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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... More
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  • U.S. Futures Advance As FOMC Meets; Asia Rebounds, Europe Higher 0 comments
    Jul 30, 2013 9:07 AM

    This morning. Earning season continues into a 3rd week, with earnings turning to oil and gas, pharmaceuticals, European banks, property and casualty insurers, and steelmakers. More than half the S&P 500 (SPX) have reported with better EPS and revenues than consensus, though critics argue that the better EPS is largely due to cost cutting and that revenues remain unimpressive. Notwithstanding, 2013-2015 annual EPS estimates are somewhat improved overall from estimates prior to the start of the current season. Since July 11th, the market trend is "confirmed uptrend".

    In Monday's session, major U.S. equity indexes opened lower and fell to late morning lows, where they found support and the improved to narrow losses through the afternoon session. Technicals worsened. The SPX, DJ Industrials (Private:DJI), and NYSE composite (NYA) surrendered their respective 5- and 10-day moving averages. Most SPX market segments ended lower. Volume fell and continued at well-less-than-average levels. DJ Transports (TRAN) underperformed the DJ Industrials. All major indexes closed above their respective 10-, 20-, and 50-day moving averages.

    Trading desks reported another "tired" session, particularly through the afternoon. M&A announcements (e.g., PUB/OMC) failed to spark much "risk-on" trading, Japanese election enthusiasm morphed into concerns that Abe may delay a planned hike in consumption taxes, and the FOMC 2-day meeting, which starts this morning, kept many investors/traders sidelined. Attention is turning to FOMC report tomorrow afternoon, continued political maneuvering on Bernanke's replacement (largely between supporters of Janet Yellen and Larry Summers), and the July employment report this Friday.

    Today, in Asia, equity markets closed higher, with better results in Japan, which rebounded from Monday's sell-off. Wednesday's Nikkei 225 (NKU3) equity futures are down -1.080%. Chinese equity futures are modestly mixed. In Europe, equities are moderately higher. Economic reporting focuses on industrial production and consumer confidence, with attention turning to August 1st Chinese PMIs.

    Today, long-term U.S. Treasury yields are 2.5798%, compared to 2.6023% at the prior close. U.S. repo rates are 4 bps, unchanged from 3 bps the prior day, but these markets are thin and moribund. Spanish and Italian 10-year debt yields are 4.67% and 4.41%, respectively, compared to 4.68% and 4.46%, the prior day. The U.S. dollar is mixed. U.S. options markets improved to neutral to bullish, from neutral the prior day. The CBOE skew rose, but is in a neutral range.

    In pre-market futures trading, September SPX equity futures are moderately higher, and near the top of a 1683-1688 range. After a fair value adjustment of -2.42 points, SPX equity futures are at 1687.75, up +7.67 points. The SPX opens +1.10% and +2.43% above its respective 20- and 50-day moving averages, and +4.52% and +10.0% above its respective 100- and 200-day moving averages.

    In Asia, equity markets closed higher. The Japanese Nikkei (NYSEARCA:NKY) rose +1.53%, rebounding from the prior day's -3.32% loss. The Hang Seng (HSI) rose +0.48%. The Shanghai composite (SHCOMP) rose +0.70%. Volumes are unavailable.

    The NKY's relative strength index (RSI) closed at 44.82, up from 40.48 the prior day and in a neutral 30-70 range. The index's RSI is up from a low of 34.42 on June 13th, down from an overbought 82.61 on May 22nd and down from 64.16 on July 23rd. The HSI's RSI rose to 61.93, up from 60.13 the prior day. The SHCOMP's RSI fell to 41.50, from 38.72 the prior day, but up from June 27th's grossly oversold 15.27.

    Commentary focused on weak Chinese corporate profits, currency trends, and Chinese central bank open market activity to invest liquidity into the economy.

