.

Valuation. The SPX trades at 15.9x 2012 earnings ($103.41), 14.9x estimated 2013 earnings ($110.46), 13.4x estimated 2014 earnings ($122.90), and 12.0x estimated 2015 earnings ($135.32). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.81% and +11.3%, and +10.1%respectively.

Options. Options markets improved to bearish to bullish, from neutral to bearish the prior day. Composite options are neutral, index options are bullish, and equity options are bearish. The composite put/call ratio is 1.02, compared to 1.06 the prior day, and better compared to its 5- and 10-period moving averages of 1.12 and 1.05, respectively. The index put/call ratio is 0.83, compared to 1.17 the prior day, and better compared to its 5- and 10-period moving averages of 1.19 and 1.15, respectively. The equity put/call ratio closed the day at 1.17, compared to 1.04 the prior day, and worse compared to its 5- and 10-period moving averages of 1.09 and 1.02, respectively.

NYSE Volume, Breadth Indicators. Volume rose +15.8% to 689.18 million shares, from 595.34 million shares the prior day, 0.91x the 756.89 million share 20-day moving average. Market breadth was negative , and up volume lagged down volume. Advancing stocks lagged decliners by -2,285 (compared to -357 the prior day), or 0.15:1. Up volume was 0.18:1 down volume.

BKX. On greater, but notably below average volume, the KBW bank index fell -1.65% to 60.91, from 61.93 at the prior day's close. The index gapped lower and opened just above 61.00, then recovered to 61.50 by mid-session. The index eased lower through mid-afternoon, then weakened further and fell to a late 60.86 intraday low. Volume rose +15.4% to 49.613 million shares, from 42.978 million shares the prior day, or 0.83:1x the 59.746 million share 15-day moving average.

Large cap banks underperformed the regional banks' performance, as the KRX fell -1.41%.

This week, the BKX is down -1.09%. Last week, the BKX closed down -0.03%, compared to a gain of +1.18% the prior week. In June, the index is down -1.12%. In May, the BKX closed up +8.30%. For the year, the BKX is up +18.8%, better than the SPX's +14.0% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +5.11% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +87.1% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +51.3% in the same period.

The BKX index closed -49.7% below its March 30, 2007, record 121.16 high.

Technical indicators worsened. The index surrendered its 5-, 10-, and 20-day moving averages. The index closed -0.34% below and +4.56% above its respective 20- and 50-day moving averages. The index closed +7.37% and +14.3% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. Yesterday, the 20-day moving average rose +11 bps. The 50-day moving average rose +11 bps. Its 100-day moving average rose +8 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.87 points) above the 50-day, and the gap widened +1 bp. The 50-day moving average closed (by +4.96 points) above the 200-day moving average, and the gap widened +3 bps. The 100-day moving average closed (by +3.43 points) above the 200-day moving average since March 19th, and the gap rose 1 bp.

The directional movement indicator improved to +7.964, from +11.105 the prior day. Relative strength fell to 54.53, from 62.22 the prior day, both in a neutral 30-70 range. Next resistance is 61.47; next support is at 60.60.

]]> Wed, 12 Jun 2013 09:09:15 -0400 This morning. The U.S. equity market uptrend, which resumed on April 29th, remains under pressure. Tuesday, major U.S. equity indexes distributed. Notably, though volume rose, it was well short of the 20-day average. Major indexes surrendered their respective 5-, 10-, and 20-day moving averages. Short-term SPX relative strength indicators (RSI) are in a neutral range.

Commentary focused on civil unrest in Istanbul. The Wall Street Journal this morning headlines, "Global Tumult Grips Markets".

Today, in Asia, Chinese equity markets were closed. Japanese equity markets opened lower, but narrowed losses by late in the session. Commentary focused on BOJ policy. In Europe, equity markets are modestly higher, with better strength in Italy. Sovereign long-term interest rates are lower. Commodities are mixed. Commentary focuses on currency and interest rate volatility.

U.S. Treasury 10-year yields are 2.1883%, compared to 2.1846% at the prior close. U.S. repo rates are 5 bps, down from 9 bps the prior day. Spanish and Italian 10-year debt yields are 4.55% and 4.66%, respectively, compared to 4.30% and 4.37%, the prior day. The U.S. dollar is mixed. U.S. options markets improved to bearish to bullish, from bearish to neutral. CBOE skew rose to 116.98, but remained in a neutral range.

The SPX closed at 1626.13, down -1.02% from 1642.81 the prior day. The index is up +2.77% since April 26th, and +51.3% above the 1074.77 October 4, 2011, intraday low. This week, the SPX is down -1.05%. Last week, the SPX rose +0.78%, compared to a loss of -1.14% the prior week. In June, the SPX is down -0.28%. In May, the index closed up +2.08%. In 2013, the SPX is up +14.0%. In 2012, the SPX closed up +16.0%. Next resistance is at 1636.53. First support is at 1619.32.

Tuesday, the BKX fell -1.65%, underperforming the SPX. This week, the BKX is down -1.09%, compared to a loss of -0.03% the prior week. In June, the BKX is down -1.12%, compared to a gain of +8.30% the prior month. This year, the BKX is up +18.8%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are higher, but near the middle of a 1634-1637 range. After a fair value adjustment of -1.87 points, SPX equity futures are at 1635.00, up +9.87 points. The SPX opens -0.34% below and +4.56% above its respective 20- and 50-day moving averages, and +7.37%, and +14.3% above its respective 100- and 200-day moving averages.

Tuesday. On greater, but notably below average volume, U.S. equity markets distributed. U.S. 10-year yields fell. The NYSE composite fell -1.10%, followed by the Nasdaq, SPX, and DJI, which fell -1.06^, -1.02%, and -0.77%, respectively. Market breadth was negative, with gainers 0.15:1 losing stocks. All SPX market segments closed at least -0.46% lower. Leaders were health care, telecommunications, and consumer goods, which fell at least -0.56%. Laggards were oil and gas, basic materials, and financials, which fell at least -1.40%.

NYSE volume rose +15.8% to 689.18 million shares, from 595.34 million shares the prior day, 0.94x the 20-day moving average volume.

From its 1642.81 prior day close, the SPX gapped lower to an early 1622.92 intraday low, then rallied back to a late morning 1640.13 intraday high. The index eased back to 1635 in early afternoon, then weakened through the close. Market volatility rose. From its prior 15.44 close, the VIX opened at 16.90, fell to 16.00 by mid-day, then rose to end at 17.07, up +10.6%. The all-time closing low was 11.26, set June 30, 1993.

On -4.45% lower volume, the DJ Transports fell -1.01%, compared to the DJI's -0.76% loss. The index gapped lower and fell to an early 6,234.28 intraday low, but by mid-day rallied nearly to breakeven, with a 6,328.54 intraday high. The index traded narrowly until mid-afternoon, then weakened in the final hour. The TRAN closed at 6,266.51, -4.32% off its 6,549.16 May 17th record close. The index closed -1.67% below and +0.61% above its respective 20- and 50-day moving averages, and +3.69%, and +12.7% above its respective 100- and 200-day moving averages.

Technical factors were little changed. SPX relative strength (RSI) fell to 48.38, from 54.23 the prior day. The CBOE put/call skew rose +0.67% to 116.98, from 116.20 the prior day. U.S. Treasury bond prices rose, as the 10-year yield fell -2.51 bps to end at 2.1846%, from 2.2097% the prior day.

This week, the SPX, DJI, Nasdaq, and NYSE composite are down -1.05%, -0.83%, -0.93%, and -1.07%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In June, the DJI is up +0.04%, while the SPX, DJI, Nasdaq, and NYSE composite are down -0.28%, -0.55%, -0.50%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +14.0%, +15.4%, +13.8%, +9.62%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX support is 1634 (10-day moving average). Resistance is 1628 (5-day moving average).

Distribution day count. The current uptrend began on April 29th. The SPX, DJI, Nasdaq, and NYSE composite have distribution counts of three.

In Asia, Chinese equity markets are closed. The Japanese Nikkei (NKY) closed down -0.21%, but significantly narrowed losses through the afternoon session. The Hang Seng (HSI) and Shanghai composite (SHCOMP) were closed for the Tuen Ng Festival. Volumes are unavailable.

The NKY's relative strength index fell to 42.98, from 43.31 the prior day, but down from an overbought 82.61 on May 22nd.

Commentary focused on BOJ policy, which hesitated at extending favorable terms on bank loans.

This week, the NKY is up +3.20%, compared to a -3.32% loss the prior week. The HSI is down -1.02%, compared to a loss of -4.63% the prior week. The SHCOMP has yet to open this week. In June, the NKY is down -3.52%. The HSI is down -3.32%. The SHCOMP is down -3.90%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +27.8%. The HSI is down -5.75%. The SHCOMP is down -2.57%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 13,2889.32, from 13,317.62 the prior day. The index gapped lower to test support at 13,000, traded narrowly through the morning session, broke through 13,100 resistance in early afternoon and rallied to a late 13,332.72 intraday high. The index ended -15.0% below its recent high. The index closed -6.18% and -3.38% below its respective 20- and 50-day moving averages, but +5.04% and +21.4% above its respective 100- and 200-day moving averages. Market segments closed mixed. Leaders were technology, consumer services, and utilities, which rose at least +0.34%. Laggards were consumer goods, health care and financials, which lost at least -0.85%.