    This week, the NKY, HSI, and SHCOMP are down -1.84%, -0.07%, and -1.03%, respectively. Last week, the NKY closed down -2.59%, the HSI rose +3.25%, and the SHCOMP closed down -1.40%. The prior week, the NKY gained +0.58%, the HSI gained +0.40%, and the SHCOMP is fell -2.30%. In July, the NKY is up +1.41%, the HSI is up +5.53%, and the SHCOMP is up +0.55%. In June, the NKY closed down -0.71%, the HSI -7.10%, and the SHCOMP -14.0%. In May, the NKY and HSI closed -6.51% and -3.65% lower, respectively, their first monthly declines since October. The SHCOMP rose +5.63%.

    In 2013, the NKY is up +33.4%. The HSI is down -3.10%. The SHCOMP is down -12.3%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

    In Japan, the NKY closed at 13,869.82, up from 13,661.13 the prior day. The index traded narrowly higher through the morning session, but rallied to 13,850 early in the afternoon session, when it traded to a mid-afternoon 13,909.45 intraday high. The index ended -11.3% below its recent May 22nd 15,627.26 closing high, but up +65.8% above its 8,295.63 July 18, 2012 low. The index closed -3.50% and -0.24% below its respective 20- and 50-day moving averages, and +2.43% and +18.0% above its respective 100- and 200-day moving averages. All market segments closed at least +0.25% higher. Leaders were oil and gas, utilities, and financials, which rose at least +2.07%. Laggards were consumer services, telecommunications, and technology.

    In China, the HSI closed at 21,953.96, compared to 21,850.15 at the prior close. The index closed -7.84% below its January 30th 23,882.06 high, but +20.7% above its 18,185.59 June 4, 2012 low. The index opened modestly higher, but rallied mid-morning to the 22,033.21 intraday high. The index eased back to near breakeven by mid-afternoon, but rallied over the final 90 minutes and into the close. The index ended +3.38% and +1.97% above its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were technology, consumer services, and consumer goods, which rose at least +0.76%. Laggards were industrials, which rose +0.21%, and telecommunications and basic materials, which fell at least -0.05%.

    In Shanghai, the SHCOMP closed at 1,990.06, up from 1,976.31 at the prior close, and +2.05% above the recent 1,950.01 June 27th closing low. The index opened below 1,985 and fell to a mid-morning 1965.67 intraday low before rallying strongly on news of PBOC open market activity. The 2,006.23 intraday high was set in late morning. The index eased lower through the afternoon session. The SHCOMP closed -1.32% and -6.06% below its respective 20- and 50-day moving averages. Market segments closed mixed. Leaders were oil and gas, financials, and utilities, which rose at least +1.04%. Laggards were telecommunications, health care, and technology, which fell at least -0.83%.

    In Europe, the major equity indexes are moderately higher and better than intraday lows. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +0.64%, +0.30%, +0.48%, and +0.41%, respectively. The Spanish IBEX 35 is up +0.51%. The Italian FTSE MIB is up +0.81%.

    Commentary focused on 2Q2013 earnings, currency developments, and U.S. monetary policy.

    From its 2,741.73 prior day's close, the Euro Stoxx50 (SX5E) rose to an early 2,764.36 intraday high, then eased back to support at 2,745 before firming and rallying anew. The index currently trades at 2,760.07. Most market segments are higher. Leaders are basic materials, technology, and utilities, which are up at least +1.26%. Laggards are telecommunications and health care, which are up at least +0.48%, and financials, which are down -0.24%.

    This week, the Euro Stoxx50, CAC 40, FTSE 100, and DAX are up +0.52%, +0.39%, +0.41%, and +0.58%, respectively. Last week, the Euro Stoxx50 and CAC 40 closed up +0.95% and +1.11%, respectively, while the FTSE 100 and DAX are off -1.14% and -1.04%, respectively. In July, the Euro Stoxx50, FTSE100, CAC 40, and DAX are up +5.90%, +5.87%, +6.58%, and +4.19%, respectively. In June, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -6.03%, -5.58%, -5.31%, and -4.67%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +4.21%, +11.5%, +9.29%, and +8.58%. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

    2Q2013 SPX Earnings. Of 280 reporting companies, 190 or 73.2% surprised positively on earnings, with a +3.30% surprise average. Of reporting companies, 155 or 55.6% reported sales or revenues in excess of estimates. The average sales/revenue surprise is +0.46%.