In China, the HSI closed Tuesday at 21,354.66, compared to 21,615.09 at the prior close. The index closed -10.4% below its January 30th yearly high, but +17.4% above its 18,185.59 June 4, 2012 low. The index opened narrowly lower, but fell on sovereign bond weakness to 21,400 by mid-morning, where it traded narrowly until the final hour, when the index traded to a 21,307.99 intraday low. The index ended -5.54% and -4.79% below its respective 20- and 50-day moving averages. All market segments lost were no better than unchanged. Leaders were telecommunications, technology, and industrials. Financials lost -1.34%. Laggards were consumer services, consumer goods, and basic materials, which lost at least -1.85%.

In Shanghai, the SHCOMP closed Friday at 2,210.90, compared to 2,242.11 at the prior close. The index traded narrowly higher through mid-morning, but reversed lower by late morning and trended lower to a late 2,205.07 intraday low. The index closed -9.18% below its 2,434.48 February 5th high, but up +12.8% from its December 3rd 1,959.77 low. The SHCOMP closed -2.98% and -1.69% below its respective 20- and 50-day moving averages. All market segments closed at least -1.04% lower. Leaders were financials, oil and gas, and utilities. Laggards were basic materials, consumer goods, and technology, which fell at least -1.70%.

In Europe, the major equity indexes are modestly mixed. The Euro Stoxx50, FTSE 100, and CAC 40, are up +0.31%, +0.16%, +0.32%, respectively, and the DAX is down -0.16%. The Spanish IBEX 35 is up +1.59%. The Italian FTSE MIB is down -0.29%. From its 2,683.20 prior day's close, the Euro Stoxx50 has traded narrowly, from a 2,677.31 mid-morning intraday low to a 2,701.22 intraday high. The index currently trades at 2,691.16. Most market segments are higher. Leaders are consumer services, health care, and utilities, which are up at least +1.10%. Laggards are oil and gas and technology, which are up at least +0.07%, and consumer goods, which are -0.22% lower.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -0.95%, -0.99%, -1.07%, and -0.32%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively, compared to the prior week, when the Euro Stoxx50, CAC 40, and DAX closed up +0.41%, +0.78%, and +0.48%, respectively. The FTSE 100 closed down -0.10%. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.58%, -3.56%, -2.97%, and -1.44%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.37%, +7.65%, +5.22%, and +8.09%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.13140%, unchanged from 0.13140% the prior day. USD 3-month LIBOR is 0.27325%, up from 0.27225% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 16.325 bps, compared to 16.525 bps the prior day, and compares to the January 6th high of 50.05 bps. Euribor-OIS is 11.65 bps, up from 1050 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -12.9778 bps, compared to -12.912 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and within a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields eased to 4.55%, from 4.66% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.30%, compared to 4.37% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.59%, compared to 1.60% the prior day. Japanese 10-year debt yields are 0.88%, compared to 0.89% the prior day.

· The U.S. government overnight repo rate is 5 bps, down from 9 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are lower, with 2- and 10-year maturities yielding 0.314% and 2.178%, respectively, compared to 0.322% and 2.185% Tuesday. The yield curve narrowed -0.08 bps with the 2- to 10-year spread at +1.864%, compared to 1.863% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.952% on June 11, 2013.

· The U.S. dollar is mixed, stronger compared to the euro and Japanese yen, but weaker compared to the British pound. The dollar trades at US$81.255, compared to a US$81.073 intraday low and US$81.113 the prior day, and worse compared to its $82.734 50-day, US$82.099 100-day, and US$81.035 200-day averages. The euro trades at US$1.3280, compared to a US$1.3335 intraday high and US$1.3313 the prior day. The euro trades better compared to its US$1.3042 50-day and US$1.3104 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥96.61, compared to 96.03 the prior day. The yen trades worse than its 50-day moving average ¥96.61, and worse than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index improved to -31.00, from -32.90 the prior day. The index is worse compared to its respective -29.00 and -23.09 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mixed, with mixed energy, mixed precious metals, lower aluminum and copper, and mostly lower agriculture prices.

Volatility, Skew:

· The VIX closed at 17.07, up +10.6% from 15.44 at the prior close. The VIX is +16.2% above its 14.69 20-day moving average. Its 30-day high is 18.51. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 20.60, down -1.95% from 21.78 at the prior day's close. The V2X index trades +9.15% above its 18.87 20-day moving average, -8.03% below the 22.39 30-day high, and +30.7% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed Tuesday at 19.04, up +1.55% from 18.75 the prior day. The VHSI index trades +12.1% above its 16.98 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 116.98, up +0.67% from 116.20 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· MBA mortgage applications rose +5.0%, compared to -11.5% prior.

Overseas Economic Reporting and News:

· Australia - June Westpac consumer confidence rose +4.7%, compared to -7.0% prior.

· Japan - April MoM machine orders fell -8.8%, compared to -8.1% survey and +14.2% prior.

· Eurozone - April MoM industrial production rose +0.4%, compared to +0.0% survey and +0.9% revised prior.

· United Kingdom - April 3 mma unemployment was +7.8%, unchanged from survey and prior.

Company Ratings/News:

· None

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 7th, the index closed up +0.78% at 1643.38, from 1630.74 the prior week and 1633.70 close four weeks prior. The April 26th sell setup progressed to 7. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. On Tuesday, the SPX fell -1.02% to close at 1626.13, from 1642.81 the prior day and 1608.90 4 days prior. The June 7th sell setup progressed to 3. The 8 sell countdown associated with the May 14th was unchanged. The index closed +1.09% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The April 26th sell setup progressed to 7. The 10 sell countdown associated with the February 1st perfection was unchanged. The index closed +8.17% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, the BKX signaled selling exhaustion on June 4th, then rallied to 44.65 on June 19th, when it perfected a sell setup. The index completed a sell countdown on August 8th, and on August 15th, perfected a daily follow-on sell setup. On September 6th, the BKX initiated a new setup with its +2.93% gain, which broke through resistance at 47.75. On September 14th, the index completed a sell countdown, followed on September 19th, with an unperfected sell setup. A sell countdown began on September 28th. On December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Monday, the index closed at 60.91, down -1.65% from 61.93 the prior day and 59.95 four days prior. The June 10th sell setup progressed to 2. The 10 May 15th sell countdown was unchanged.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 7th, the VIX fell -7.12% to 15.14, from 16.30 the prior week, and 12.59 weeks prior. The May 24th sell setup progressed to 3.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Tuesday, the VIX rose +10.6% to 17.07, from 15.44 at the prior close and 17.50 at the 4 days' prior close. The June 7th sell setup progressed to 3. The May 31st sell countdown progressed to 3. The VIX closed +64.0% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of May 31st, the index rose +0.52% to end at 1.2999, from 1.2932 the prior week and 1.3114 4 weeks prior. The buy setup progressed to 4. The 11 sell countdown associated with the September 28th perfection was unchanged. The cross closed +9.24% above the 1.1964 risk level.

On a daily basis, the EURUSD cross perfected a sell setup on September 12th. The subsequent trend was lower until a buy setup initiated on November 2nd and perfected on November 14th with a 1.2736 close. The index initiated a buy setup the following day and perfected the setup on November 27th at 1.2943. On January 11th, the sell countdown stemming from the November 27th completed, setting a 1.3393 risk level. On January 24th, a bullish price flip initiated a sell setup which rose to an unperfected 9 on February 5th. On February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection perfected. With Tuesday's +0.42% higher close, the EURUSD cross ended at 1.3315, from 1.3257 the prior day and 1.3246 four days prior. The May 29th sell setup perfected and initiated a sell countdown. The cross closed -0.60% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1718%, from 2.1282% the prior Friday and 1.8973% four weeks prior. The May 3rd sell setup progressed to 6. The sell countdown associated with the February 1st perfection progressed to 6.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Tuesday, the rate ended at 2.1846%, from 2.2097% the prior day and 2.0892% four days prior. The June 7th sell setup progressed to 3. The May 20th sell countdown progressed to 8.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 7th, the index closed down -6.51% at 12,877.53, from 13,774.54 the prior week and 14,607.54 four weeks' prior. The index closed -12.1% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Wednesday, the index fell -0.21% to 13,289.32, from 13,317.62 the prior day and 12,904.02 four days prior. The June 11th sell setup progressed to 2. The 4 June 4th buy countdown was unchanged. The index closed -13.8% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 7th, the index closed at 21,575.26, down -3.65% from 22,392.16 the prior week and 23,321.22 four weeks prior. The May 31st buy setup progressed to 2. The April 5th buy countdown progressed to 4. The index closed -3.50% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Tuesday, the HSI fell -1.20% to 21,354.66, from 21,615.09 the prior day and 22,069.24 four days prior. The 5 June 4th buy countdown was unchanged. The index closed -10.6% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 7th, the index closed the week down -3.90% at 2,210.90, from 2,300.60 the prior week and 2,246.83 four weeks prior. The bearish price flip initiated a buy setup. The 5 sell countdown associated with the February 8th perfection was unchanged.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. Monday, the index fell -1.33% to 2,210.90, from 2,242.11 at the prior close and 2,299.25 4 days prior. The June 3rd buy setup progressed to 5. The April 9th buy countdown completed.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. The perfection initiated a sell countdown. Tuesday, the index fell -1.33%, to 2,683.20, from 2,719.40 the prior day and 2,709.33 at the prior 4 days' close. The May 31st buy setup progressed to 8. The 11 sell countdown associated with the May 3rd perfection is unchanged since May 28th. The index closed -3.71% below the 2,786.57 risk level.

1Q2013 Earnings. Of 494 reporting companies, 347 or 70.2% surprised positively on earnings, with a +4.84% surprise average. Of reporting companies, 233 or 47.3% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.66%.

Valuation. The SPX trades at 15.9x 2012 earnings ($103.41), 14.9x estimated 2013 earnings ($110.46), 13.4x estimated 2014 earnings ($122.90), and 12.0x estimated 2015 earnings ($135.32). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.81% and +11.3%, and +10.1%respectively.

Options. Options markets improved to bearish to bullish, from neutral to bearish the prior day. Composite options are neutral, index options are bullish, and equity options are bearish. The composite put/call ratio is 1.02, compared to 1.06 the prior day, and better compared to its 5- and 10-period moving averages of 1.12 and 1.05, respectively. The index put/call ratio is 0.83, compared to 1.17 the prior day, and better compared to its 5- and 10-period moving averages of 1.19 and 1.15, respectively. The equity put/call ratio closed the day at 1.17, compared to 1.04 the prior day, and worse compared to its 5- and 10-period moving averages of 1.09 and 1.02, respectively.

NYSE Volume, Breadth Indicators. Volume rose +15.8% to 689.18 million shares, from 595.34 million shares the prior day, 0.91x the 756.89 million share 20-day moving average. Market breadth was negative , and up volume lagged down volume. Advancing stocks lagged decliners by -2,285 (compared to -357 the prior day), or 0.15:1. Up volume was 0.18:1 down volume.

BKX. On greater, but notably below average volume, the KBW bank index fell -1.65% to 60.91, from 61.93 at the prior day's close. The index gapped lower and opened just above 61.00, then recovered to 61.50 by mid-session. The index eased lower through mid-afternoon, then weakened further and fell to a late 60.86 intraday low. Volume rose +15.4% to 49.613 million shares, from 42.978 million shares the prior day, or 0.83:1x the 59.746 million share 15-day moving average.

Large cap banks underperformed the regional banks' performance, as the KRX fell -1.41%.

This week, the BKX is down -1.09%. Last week, the BKX closed down -0.03%, compared to a gain of +1.18% the prior week. In June, the index is down -1.12%. In May, the BKX closed up +8.30%. For the year, the BKX is up +18.8%, better than the SPX's +14.0% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +5.11% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +87.1% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +51.3% in the same period.

The BKX index closed -49.7% below its March 30, 2007, record 121.16 high.

Technical indicators worsened. The index surrendered its 5-, 10-, and 20-day moving averages. The index closed -0.34% below and +4.56% above its respective 20- and 50-day moving averages. The index closed +7.37% and +14.3% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. Yesterday, the 20-day moving average rose +11 bps. The 50-day moving average rose +11 bps. Its 100-day moving average rose +8 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.87 points) above the 50-day, and the gap widened +1 bp. The 50-day moving average closed (by +4.96 points) above the 200-day moving average, and the gap widened +3 bps. The 100-day moving average closed (by +3.43 points) above the 200-day moving average since March 19th, and the gap rose 1 bp.

The directional movement indicator improved to +7.964, from +11.105 the prior day. Relative strength fell to 54.53, from 62.22 the prior day, both in a neutral 30-70 range. Next resistance is 61.47; next support is at 60.60.

]]> SPX DJI RTY TRAN CCMP NYA VIX SKEW NKY EURUSD USGG10YR HSI SHCOMP SX5E CAC DAX FTSE JPY GBP EUR U.S. Futures Follow Asia, Europe Lower http://seekingalpha.com/instablog/179003-gary-townsend/1942022-u-s-futures-follow-asia-europe-lower?source=feed 1942022 This morning. The U.S. equity market uptrend, which resumed on April 29th, remains under pressure. Monday, major U.S. equity indexes extended fractionally mixed. Volume fell. Major indexes closed above their respective 5- and 10-day moving averages. The SPX, DJI, and NYSE composite closed below their respective 20-day moving averages. Short-term SPX relative strength indicators (RSI) are in a neutral range.

Today, in Asia, equity markets closed lower, on disappointment that in its policy statement, the BOJ kept monetary policy unchanged. In Europe, equity markets are selling off , with greater weakness in Italy and Spain. Sovereign long-term interest rates are moving higher. Commodities are lower. Commentary focuses on currency and interest rate volatility.

U.S. Treasury 10-year yields are 2.2460%, compared to 2.2097% at the prior close. U.S. repo rates are 9 bps, up from 3 bps the prior day. Spanish and Italian 10-year debt yields are 4.74% and 4.44%, respectively, compared to 4.60 and 4.29%, the prior day. The U.S. dollar is mixed. U.S. options markets are unchanged at bearish to neutral. CBOE skew was unchanged, in a neutral range.

The SPX closed at 1642.81, down -0.03% from 1643.38 the prior day. The index is up +3.83% since April 26th, and +52.9% above the 1074.77 October 4, 2011, intraday low. Last week, the SPX rose +0.78%, compared to a loss of -1.14% the prior week. In June, the SPX is up +0.74%. In May, the index closed up +2.08%. In 2013, the SPX is up +15.2%. In 2012, the SPX closed up +16.0%. Next resistance is at 1647.91. First support is at 1638.48.

Monday, the BKX rose +0.57%, outperforming the SPX. Last week, the BKX fell -0.03%, compared to a gain of +1.18% the prior week. In June, the BKX is up +0.54%, compared to a gain of 8.30% the prior month. This year, the BKX is up +20.8%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are lower, but near the middle of a 1624-1630 range. After a fair value adjustment of -0.09 points, SPX equity futures are at 1627.50, down -14.41 points. The SPX opens -0.24% below and +2.14% above its respective 20- and 50-day moving averages, and +4.90%, and +9.78% above its respective 100- and 200-day moving averages.

Monday. On lower and below average volume, U.S. equity markets closed modestly mixed. Notably, U.S. 10-year yields rose sharply to 14 month highs. At day's end, the Nasdaq and NYSE composite rose +0.13% and +0.03%, respectively, while the SPX and DJI lost -0.03% and -0.06%, respectively. Market breadth was negative, with gainers 0.79:1 losing stocks. Most SPX market segments closed lower. Leaders were telecommunications, health care, and financials, which rose at least +0.12%. Laggards were utilities, industrials, and oil and gas, which fell at least -0.17%.

NYSE volume fell -18.4% to 595.34 million shares, from 729.44 million shares the prior day, 0.79x the 20-day moving average volume.

From its 1643.38 prior day close, the SPX opened higher and set an early 1648.69 intraday high, then reversed lower to a mid-morning 1639.26 intraday low. The index reversed higher by mid-morning, reversed lower in early afternoon, and traded narrowly lower through the close. The index closed fractionally lower at 1642.81. Market volatility rose. From its prior 16.63 close, the VIX opened at 15.15, and traded to resistance at 15.60 through the session and closed at 15.44, up +1.98%. The all-time closing low was 11.26, set June 30, 1993.

On -25.3% lower volume, the DJ Transports fell -0.21%, compared to the DJI's -0.06% loss. The index traded briefly higher and set an early 6,370.24 intraday high, but immediately reversed lower to a mid-morning 6,309.70 intraday low. The index improved through mid-session to 6,355, but traded narrowly lower to the close. The TRAN closed at 6,330.48, -3.34% off its 6,549.16 May 17th record close. The index closed -0.72% below and +1.67% above its respective 20- and 50-day moving averages, and +3.69%, and +12.7% above its respective 100- and 200-day moving averages.

Technical factors were little changed. SPX relative strength (RSI) eased to 54.23, from 54.44 the prior day. The CBOE put/call skew was unchanged at 116.20. U.S. Treasury bond prices fell, as the 10-year yield rose +3.79 bps to end at 2.2097%, from 2.1718% the prior day.

Last week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively, compared to losses of -1.14%, -1.23%, -0.09%, and -1.48%, respectively, the prior week. In June, the SPX, DJI, Nasdaq, and NYSE composite are up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +15.2%, +16.3%, +15.0%, +10.8%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX support is 1638 (10-day moving average). Resistance is 1646 (20-day moving average).

Distribution day count. The current uptrend began on April 29th. The SPX, DJI, Nasdaq, and NYSE composite have distribution counts of two.

In Asia, equity markets closed lower. The Nikkei (NKY) closed down -1.45%. The Hang Seng (HIS) fell -1.20%. The Shanghai composite (SHCOMP) remained closed for the Dragon boat festival. Volumes are unavailable.