    Valuation. The SPX trades at 16.3x 2012 earnings ($103.41), 15.3x estimated 2013 earnings ($110.33), 13.8x estimated 2014 earnings ($122.40), and 12.5x 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 +6.70% and +10.9%, and +10.6%respectively.

    Composite, index, and equity options. Options markets improved to neutral to bullish, from neutral the prior session. Composite options are bullish, index options are neutral, and equity options are neutral. The composite put/call ratio is 0.82, compared to 1.00 the prior day, and better compared to its 5- and 10-period moving averages of 0.94 and 0.91, respectively. The index put/call ratio is 1.23, compared to 1.33 the prior day, and worse compared to its 5- and 10-period moving averages of 1.20 and 1.14, respectively. The equity put/call ratio closed the day at 0.73, compared to 0.85 the prior day, and worse compared to its 5- and 10-period moving averages of 0.86 and 0.83, respectively.

    NYSE Volume, Breadth Indicators. Volume fell -3.01% to 579.17 million shares, from 597.12 million shares the prior day, 0.87x the 668.73 million share 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged decliners by -1,202 (compared to -154 the prior day), or 0.43:1. Up volume was 0.48:1 down volume.

    Distribution day count. Volumes fell on all the major exchanges. Since the current market uptrend commenced on July 11th, the distribution count is 2 SPX, 2 NYSE composite, and 1 Nasdaq.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.11900%, down from 0.11980% the prior day. USD 3-month LIBOR is 0.26500%, down from 0.26600% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US Libor-OIS (LOIS) spread is 16.10 bps, down from 16.20 bps the prior day, and compares to the January 6th high of 50.050 bps. Euribor-OIS is 12.30 bps, up from 11.60 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 -9.13, compared to -9.54 bps the prior day, up from a trough of -147.00 bps on December 14, 2011, and at the below a normal -10 bps and -40 bps range.

    · Spanish 10-year debt yields are 4.67%, down from 4.68% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.41%, compared to 4.46% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.67%, compared to 1.66% the prior day. Japanese 10-year debt yields are 0.80%, compared to 0.80% the prior day.

    · The U.S. government overnight repo rate is 4 bps, unchanged from 4 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 0.313% and 2.593%, respectively, compared to 0.317% and 2.602% Monday. The yield curve narrowed -0.520 bps, with the 2- to 10-year spread at +2.280%, compared to 2.286% 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 +2.344% on July 5, 2013.

    · The U.S. dollar is modestly mixed, stronger compared to the Japanese yen and British pound, but slightly weaker compared to the euro. The dollar trades at US$81.715, compared to US$81.682 intraday low and US$81.663 the prior day, and mixed compared to its $82.607 50-day, US$82.667 100-day, and US$81.524 200-day averages. The euro trades at US$1.3276, compared to a US$1.3279 intraday low and US$1.3262 the prior day. The euro trades better compared to its US$1.3108 50-day and US$1.3048 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥97.88, compared to ¥97.96 the prior day. The yen trades worse than its 50-day moving average ¥99.03, and better than its May 17th 103.21 closing low.

    · Citigroup Economic Surprise Index worsened to -5.50, from -3.40 the prior day. The index is mixed compared to its respective -6.00 and -7.49 5-day and 10-day moving averages. 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 May 6th and fell to a low of -32.90 on June 10th. After a lag, the CESIUSD correlates with EPS revisions.

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

    Volatility, Skew:

    · The VIX closed at 13.39, up +5.27% from 12.72 at the prior close. The VIX is -4.56% below its 14.03 20-day moving average. Its 30-day high is 21.91. Its 30-day low is 12.07. 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 18.42, down -1.50% from 18.29 at the prior day's close. The V2X index trades -4.69% below its 19.33 20-day moving average, -31.3% below the 26.80 30-day high, and +9.71% above the 16.79 30-day low.