The NKY's relative strength index fell to 43.31, from 45.61 the prior day, but down from an overbought 82.61 on May 22nd.

Commentary focused on The BOJ policy statement.

This week, the NKY is up +3.42%, compared to a -3.32% loss the prior week. The HSI is down -1.02%, compared to a loss of -4.63% the prior week. In June, the NKY is down -3.32%. The HSI is down -3.32%. The SHCOMP is down -3.90%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +28.1%. The HSI is down -5.75%. The SHCOMP is down -2.57%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the Nikkei 224 (NKY) closed at 13,317.62, from 13,514.20 the prior day. The index traded narrowly through mid-session, with a 13,584.31 mid-morning high, but fell back at the start of the afternoon session, falling to a 13,296.31 intraday low. The index ended -14.8% below its recent high. The index closed -6.46% and -3.04% below its respective 20- and 50-day moving averages, but +5.47% and +21.8% above its respective 100- and 200-day moving averages. All market segments closed at least -0.62%. Leaders were utilities, health care, and consumer goods. Laggards were consumer services, financials, and oil and gas, which lost at least -2.48%.

In China, the Hang Seng (HSI) closed at 21,354.66, compared to 21,615.09 at the prior close. The index closed -10.4% below its January 30th yearly high, but +17.4% above its 18,185.59 June 4, 2012 low. The index opened narrowly lower, but fell on sovereign bond weakness to 21,400 by mid-morning, where it traded narrowly until the final hour, when the index traded to a 21,307.99 intraday low. The index ended -5.54% and -4.79% below its respective 20- and 50-day moving averages. All market segments lost were no better than unchanged. Leaders were telecommunications, technology, and industrials. Financials lost -1.34%. Laggards were consumer services, consumer goods, and basic materials, which lost at least -1.85%.

In Shanghai, the SHCOMP closed Friday at 2,210.90, compared to 2,242.11 at the prior close. The index traded narrowly higher through mid-morning, but reversed lower by late morning and trended lower to a late 2,205.07 intraday low. The index closed -9.18% below its 2,434.48 February 5th high, but up +12.8% from its December 3rd 1,959.77 low. The SHCOMP closed -2.98% and -1.69% below its respective 20- and 50-day moving averages. All market segments closed at least -1.04% lower. Leaders were financials, oil and gas, and utilities. Laggards were basic materials, consumer goods, and technology, which fell at least -1.70%.

In Europe, the major equity indexes are selling off, which greater weakness in Italy and Spain. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.16%, -1.67%, -1.99%, and -1.74%, respectively. The Spanish IBEX 35 is down -2.60%. The Italian FTSE MIB is down -2.56%. From its 2,719.40 prior day's close, the Euro Stoxx50 opened above 2,700 and trended lower to a mid-session 2,656.00 intraday low. The index currently trades at 2,661.67. All market segments are at least -1.31% lower. Leaders are technology, health care, and industrials. Laggards are consumer services, consumer goods, and financials, which are at least -1.91% lower.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.32%, -1.96%, -2.23%, and -1.11%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively, compared to the prior week, when the Euro Stoxx50, CAC 40, and DAX closed up +0.41%, +0.78%, and +0.48%, respectively. The FTSE 100 closed down -0.10%. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -3.93%, -4.51%, -4.11%, and -2.23%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +0.94%, +6.58%, +3.99%, and +7.23%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.13140%, up from 0.13290% the prior day. USD 3-month LIBOR is 0.27225%, down from 0.27415% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 16.675 bps, compared to 16.915 bps the prior day, and compares to the January 6th high of 50.05 bps. Euribor-OIS is 11.45 bps, unchanged from 11.10 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -12.871 bps, compared to -12.470 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and within a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields surged to 4.70%, from 4.60% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.44%, compared to 4.29% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.65%, compared to 1.60% the prior day. Japanese 10-year debt yields are 0.89%, compared to 0.84% the prior day.

· The U.S. government overnight repo rate is 9 bps, up from 3 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are higher, with 2- and 10-year maturities yielding 0.334% and 2.286%, respectively, compared to 0.310% and 2.210% Monday. The yield curve widened with the 2- to 10-year spread at +1.952%, compared to 1.900% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.95.2% on June 11, 2013.

· The U.S. dollar is mixed, but weaker compared to the euro and Japanese yen, but stronger compared to the British pound. The dollar trades at US$81.418, compared to a US$81.349 intraday low and US$81.646 the prior day, and worse compared to its $82.769 50-day, US$82.089 100-day, and US$81.037 200-day averages. The euro trades at US$1.3289, compared to a US$1.3248 intraday high and US$1.3257 the prior day. The euro trades mixed compared to its US$1.3033 50-day and US$1.3104 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥96.95, compared to 98.76 the prior day. The yen trades better than its 50-day moving average ¥99.51, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index worsened to -32.90, from -32.30 the prior day. The index is worse compared to its respective -29.00 and -23.09 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mostly lower, with lower energy, lower precious metals, lower aluminum and copper, and mostly lower agriculture prices.

Volatility, Skew:

· The VIX closed at 15.44, up +1.98% from 15.14 at the prior close. The VIX is +6.73% above its 14.47 20-day moving average. Its 30-day high is 18.51. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 21.78, up +11.2% from 19.42 at the prior day's close. The V2X index trades +16.6% above its 18.58 20-day moving average, -2.73% below the 22.39 30-day high, and +38.2% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 19.04, up +1.55% from 18.75 the prior day. The VHSI index trades +12.1% above its 16.98 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 116.20, unchanged from 116.20 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· NFIB small business optimism improved to 94.4 from 92.1 survey and prior.

· At 10:00, April wholesale inventories, with +0.2% survey and +0.4% prior.

· April MoM wholesale sales, with -0.1% survey and -1.3% revised prior.

Overseas Economic Reporting and News:

· Australia - May NAB business conditions, with -4 actual and -6 prior.

· Japan - Bank of Japan left monetary policy unchanged.

· United Kingdom - April MoM industrial production rose +0.1%, with 0.0% survey and +0.7% prior. MoM manufacturing production fell -0.5%, compared to -0.2% surey and +1.1% prior.

Company Ratings/News:

· None

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 7th, the index closed up +0.78% at 1643.38, from 1630.74 the prior week and 1633.70 close four weeks prior. The April 26th sell setup progressed to 7. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. On Monday, the SPX fell -0.04% to close at 1642.81, from 1643.38 the prior day and 1631.38 4 days prior. The June 7th sell setup progressed to 2. The sell countdown associated with the May 14th progressed to 8. The index closed +2.13% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The April 26th sell setup progressed to 7. The 10 sell countdown associated with the February 1st perfection was unchanged. The index closed +8.17% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, the BKX signaled selling exhaustion on June 4th, then rallied to 44.65 on June 19th, when it perfected a sell setup. The index completed a sell countdown on August 8th, and on August 15th, perfected a daily follow-on sell setup. On September 6th, the BKX initiated a new setup with its +2.93% gain, which broke through resistance at 47.75. On September 14th, the index completed a sell countdown, followed on September 19th, with an unperfected sell setup. A sell countdown began on September 28th. On December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Monday, the index closed at 61.93, up +0.57% from 61.58 the prior day and 61.00 four days prior. The bullish price flip canceled the 5 June 3rd buy setup and initiated a sell setup. The May 15th sell countdown progressed to 10.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 7th, the VIX fell -7.12% to 15.14, from 16.30 the prior week, and 12.59 weeks prior. The May 24th sell setup progressed to 3.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Monday, the VIX rose +1.98% to 15.44, from 15.14 at the prior close and 16.27 at the 4 days' prior close. The June 7th sell setup progressed to 2. The May 31st 2 sell countdown was unchanged. The VIX closed +48.3% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of May 31st, the index rose +0.52% to end at 1.2999, from 1.2932 the prior week and 1.3114 4 weeks prior. The buy setup progressed to 4. The 11 sell countdown associated with the September 28th perfection was unchanged. The cross closed +9.24% above the 1.1964 risk level.