    · The Hang Seng volatility index (VHSI) closed at 17.77, down -2.84% from 18.29 the prior day. The VHSI index trades -13.5% below its 20.55 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE skew closed at 118.93, up +0.59% from 118.23 at the prior day's close, and within a neutral (115-120) range. The recent low was 112.47 on May 25, 2013. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21st, and March 12th, 15th, and 16th) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. 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 9:00, May MoM S&P/CaseShiller home price index rose +2.47% to 156.14, from 152.42 revised prior.

    · At 10:00, July consumer confidence with 81.3 survey and 81.4 prior.

    Overseas Economic Reporting and News:

    · Australia - June MoM building approvals fell -6.9%, compared to +2.0% survey and -4.3% revised prior.

    · China - On August 1st, July manufacturing PMI, with 49.8 survey and 50.1 prior. HSBC/Markit manufacturing PMI, with 47.7 survey and 48.2 prior.

    · Japan - June preliminary MoM industrial production fell -3.3%, compared to -1.5% survey and +1.9% prior.

    · South Korea - June MoM industrial production rose +0.4%, compared to +0.4% survey and -0.1% revised prior.

    · Eurozone - July economic confidence is 92.5, compared to 92.5 survey and 91.3 prior.

    · Germany- GfK August consumer confidence rose to 7.0, compared to 6.9 survey and 6.8 prior.

    · Portugal - July consumer confidence was -52.7, compared to -53.9 prior. June MoM industrial production fell -2.7%, compared to +5.4 revised prior. June MoM retail sales rose +1.1%, compared to +1.5% revised prior.

    · Spain - QoQ 2Q GDP fell -0.1%, compared to -0.1% survey and -0.5% prior. YoY 2Q GDP fell -1.7%, compared to -1.8% survey and -2.0% prior.

    · United Kingdom - July Lloyds business barometer rose to 41, from 36 prior.

    Company Ratings/News:

    · None.

    Monday. On lower and below average volume, U.S. equity markets ended with moderate losses, but better than their late morning lows. The NYSE composite lost -0.50%, followed by the Nasdaq, SPX, and DJI, which fell -0.39%, -0.37%, and -0.24%, respectively. Market breadth was negative, with gainers 0.43:1 losing stocks. Most SPX market segments closed lower. Leaders were telecommunications, basic materials, and utilities, which rose at least +0.14%. Laggards were consumer services, financials, and oil and gas, which fell at least -0.56%.

    NYSE volume fell -3.01% to 579.17 million shares, from 597.12 million shares the prior day and +0.87x the 668.73 million share 20-day moving average volume. U.S. 10-year yields rose 3.99 bps to 2.6023%, from 2.5624% at the prior close.

    Futures indicated a lower open and the SPX gapped lower to open near 1688. The index lost ground through late morning, found support and rallied back to 1688 by mid-afternoon. The index eased again into the close. The SPX closed at 1685.33, -0.60% below the July 22nd record close. The index closed +56.8% above the 1074.77 October 4, 2011, intraday low.

    The TRAN also opened lower, but fell through the session. On -9.29% lower and below average volume, the TRAN fell -1.10%, compared to the DJI's -0.24% loss. From its prior 6,472.92 close, the index opened at 6,460 and fell to a late-session 6,396.30 intraday low, before improving in the session's final minutes. The index closed at 6,401.65, -2.81% below its July 19th 6,586.57 record close. The index closed -0.26% below and +0.96% above its respective 20- and 50-day moving averages. The index ended +2.31% and +9.64% above its respective 100- and 200-day moving averages.

    Market volatility rose. From its prior 12.72 close, the VIX opened above 13.50, rose to 13.86 late-morning intraday high, then eased through the afternoon session to a late 13.38 intraday low. The index closed at 13.39, up +5.27%. The all-time closing low was 11.26, set June 30, 1993.