On a daily basis, the EURUSD cross perfected a sell setup on September 12th. The subsequent trend was lower until a buy setup initiated on November 2nd and perfected on November 14th with a 1.2736 close. The index initiated a buy setup the following day and perfected the setup on November 27th at 1.2943. On January 11th, the sell countdown stemming from the November 27th completed, setting a 1.3393 risk level. On January 24th, a bullish price flip initiated a sell setup which rose to an unperfected 9 on February 5th. On February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection perfected. With Monday's +0.30% higher close, the EURUSD cross ended at 1.3257, from 1.3218 the prior day and 1.3081 four days prior. The 9 May 29th sell setup is unperfected. The cross closed -1.02% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1718%, from 2.1282% the prior Friday and 1.8973% four weeks prior. The May 3rd sell setup progressed to 6. The sell countdown associated with the February 1st perfection progressed to 6.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Monday, the rate ended at 2.2097%, from 2.1718% the prior day and 2.1462% four days prior. The June 7th sell setup progressed to 2. The May 20th sell countdown progressed to 7.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 7th, the index closed down -6.51% at 12,877.53, from 13,774.54 the prior week and 14,607.54 four weeks' prior. The index closed -12.1% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Tuesday, the index fell -1.45% to 13,317.62, from 13,514.20 the prior day and 13,014.87 four days prior. The bullish price flip initiated a sell setup. The 4 June 4th buy countdown was unchanged. The index closed -13.6% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 7th, the index closed at 21,575.26, down -3.65% from 22,392.16 the prior week and 23,321.22 four weeks prior. The May 31st buy setup progressed to 2. The April 5th buy countdown progressed to 4. The index closed -3.50% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Tuesday, the HSI fell -1.20% to 21,354.66, from 21,615.09 the prior day and 22,069.24 four days prior. The 5 June 4th buy countdown was unchanged. The index closed -10.6% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 7th, the index closed the week down -3.90% at 2,210.90, from 2,300.60 the prior week and 2,246.83 four weeks prior. The bearish price flip initiated a buy setup. The 5 sell countdown associated with the February 8th perfection was unchanged.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. Monday, the index fell -1.33% to 2,210.90, from 2,242.11 at the prior close and 2,299.25 4 days prior. The June 3rd buy setup progressed to 5. The April 9th buy countdown completed.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. The perfection initiated a sell countdown. Monday, the index fell -0.17%, from 2,719.40 the prior day and 2,724.08 the prior day and 2,755.70 at the prior 4 days' close. The May 31st buy setup progressed to 7. The 11 sell countdown associated with the May 3rd perfection is unchanged since May 28th. The index closed -2.41% below the 2,786.57 risk level.

1Q2013 Earnings. Of 493 reporting companies, 347 or 70.4% surprised positively on earnings, with a +4.94% surprise average. Of reporting companies, 233 or 47.4% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.67%.

Valuation. The SPX trades at 15.9x 2012 earnings ($103.41), 14.9x estimated 2013 earnings ($110.05), and 13.4x estimated 2014 earnings ($122.89). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013 and 2014 earnings to grow +6.34% and +11.6%, respectively.

Options. Options markets are unchanged at neutral to bearish, from neutral to bearish the prior day. Composite options are neutral, index options are neutral, and equity options markets are bearish. The composite put/call ratio is 1.06, compared to 1.12 the prior day, and worse compared to its 5- and 10-period moving averages of 1.14 and 1.05, respectively. The index put/call ratio is 1.17, compared to 1.22 the prior day, and better compared to its 5- and 10-period moving averages of 1.30 and 1.18, respectively. The equity put/call ratio closed the day at 1.04, compared to 1.08 the prior day, and worse compared to its 5- and 10-period moving averages of 1.07 and 1.00, respectively.

NYSE Indicators. Volume fell -18.4% to 595.34 million shares, from 729.44 million shares the prior day, 0.79x the 752.12 million share 20-day moving average. Market breadth was negative , and up volume lagged down volume. Advancing stocks lagged decliners by -357 (compared to +1,165 the prior day), or 0.79:1. Up volume was 0.89:1 down volume.

BKX. On lower volume, the KBW bank index rose +0.57% to 61.93, from 61.58 at the prior day's close. The index gapped higher and quickly tested resistance at 62.00, but then fell back to an early 61.58 intraday low. The index rallied back to 62.08 by mid-morning, then traded narrowly through the close. Volume fell -23.0% to 42.978 million shares, from 55.828 million shares the prior day, or 0.72:1x the 61.337 million share 15-day moving average.

Large cap banks underperformed the regional banks' performance, as the KRX rose +0.94%.

This week, the BKX is up +0.57%. Last week, the BKX closed down -0.03%, compared to a gain of +1.18% the prior week. In June, the index is up +0.4%. In May, the BKX closed up +8.30%. For the year, the BKX is up +20.1%, better than the SPX's +15.2% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +6.87% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +90.2% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +52.9% in the same period.

The BKX index closed -47.3% below its March 30, 2007, record 121.16 high.

Technical indicators improved. The index closed above its 5-, 10-, and 20-day moving averages. The index closed +1.50% and +6.49% above its respective 20- and 50-day moving averages. The index closed +9.31% and +16.4% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. Yesterday, the 20-day moving average rose +17 bps. The 50-day moving average rose +11 bps. Its 100-day moving average rose +8 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.86 points) above the 50-day, and the gap widened +6 bps. The 50-day moving average closed (by +4.93 points) above the 200-day moving average, and the gap widened +4 bps. The 100-day moving average closed (by +3.42 points) above the 200-day moving average since March 19th, and the gap rose 1 bp.

The directional movement indicator improved to 11.105, from +4.175 the prior day. Relative strength rose to 62.22, from 60.44 the prior day, both in a neutral 30-70 range. Next resistance is 62.17; next support is at 61.59.

]]> Tue, 11 Jun 2013 09:21:40 -0400 This morning. The U.S. equity market uptrend, which resumed on April 29th, remains under pressure. Monday, major U.S. equity indexes extended fractionally mixed. Volume fell. Major indexes closed above their respective 5- and 10-day moving averages. The SPX, DJI, and NYSE composite closed below their respective 20-day moving averages. Short-term SPX relative strength indicators (RSI) are in a neutral range.

Today, in Asia, equity markets closed lower, on disappointment that in its policy statement, the BOJ kept monetary policy unchanged. In Europe, equity markets are selling off , with greater weakness in Italy and Spain. Sovereign long-term interest rates are moving higher. Commodities are lower. Commentary focuses on currency and interest rate volatility.

U.S. Treasury 10-year yields are 2.2460%, compared to 2.2097% at the prior close. U.S. repo rates are 9 bps, up from 3 bps the prior day. Spanish and Italian 10-year debt yields are 4.74% and 4.44%, respectively, compared to 4.60 and 4.29%, the prior day. The U.S. dollar is mixed. U.S. options markets are unchanged at bearish to neutral. CBOE skew was unchanged, in a neutral range.

The SPX closed at 1642.81, down -0.03% from 1643.38 the prior day. The index is up +3.83% since April 26th, and +52.9% above the 1074.77 October 4, 2011, intraday low. Last week, the SPX rose +0.78%, compared to a loss of -1.14% the prior week. In June, the SPX is up +0.74%. In May, the index closed up +2.08%. In 2013, the SPX is up +15.2%. In 2012, the SPX closed up +16.0%. Next resistance is at 1647.91. First support is at 1638.48.

Monday, the BKX rose +0.57%, outperforming the SPX. Last week, the BKX fell -0.03%, compared to a gain of +1.18% the prior week. In June, the BKX is up +0.54%, compared to a gain of 8.30% the prior month. This year, the BKX is up +20.8%, outperforming the SPX. Last year, financial stocks outperformed the broader market, as the BKX closed up +30.2%, compared to the +13.4% SPX gain.

In pre-market futures trading, June SPX equity futures are lower, but near the middle of a 1624-1630 range. After a fair value adjustment of -0.09 points, SPX equity futures are at 1627.50, down -14.41 points. The SPX opens -0.24% below and +2.14% above its respective 20- and 50-day moving averages, and +4.90%, and +9.78% above its respective 100- and 200-day moving averages.

Monday. On lower and below average volume, U.S. equity markets closed modestly mixed. Notably, U.S. 10-year yields rose sharply to 14 month highs. At day's end, the Nasdaq and NYSE composite rose +0.13% and +0.03%, respectively, while the SPX and DJI lost -0.03% and -0.06%, respectively. Market breadth was negative, with gainers 0.79:1 losing stocks. Most SPX market segments closed lower. Leaders were telecommunications, health care, and financials, which rose at least +0.12%. Laggards were utilities, industrials, and oil and gas, which fell at least -0.17%.

NYSE volume fell -18.4% to 595.34 million shares, from 729.44 million shares the prior day, 0.79x the 20-day moving average volume.

From its 1643.38 prior day close, the SPX opened higher and set an early 1648.69 intraday high, then reversed lower to a mid-morning 1639.26 intraday low. The index reversed higher by mid-morning, reversed lower in early afternoon, and traded narrowly lower through the close. The index closed fractionally lower at 1642.81. Market volatility rose. From its prior 16.63 close, the VIX opened at 15.15, and traded to resistance at 15.60 through the session and closed at 15.44, up +1.98%. The all-time closing low was 11.26, set June 30, 1993.

On -25.3% lower volume, the DJ Transports fell -0.21%, compared to the DJI's -0.06% loss. The index traded briefly higher and set an early 6,370.24 intraday high, but immediately reversed lower to a mid-morning 6,309.70 intraday low. The index improved through mid-session to 6,355, but traded narrowly lower to the close. The TRAN closed at 6,330.48, -3.34% off its 6,549.16 May 17th record close. The index closed -0.72% below and +1.67% above its respective 20- and 50-day moving averages, and +3.69%, and +12.7% above its respective 100- and 200-day moving averages.

Technical factors were little changed. SPX relative strength (RSI) eased to 54.23, from 54.44 the prior day. The CBOE put/call skew was unchanged at 116.20. U.S. Treasury bond prices fell, as the 10-year yield rose +3.79 bps to end at 2.2097%, from 2.1718% the prior day.

Last week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.78%, +0.88%, +0.39%, and +0.57%, respectively, compared to losses of -1.14%, -1.23%, -0.09%, and -1.48%, respectively, the prior week. In June, the SPX, DJI, Nasdaq, and NYSE composite are up +0.78%, +0.88%, +0.39%, and +0.57%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.08%, +1.86%, +3.82%, and +0.29%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +15.2%, +16.3%, +15.0%, +10.8%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX support is 1638 (10-day moving average). Resistance is 1646 (20-day moving average).

Distribution day count. The current uptrend began on April 29th. The SPX, DJI, Nasdaq, and NYSE composite have distribution counts of two.

In Asia, equity markets closed lower. The Nikkei (NKY) closed down -1.45%. The Hang Seng (HIS) fell -1.20%. The Shanghai composite (SHCOMP) remained closed for the Dragon boat festival. Volumes are unavailable.

The NKY's relative strength index fell to 43.31, from 45.61 the prior day, but down from an overbought 82.61 on May 22nd.

Commentary focused on The BOJ policy statement.

This week, the NKY is up +3.42%, compared to a -3.32% loss the prior week. The HSI is down -1.02%, compared to a loss of -4.63% the prior week. In June, the NKY is down -3.32%. The HSI is down -3.32%. The SHCOMP is down -3.90%. The NKY and HSI closed -6.51% and -3.65% lower in May, respectively, their first monthly declines since October. The SHCOMP rose +5.63%. In 2013, the NKY is up +28.1%. The HSI is down -5.75%. The SHCOMP is down -2.57%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the Nikkei 224 (NKY) closed at 13,317.62, from 13,514.20 the prior day. The index traded narrowly through mid-session, with a 13,584.31 mid-morning high, but fell back at the start of the afternoon session, falling to a 13,296.31 intraday low. The index ended -14.8% below its recent high. The index closed -6.46% and -3.04% below its respective 20- and 50-day moving averages, but +5.47% and +21.8% above its respective 100- and 200-day moving averages. All market segments closed at least -0.62%. Leaders were utilities, health care, and consumer goods. Laggards were consumer services, financials, and oil and gas, which lost at least -2.48%.

In China, the Hang Seng (HSI) closed at 21,354.66, compared to 21,615.09 at the prior close. The index closed -10.4% below its January 30th yearly high, but +17.4% above its 18,185.59 June 4, 2012 low. The index opened narrowly lower, but fell on sovereign bond weakness to 21,400 by mid-morning, where it traded narrowly until the final hour, when the index traded to a 21,307.99 intraday low. The index ended -5.54% and -4.79% below its respective 20- and 50-day moving averages. All market segments lost were no better than unchanged. Leaders were telecommunications, technology, and industrials. Financials lost -1.34%. Laggards were consumer services, consumer goods, and basic materials, which lost at least -1.85%.

In Shanghai, the SHCOMP closed Friday at 2,210.90, compared to 2,242.11 at the prior close. The index traded narrowly higher through mid-morning, but reversed lower by late morning and trended lower to a late 2,205.07 intraday low. The index closed -9.18% below its 2,434.48 February 5th high, but up +12.8% from its December 3rd 1,959.77 low. The SHCOMP closed -2.98% and -1.69% below its respective 20- and 50-day moving averages. All market segments closed at least -1.04% lower. Leaders were financials, oil and gas, and utilities. Laggards were basic materials, consumer goods, and technology, which fell at least -1.70%.

In Europe, the major equity indexes are selling off, which greater weakness in Italy and Spain. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.16%, -1.67%, -1.99%, and -1.74%, respectively. The Spanish IBEX 35 is down -2.60%. The Italian FTSE MIB is down -2.56%. From its 2,719.40 prior day's close, the Euro Stoxx50 opened above 2,700 and trended lower to a mid-session 2,656.00 intraday low. The index currently trades at 2,661.67. All market segments are at least -1.31% lower. Leaders are technology, health care, and industrials. Laggards are consumer services, consumer goods, and financials, which are at least -1.91% lower.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.32%, -1.96%, -2.23%, and -1.11%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.64%, -2.60%, -1.92%, and -1.13%, respectively, compared to the prior week, when the Euro Stoxx50, CAC 40, and DAX closed up +0.41%, +0.78%, and +0.48%, respectively. The FTSE 100 closed down -0.10%. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -3.93%, -4.51%, -4.11%, and -2.23%, respectively. In May, the Euro Stoxx50, FTSE 100, CAC 40 and DAX closed up +2.13%, +2.38%, +2.38%, and +5.50%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +0.94%, +6.58%, +3.99%, and +7.23%, respectively. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.13140%, up from 0.13290% the prior day. USD 3-month LIBOR is 0.27225%, down from 0.27415% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 16.675 bps, compared to 16.915 bps the prior day, and compares to the January 6th high of 50.05 bps. Euribor-OIS is 11.45 bps, unchanged from 11.10 bps the prior day, and down from the December 27, 2011, high of 98.80 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

· The 3-month Euro basis swap is -12.871 bps, compared to -12.470 bps the prior day, and up from a trough of -147.00 bps on December 14, 2011 and within a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields surged to 4.70%, from 4.60% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.44%, compared to 4.29% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.65%, compared to 1.60% the prior day. Japanese 10-year debt yields are 0.89%, compared to 0.84% the prior day.

· The U.S. government overnight repo rate is 9 bps, up from 3 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are higher, with 2- and 10-year maturities yielding 0.334% and 2.286%, respectively, compared to 0.310% and 2.210% Monday. The yield curve widened with the 2- to 10-year spread at +1.952%, compared to 1.900% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.3875% on July 24, 2012, to a high of +1.95.2% on June 11, 2013.

· The U.S. dollar is mixed, but weaker compared to the euro and Japanese yen, but stronger compared to the British pound. The dollar trades at US$81.418, compared to a US$81.349 intraday low and US$81.646 the prior day, and worse compared to its $82.769 50-day, US$82.089 100-day, and US$81.037 200-day averages. The euro trades at US$1.3289, compared to a US$1.3248 intraday high and US$1.3257 the prior day. The euro trades mixed compared to its US$1.3033 50-day and US$1.3104 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥96.95, compared to 98.76 the prior day. The yen trades better than its 50-day moving average ¥99.51, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index worsened to -32.90, from -32.30 the prior day. The index is worse compared to its respective -29.00 and -23.09 5-day and 10-day moving averages. From its July 19th -65.30 low, the index improved rapidly and turned positive last September 5th, but the index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on April 17th. After a lag, the CESIUSD correlates with EPS revisions.

· Commodities prices are mostly lower, with lower energy, lower precious metals, lower aluminum and copper, and mostly lower agriculture prices.

Volatility, Skew:

· The VIX closed at 15.44, up +1.98% from 15.14 at the prior close. The VIX is +6.73% above its 14.47 20-day moving average. Its 30-day high is 18.51. Its 30-day low is 12.26. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 21.78, up +11.2% from 19.42 at the prior day's close. The V2X index trades +16.6% above its 18.58 20-day moving average, -2.73% below the 22.39 30-day high, and +38.2% above the 15.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 19.04, up +1.55% from 18.75 the prior day. The VHSI index trades +12.1% above its 16.98 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 116.20, unchanged from 116.20 at the prior day's close, and within a neutral (115-120) range. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21, and March 12, 15, and 16) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The recent low was 113.23 on November 14th. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· NFIB small business optimism improved to 94.4 from 92.1 survey and prior.

· At 10:00, April wholesale inventories, with +0.2% survey and +0.4% prior.

· April MoM wholesale sales, with -0.1% survey and -1.3% revised prior.

Overseas Economic Reporting and News:

· Australia - May NAB business conditions, with -4 actual and -6 prior.

· Japan - Bank of Japan left monetary policy unchanged.

· United Kingdom - April MoM industrial production rose +0.1%, with 0.0% survey and +0.7% prior. MoM manufacturing production fell -0.5%, compared to -0.2% surey and +1.1% prior.

Company Ratings/News:

· None

Price and Selling Exhaustion/Trend Reversal (based on TD sequential):

SPX - On a monthly basis, the SPX initiated a buy setup in June 2008, with the month's 1404.05 high setting the resistance level. The setup perfected at 735.09 in February 2009. A sell setup ensued in May 2009. In September 2010, a follow-on setup began. The May 2009 setup perfected in January 2010. Its countdown completed in January 2012, closing at 1312.41 and setting a 1429.36 risk level. The follow-on setup perfected in May 2011. In March 2012, the index closed at 1408.47, above resistance, suggesting further upside. In September 2012, the index closed at 1440.67, above the 1429.36 risk level and suggesting the likelihood of further upside. In October and November, the index closed below the risk level, but above support. Also, the follow-on countdown rose to 8 in September 2012, but hasn't subsequently progressed. In August 2012, the index initiated a new sell setup, which perfected in April 2013. In May, the index closed at 1630.74, from 1597.57 the prior month and 1498.11 four months prior. The sell countdown stemming with the May 2011 perfection completed, setting a risk level of 1793.08, based on May's 105.90 range and 1687.18 high. The index closed -9.00% below the risk level.