    The broader market's technical factors worsened, as the SPX surrendered both its 5- and 10-day moving averages. SPX relative strength (RSI) fell to 61.48, from 65.42 the prior day, within a neutral range. The CBOE put/call skew rose +0.5952% to 118.23, from 117.85 the prior day, and within a neutral 115-120 range. This week, the SPX is down -0.37%, while the DJI, Nasdaq, and NYSE composite are down -0.24%, -0.39%, and -0.50%, respectively. The prior week, the SPX closed down -0.03%, while the DJI, Nasdaq, and NYSE composite closed up +0.10%, +0.71%, and +0.02%, respectively. In July, the SPX, DJI, Nasdaq, and NYSE composite are up +4.92%, +4.11%, +5.76%, and +5.04%, respectively. In June, the SPX, DJI, Nasdaq, and NYSE composite closed down -1.50%, -1.36%, -1.52%, and -2.04%, respectively.

    In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +18.2%, +18.5%, +19.2%, +13.4%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX resistance is 1697. Immediate support is 1681, then 1671.

    KBW Bank Index (BKX). On lower and below average volume, the BKX closed lower for a 4th consecutive session. The BKX fell -0.89% to 65.39, from 65.98 at the prior day's close. The index opened below 65.90, fell to a late morning 65.18 intraday low, then rallied mildly back to 65.50 late in the session. Volume fell -1.29% to 41.029 million shares, from 41.566 million shares the prior day, or 0.73:1x the 56.450 million share 15-day moving average.

    Large cap banks outperformed the regional banks' performance, as the KBW regional banking index (KRX) fell -1.03%.

    Last week, the BKX closed down -0.11% compared to a gain of +2.42% the prior week. In July, the BKX is up +7.44%. In June, the index closed down -0.31%, compared to May's +8.30% gain. For the year, the BKX is up +28.7%, better than the SPX's +18.6% rise. In 2012, the index rose +18.9%, compared to a +13.4% rise in the SPX.

    The BKX is now +10.5% better than the June 24th 59.19 close, its worst since May 13th. The index crossed above 50 on December 17th and 60 on May 31st. The BKX closed +100.8% 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 +56.8% in the same period.

    The BKX index closed -46.0% below its February 20, 2007, record 121.06 high. The BKX is up +251.2% from its 18.62 March 6, 2009, closing low.

    Technical indicators worsened. For a 3rd consecutive day, the index closed below its 5-day moving average, but yesterday surrendered its 10-day moving average as well. The index closed above its 20-, 50-, 100-, and 200-day moving averages. The index closed +1.02% and +4.64% above its respective 20- and 50-day moving averages. The index closed +9.73% and +17.7% 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 rose +20 bps. The 50-day moving average rose +11 bps. Its 100-day moving average rose +10 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by +2.24 points) above the 50-day, and the gap widened +9 bps. The 50-day moving average closed (by +6.91 points) above the 200-day moving average, and the gap rose +4 bps. The 100-day moving average closed (by +4.01 points) above the 200-day moving average since March 19th, and the gap widened +3 bps.

    The directional movement indicator narrowed to +8.755, from +12.337 the prior day, its 21st consecutive positive reading. Relative strength fell to 59.83, from 65.51 the prior day, within a neutral 30-70 range. Next resistance is 65.79; next support is at 65.09.

    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 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. In June, the index closed at 1606.28, down -1.50% from 1630.74 the prior month and 1514.68 four months prior. The May 2013 sell countdown progressed to 2. The index closed -10.4% 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 July 26th, the index closed down -0.03% at 1691.65, from 1692.09 the prior week and 1606.28 close four weeks prior. The July 12th sell setup progressed to 3. The March 8th sell countdown progressed to 12. The index closed +10.9% 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, which completed on July 8th. The completion set a risk level of 1725.50, based on the 38.32 point May 22nd trading range and 1,687.18 intraday high. On July 9th, the June 27th sell setup perfected and initiated a sell countdown. On Monday, the SPX fell -0.37% to 1685.33, from 1691.65 the prior day and 1692.39 4 days prior. The July 24th buy setup progressed to 4. The July 9th 9 sell countdown is unchanged since July 23rd. The index closed -2.33% below the 1725.50 risk level.