On a weekly basis, the SPX signaled selling exhaustion the week ended June 8th, during which the SPX traded to an intraweek 1266.74 low on June 4th, and then perfected a weekly buy setup with its 1325.66 close. The next week's bullish price flip initiated a sell setup that perfected on August 10th at 1405.87. On January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. On January 31st, the sell countdown associated with August 10th perfection completed and generated a 1525.36 risk level. In the week ending June 7th, the index closed up +0.78% at 1643.38, from 1630.74 the prior week and 1633.70 close four weeks prior. The April 26th sell setup progressed to 7. The 9 sell countdown associated with the March 8th perfection is unchanged since May 24th. The index closed +7.74% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on August 15th at 1405.53, and completed its sell countdown on September 13th, with its 1459.99 close. The index showed weak subsequent trend until November 19th, when a bullish price flip initiated a sell setup with support at 1359.88, the open and intraday low. The index perfected the setup on November 30th with its 1416.18 close, initiating a sell countdown, which completed on January 7th. On January 9th, a bullish price flip initiated another sell setup, which perfected on January 22nd. On March 6th, the sell countdown associated with the January 7th setup perfected and set a 1561.74 risk level, based on the March 6th 18.27 range and 1543.47 intraday high. On March 13th, the sell setup perfected. On April 29th, the sell countdown associated with the March 13th perfection completed and set a 1608.53 risk level, which superseded the prior risk level. On May 14th, the May 2nd sell setup perfected and initiated a sell countdown. On Monday, the SPX fell -0.04% to close at 1642.81, from 1643.38 the prior day and 1631.38 4 days prior. The June 7th sell setup progressed to 2. The sell countdown associated with the May 14th progressed to 8. The index closed +2.13% above the 1608.53 risk level, which is based on the SPX's April 11th 11.18 point trading range and 1597.35 intraday high.

BKX - On a monthly basis, the BKX perfected a buy setup in December 2007, but has yet to complete its associated buy countdown, which is has been a deferred 13 since April 2011. That same month, the BKX initiated a buy setup, but the setup has remained unperfected since December 2011, when the index closed at 39.38. The buy countdown would complete with a close below 28.72, the February 2009 close with an 8 buy countdown. In September 2012, the index initiated a sell setup, which perfected in May 2013, when the index closed at 61.60, +8.30% from 56.88 at April-end and 53.83 four months prior. The perfection initiated a sell countdown.

On a weekly basis, the BKX recorded a completed buy countdown December 2, 2011. A bullish price flip in the week ending December 16th initiated a sell setup, which perfected the week of February 10th, when the index closed at 44.53. A bearish price flip ensued the week of April 13th, and a buy setup perfected the week of June 8th, when the index closed at 40.86. A bullish price flip occurred on July 27th, and the sell setup perfected on September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1st. On February 22nd, the sell countdown associated with the September 21st perfection completed and set a 56.93 risk level. On June 7th, the BKX closed at 61.58, down -0.03% from 61.60 the prior week and 58.53 four weeks prior. The April 26th sell setup progressed to 7. The 10 sell countdown associated with the February 1st perfection was unchanged. The index closed +8.17% above the 56.93 risk level, which is based on the February 22nd week's 1.08 point range and 55.85 high.

On a daily basis, the BKX signaled selling exhaustion on June 4th, then rallied to 44.65 on June 19th, when it perfected a sell setup. The index completed a sell countdown on August 8th, and on August 15th, perfected a daily follow-on sell setup. On September 6th, the BKX initiated a new setup with its +2.93% gain, which broke through resistance at 47.75. On September 14th, the index completed a sell countdown, followed on September 19th, with an unperfected sell setup. A sell countdown began on September 28th. On December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. Monday, the index closed at 61.93, up +0.57% from 61.58 the prior day and 61.00 four days prior. The bullish price flip canceled the 5 June 3rd buy setup and initiated a sell setup. The May 15th sell countdown progressed to 10.

VIX - On a monthly basis, the VIX perfected a sell setup in October 2007. The associated sell countdown progressed to a deferred 13 in June 2012, but is subsequently unchanged. In January, the VIX fell -23.9%, initiating a buy countdown. The VIX ended May at 16.3013.52, compared to 12.70 at the end of March and 18.02 at the end of December. The bullish index flip canceled a 4 buy setup and initiated a sell setup.

On a weekly basis, the VIX perfected a buy setup on January 27, 2012, and a sell setup on June 8th, followed by another perfected buy setup on August 10th. On April 12th, the VIX completed the buy countdown associated with the August 10th, setup, which also established a 9.17 risk level. The week ending June 7th, the VIX fell -7.12% to 15.14, from 16.30 the prior week, and 12.59 weeks prior. The May 24th sell setup progressed to 3.

On a daily basis, on January 18th, a bearish flip initiated a new buy setup and a buy countdown stemming from the January 16th setup perfection. On March 1st, a bearish flip initiated a buy setup. On March 11th, the buy countdown associated with the January 16th perfection completed, and set a 10.41 risk level. On March 15th, the buy setup associated with March 1st flip perfected. On May 31st, the May 20th sell setup perfected and initiated a sell countdown. Monday, the VIX rose +1.98% to 15.44, from 15.14 at the prior close and 16.27 at the 4 days' prior close. The June 7th sell setup progressed to 2. The May 31st 2 sell countdown was unchanged. The VIX closed +48.3% above the risk level.

EUR, USD Cross - On a monthly basis, Euro Dollar cross perfected a buy setup on May 30, 2008, at 1.554. Subsequent monthly trends were weak until December 31, 2009, when a monthly decline of -4.56% brought the index to 1.4321. The downward move continued until July 2010, when from 1.2238, the index rose +7.10%, with an unperfected buy setup in August 2010. The index failed to establish much strong upward momentum, however, peaking at the end of April 2011 at 1.4807, but then trending lower to retest the July 2010 lows. In March, a bearish price initiated a buy setup. The cross ended May at 1.2999, down -1.28% from 1.3168 the prior month and 1.3057 4 months prior. The buy setup progressed to 3. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of May 31st, the index rose +0.52% to end at 1.2999, from 1.2932 the prior week and 1.3114 4 weeks prior. The buy setup progressed to 4. The 11 sell countdown associated with the September 28th perfection was unchanged. The cross closed +9.24% above the 1.1964 risk level.

On a daily basis, the EURUSD cross perfected a sell setup on September 12th. The subsequent trend was lower until a buy setup initiated on November 2nd and perfected on November 14th with a 1.2736 close. The index initiated a buy setup the following day and perfected the setup on November 27th at 1.2943. On January 11th, the sell countdown stemming from the November 27th completed, setting a 1.3393 risk level. On January 24th, a bullish price flip initiated a sell setup which rose to an unperfected 9 on February 5th. On February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection perfected. With Monday's +0.30% higher close, the EURUSD cross ended at 1.3257, from 1.3218 the prior day and 1.3081 four days prior. The 9 May 29th sell setup is unperfected. The cross closed -1.02% below the risk level.

USGG10YR - On a monthly basis, the USGG10YR began a downward trend from 5.0506% in May 2006, perfecting a sell setup in April 2008 (at 3.7295%) and completing the associated buy countdown in June 2011 (at 3.1600%), when it produced a 1.1121% risk factor. A subsequent 9 buy setup perfected in May 2012, with the rate at 1.5578%. In September 2012, a bullish price flip initiated a sell setup. The rate ended May at 2.1282%, compared to 1.6717% the prior month and 1.7382% 4 months prior. The bullish rate flip canceled a 1 buy setup and initiated a sell setup.

On a weekly basis, the index perfected a buy setup on June 8th, but subsequent trends were weak until a December 7th bullish rate flip initiated a sell setup, which perfected on February 1st, when the rate ended at 2.0149%. The rate has subsequently shown little trend, and the associated sell setup is unchanged at 1. The rate ended the most recent week at 2.1718%, from 2.1282% the prior Friday and 1.8973% four weeks prior. The May 3rd sell setup progressed to 6. The sell countdown associated with the February 1st perfection progressed to 6.

On a daily basis, after a late October intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. On February 20th, a bearish rate flip initiated a buy setup, which perfected on March 4th. On April 8th, the buy setup perfected. On April 15th, the buy countdown associated with the March 4th perfection completed and set a 1.6098% risk level, based on the April 5th 10.61 bps range between the intraday high and low rate and 1.7159% close. On May 15th, the May 3rd buy setup perfected. On Monday, the rate ended at 2.2097%, from 2.1718% the prior day and 2.1462% four days prior. The June 7th sell setup progressed to 2. The May 20th sell countdown progressed to 7.

NKY - On a monthly basis, the NKY perfected a buy setup on April 30, 2009 (at 8,828.26), but subsequently traded narrowly until November, 2012, when the index rose +5.80%, following an increase of +1.50% in October, and initiated a sell setup. The index closed May at 13,774.54, down -0.62% from 13,860.86 the prior month and 11,138.66 four months prior, ending 7 consecutive monthly gains. The sell setup rose to 7.