    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. In June, the index closed at 61.41, down -0.31% from 61.60 at May-end and 53.98 four months prior. The May 2013 sell countdown progressed to 2.

    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 July 26th, the BKX closed at 65.98, down -0.11% from 66.05 the prior week and 61.41 four weeks prior. The July 5th sell setup progressed to 4. The February 1st sell countdown progressed to 13. The index closed +15.9% 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. On June 26th, a bullish price flip initiated a sell setup, which perfected on July 9th and initiated a sell countdown. On July 2nd, the index completed its May 15th sell countdown, which set a 64.06 risk level, based on the May 30th 1.14 point high/low range and 62.92 close. On July 24th, the July 12th sell setup perfected, but did not initiate a sell countdown. Monday, the index closed at 65.39, down -0.89% from 65.98 the prior day and 66.71 four days prior. The July 26th buy setup progressed to 2. The July 9th 6 sell countdown is unchanged since July 23rd. The index closed +2.08% above its 64.06 risk level.

    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 May a bullish flip initiated a sell countdown. The VIX ended June at 16.86, up +3.44% from 16.30 at the end of May and 115.51 at the end of February. The May 2013 sell setup progressed to 2.

    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 July 26th, the VIX rose +1.44% to 12.72, from 12.54 the prior week, and 16.86 4 weeks prior. The July 5th sell setup progressed to 4. The index closed +38.7% above the risk level.

    On a daily basis, on May 20th a bullish flip initiated a sell setup, which perfected on May 31st and initiated a sell countdown. On June 26th, a bearish flip initiated a buy countdown, which perfected on July 9th, when a sell countdown was initiated. Monday, the VIX rose +5.27% to 13.39, from 12.72 at the prior close and 12.66 at the 4 days' prior close. The July 25th sell setup progressed to 3. The July 9th 7 buy countdown is unchanged since July 22nd. The VIX closed +28.6% above the 10.41 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 June at 2.4857%, compared to 2.1282% the prior month and 1.8756% 4 months prior. The May 2013 sell setup progressed to 2.

    On a weekly basis, on December 7th, a bullish rate flip (at 1.6215%) initiated a sell setup, which perfected on February 1st. The perfection initiated a sell setup. Subsequent trends were weak until a May 3rd bullish rate flip (at 1.7382%) initiated a sell setup, which perfected on June 28th, when the rate ended at 2.4857%. The rate ended the most recent week at 2.5624%, from 2.4839% the prior Friday and 2.4857% four weeks prior. The February 1st 9 sell countdown is unchanged since July 5th.

    On a daily basis, after a late October 2012 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 June 24th, the May 20th sell countdown completed, setting a 2.8150% risk level, based on the June 24th 15.03 bps trading range and 2.6647% intraday high. On July 11th, a bearish rate flip initiated a buy setup. On Monday, the rate ended at 2.6023%, up +3.99 bps from 2.5624% the prior day and 2.5049% four days prior. The July 23rd sell setup progressed to 5. The rate closed -21.3 bps below the 2.8150% 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 June at 1.3010, up +0.08% from 1.2999 the prior month and 1.28.15 4 months prior. The bullish price flip canceled the March 2013 3 buy setup. 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 July 26th, the index rose +1.03% to end at 1.3279, from 1.3277 the prior week and 1.3010 4 weeks prior. The July 19th sell setup progressed to 2. The sell countdown associated with the September 28th perfection is a deferred 13, unchanged since June 7th. The cross closed +11.0% 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. On July 2nd, the June 20th buy setup perfected and initiated a buy countdown. On July 10th, a bullish price flip initiated a sell setup, which perfected on July 22nd. The perfection canceled the July 2nd buy countdown. With Monday's -0.13% lower close, the EURUSD cross ended at 1.3262, from 1.3279 the prior day and 1.3223 four days prior. The July 22nd 4 sell countdown is unchanged since July 26th. The cross closed -2.03% below the 1.3537 risk level.