On a weekly basis, the NKY perfected a sell setup on March 9th, and a subsequent buy setup on June 1st with a countdown of 8. The index initiated a sell setup on October 26th, and on December 21st, the sell setup perfected. Notably, on December 28th, the index closed at 10,395.18, +2.01% above 10,190.35 resistance (its April 4th weekly high), suggesting further upside. The sell countdown associated with the December 21st perfection completed April 5th and set a 14.645.46 risk level, based on the 1,419.84 point range on that day and 13,225.62 intraday high. For the week ending June 7th, the index closed down -6.51% at 12,877.53, from 13,774.54 the prior week and 14,607.54 four weeks' prior. The index closed -12.1% below the risk level.

On a daily basis, the November 15th bullish price flip initiated a sell setup, which perfected on November 30th. The associated sell countdown completed on December 28th. On January 4th, the index opened after the New Year's holiday, and closed above resistance, suggesting further upside. Though the index subsequently moved higher, it was without strong trend until a March 4th bullish price flip initiated a sell setup. On March 15th, the sell setup perfected with its close above the March 12th 12,461.97 intraday high. The associated sell countdown completed on April 26th. On March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Tuesday, the index fell -1.45% to 13,317.62, from 13,514.20 the prior day and 13,014.87 four days prior. The bullish price flip initiated a sell setup. The 4 June 4th buy countdown was unchanged. The index closed -13.6% below the risk level.

HSI - On a monthly basis, the HSI perfected a buy countdown on March 31, 2009, and two subsequent perfected upward setups on December 31, 2009 and May 31, 2011. In February, the index closed at 23,020.27, completing the sell countdown stemming from the May 2011 perfection. The completed countdown set a 27,194.16 risk level. A bullish price flip in September 2012 initiated a sell setup. The index ended May at 22,392.16, down -1.52% from 22,737.01 the prior month and 22,729.53 four months prior. The bearish price flip canceled an 8 sell setup and initiated a buy setup. The index closed -17.7% below the risk level.

On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On June 7th, the index closed at 21,575.26, down -3.65% from 22,392.16 the prior week and 23,321.22 four weeks prior. The May 31st buy setup progressed to 2. The April 5th buy countdown progressed to 4. The index closed -3.50% below the risk level.

On a daily basis, the HSI perfected a sell setup and completed an upward countdown on August 8th. After September 5th's lower close, the index perfected a buy setup. A sell setup commenced on September 9th, followed by a completed countdown on October 24th, with a trend of 22,071.74, and another perfected setup on October 25th. It completed another sell countdown on December 6th. The index perfected another sell setup on December 14th, and completed the associated countdown on January 23rd, when it set a 23,881.32 risk level. On April 19th, a bullish price flip initiated a sell setup, which perfected on May 2nd and initiated a sell countdown. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On Tuesday, the HSI fell -1.20% to 21,354.66, from 21,615.09 the prior day and 22,069.24 four days prior. The 5 June 4th buy countdown was unchanged. The index closed -10.6% below the risk level.

SHCOMP - On a monthly basis, the SHCOMP perfected a buy setup on September 30, 2008, and subsequently rallied to an August 31, 2009, high, but without perfecting a subsequent sell setup. In May 2011, the SHCOMP assumed a downward trend and perfected a buy setup on January 31, 2012. In December, a bullish price flip initiated a sell setup. In May, the index closed at 2,300.60, up +5.63% from 2,177.91 the prior month and 2,385.42 four months prior. The April 30th buy setup progressed to 2. The 7 buy countdown associated with the January 2012 perfection was unchanged.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On June 7th, the index closed the week down -3.90% at 2,210.90, from 2,300.60 the prior week and 2,246.83 four weeks prior. The bearish price flip initiated a buy setup. The 5 sell countdown associated with the February 8th perfection was unchanged.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th and canceled a deferred sell countdown. Monday, the index fell -1.33% to 2,210.90, from 2,242.11 at the prior close and 2,299.25 4 days prior. The June 3rd buy setup progressed to 5. The April 9th buy countdown completed.

SX5E - On a monthly basis, the Euro Stoxx50 last perfected an sell setup on May 31, 2007. It perfected a buy setup on September 30, 2008. The buy countdown completed in May 2012. A bullish price flip in August initiated a sell setup. On May 31st, the index closed at 2,769.64, compared to 2,712.00 the prior month and 2,763.68 four months prior. The 9 sell setup perfected and initiated a sell countdown.

On a weekly basis, the index trends are more pronounced, having perfected an sell setup on March 16th (at 2,511.42), followed by a buy setup initiation on March 30th, which perfected on May 25th, when the index closed at 2,161.87, down -13.9%. On June 15th, a bullish price flip initiated a sell setup with a 2,181.23 close. The index subsequently rallied to perfect a sell setup on August 10th, when it closed at 2,362.69, up +9.29%. A bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend is lower. In the week ended June 7th, the index fell -1.64% to 2,724.08, from 2,769.64 the prior week and 2,785.24 at the 4 weeks' prior close. The bearish price flip canceled the 6 April 26th sell setup and initiated a buy setup. The 7 sell countdown stemming from the January 18th perfection was unchanged. The index closed -2.03% below the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. The perfection initiated a sell countdown. Monday, the index fell -0.17%, from 2,719.40 the prior day and 2,724.08 the prior day and 2,755.70 at the prior 4 days' close. The May 31st buy setup progressed to 7. The 11 sell countdown associated with the May 3rd perfection is unchanged since May 28th. The index closed -2.41% below the 2,786.57 risk level.

1Q2013 Earnings. Of 493 reporting companies, 347 or 70.4% surprised positively on earnings, with a +4.94% surprise average. Of reporting companies, 233 or 47.4% reported sales or revenues in excess of estimates. The average sales/revenue surprise is -0.67%.

Valuation. The SPX trades at 15.9x 2012 earnings ($103.41), 14.9x estimated 2013 earnings ($110.05), and 13.4x estimated 2014 earnings ($122.89). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013 and 2014 earnings to grow +6.34% and +11.6%, respectively.

Options. Options markets are unchanged at neutral to bearish, from neutral to bearish the prior day. Composite options are neutral, index options are neutral, and equity options markets are bearish. The composite put/call ratio is 1.06, compared to 1.12 the prior day, and worse compared to its 5- and 10-period moving averages of 1.14 and 1.05, respectively. The index put/call ratio is 1.17, compared to 1.22 the prior day, and better compared to its 5- and 10-period moving averages of 1.30 and 1.18, respectively. The equity put/call ratio closed the day at 1.04, compared to 1.08 the prior day, and worse compared to its 5- and 10-period moving averages of 1.07 and 1.00, respectively.

NYSE Indicators. Volume fell -18.4% to 595.34 million shares, from 729.44 million shares the prior day, 0.79x the 752.12 million share 20-day moving average. Market breadth was negative , and up volume lagged down volume. Advancing stocks lagged decliners by -357 (compared to +1,165 the prior day), or 0.79:1. Up volume was 0.89:1 down volume.

BKX. On lower volume, the KBW bank index rose +0.57% to 61.93, from 61.58 at the prior day's close. The index gapped higher and quickly tested resistance at 62.00, but then fell back to an early 61.58 intraday low. The index rallied back to 62.08 by mid-morning, then traded narrowly through the close. Volume fell -23.0% to 42.978 million shares, from 55.828 million shares the prior day, or 0.72:1x the 61.337 million share 15-day moving average.

Large cap banks underperformed the regional banks' performance, as the KRX rose +0.94%.

This week, the BKX is up +0.57%. Last week, the BKX closed down -0.03%, compared to a gain of +1.18% the prior week. In June, the index is up +0.4%. In May, the BKX closed up +8.30%. For the year, the BKX is up +20.1%, better than the SPX's +15.2% rise. In 2012, the index rose +30.2%, compared to a +13.4% rise in the SPX.

Since May 15th, the BKX closed below 60 only on June 5th. It crossed above 50 on December 17th. The BKX closed +6.87% above its 57.95 April 23, 2010 close (the prior post-2008 high point), and +90.2% above the 32.56 intraday low on October 4, 2011. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +52.9% in the same period.

The BKX index closed -47.3% below its March 30, 2007, record 121.16 high.

Technical indicators improved. The index closed above its 5-, 10-, and 20-day moving averages. The index closed +1.50% and +6.49% above its respective 20- and 50-day moving averages. The index closed +9.31% and +16.4% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since last August 7th. Yesterday, the 20-day moving average rose +17 bps. The 50-day moving average rose +11 bps. Its 100-day moving average rose +8 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.86 points) above the 50-day, and the gap widened +6 bps. The 50-day moving average closed (by +4.93 points) above the 200-day moving average, and the gap widened +4 bps. The 100-day moving average closed (by +3.42 points) above the 200-day moving average since March 19th, and the gap rose 1 bp.

The directional movement indicator improved to 11.105, from +4.175 the prior day. Relative strength rose to 62.22, from 60.44 the prior day, both in a neutral 30-70 range. Next resistance is 62.17; next support is at 61.59.

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