    SX5E - On a monthly basis, the Euro Stoxx50 perfected a 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 2012 initiated a sell setup, which perfected in May 2013 and initiated a sell countdown. In June, the index closed at 2,602.59, compared to 2,769.64 the prior month and 2,633.55 four months prior. The bearish price flip initiated a buy countdown.

    On a weekly basis, 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 was lower, until a bullish price flip in the week ending July 12th. In the week ended July 26th, the index rose +0.95% to 2,741.96, from 2,716.17 the prior week and 2,602.59 at the 4 weeks' prior close. The July 12th sell setup progressed to 3. The sell countdown stemming from the January 18th perfection progressed to 10. The index closed -1.38% 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 July 8th, a bullish price flip initiated a sell setup, which perfected on July 18th and initiated a sell countdown. Monday, the index fell -0.01% to 2,741.73, from 2,741.96 the prior day and 2,722.90 at the prior 4 days' close. The July 18th 5 sell countdown progressed was unchanged since July 24th.

    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 ended June at 13,677.32, down -0.71% from 13,774.32 the prior month and 11,559.36 four months prior. The sell setup progressed to 8.

    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 July 26th, the index closed down -3.15% at 14,129.98, from 14,589.91 the prior week and 13,677.32 four weeks' prior. The July 5th sell setup progressed to 4. The index closed -3.52% below the risk level.

    On a daily basis, 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 July 10th, the June 28th sell setup perfected, cancelled the June 4th 7 buy countdown, and initiated a sell countdown. On July 24th, a bearish price flip initiated a sell setup. Tuesday, the index rose +1.53% to 13,869.82, from 13,661.13 the prior day and 14,731.28 four days prior. The July 24th buy setup progressed to 5. The July 10th 3 sell countdown is unchanged since July 18th. The index closed -10.0% below the 15,412.34 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. A bearish price flip in May 2013 initiated a buy setup. The index ended June at 20,803.29, down -7.01% from 22,392.16 the prior month and 23,020.27 four months prior. The May 2013 buy setup progressed to 2. The index closed -23.5% 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 July 19th, the index closed at 21,968.95, up +2.84% from 21,362.42 the prior week and 20,803.29 four weeks prior. The July 12th sell setup progressed to 3. The April 5th 6 buy countdown is unchanged since June 21st. The index closed -1.74% below the risk level.

    On a daily basis, 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 June 20th, a bearish price flip initiated a buy setup. On June 25th, the June 4th buy countdown completed and set a 18,860.42 risk level, which is based on the day's 565.94 trading range and 19,426.36 intraday low. On Tuesday, the index rose +0.48% to 21,953.96, from 21,850.15 the prior day and 21,968.93 four days prior. The July 29th buy setup progressed to 2. The index closed +16.4% above the 18,860.42 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 June, the index closed at 1,979.21, down 14.0% from 2,300.60 the prior month and 2,365.59 four months prior. The April 30th buy setup progressed to 3. The January 2012 buy countdown progressed to 8.

    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 July 26th, the index closed the week up +0.91% at 2,010.85, from 1,992.65 the prior week and 1,979.21 four weeks prior. The bullish price flip canceled the June 7th y buy setup and initiated a sell setup. The February 8th 6 sell countdown 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. On June 3rd, a bearish price flip initiated a buy setup, which perfected on June 19th, and initiated a buy countdown. On June 7th, the April 9th buy countdown completed and set a 2,142.63 buy risk level. On July 10th, a bullish price flip initiated a sell setup. Tuesday, the index rose +0.70% to 1,990.06, from 1,976.31 at the prior close and 2,033.33 4 days prior. The June 19th 12 buy was unchanged. The index closed -7.12% below the June 7th risk level.

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