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Gary Townsend - Founding member and Chairman, GBT Capital Management, LLC, a macro long/short fund based in Chevy Chase, Maryland. Also, 2007-2013, a founding partner, CEO and Portfolio Manager of Hill-Townsend Capital LLC, a long/short equity financial sector fund. Mr. Townsend has 35 years... More
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  • U.S. Futures Improve After Capital Goods And Shipments; Europe Lower, Asia Ends Mixed 0 comments
    Sep 25, 2013 9:17 AM

    This morning. Since September 8th, the U.S. equity trend is "confirmed uptrend", following conclusion of a corrective trend that began on August 15th.

    Today, focus is on August durable goods, capital shipments, and new home sales. Other foci are the Congress, the presidency, the 2014 Federal budget, Treasury debt reauthorization, and likelihood that the U.S. government will be forced to shut down. This morning, U.S. equity futures are modestly higher.

    Tuesday, U.S. equity markets closed mixed, with negative reversals on the SPX, DJI, and NYSE composite. Volume fell.

    Trading desks reported a "do nothing session" with weak upward momentum replaced with a sluggish final two hours. Much of the market seems to expect a resumed rally once the current "consolidation and digestion" of recent gains complete. Nonetheless, thin liquidity and ample skepticism continue to suggest near term weakness. Roubini's overweight equity recommendation has been taken as a contrary indicator.

    Technicals weakened marginally. Most S&P 500 (SPX) market segments closed lower. Market breadth was positive, though up volume lagged down volume. Volatility fell. U.S. Treasury 10-year bond yields fell -4.47 basis points (bps) to 2.6652%, from 2.6999% the prior day.

    In Asia, equity markets closed mixed. Japanese equity markets closed lower for a 2nd consecutive session. Hong Kong rose modestly. Shanghai closed lower for a 2nd consecutive day. Thursday's Nikkei 225 (NKZ3) equity futures are down -0.137%. In Europe, equities are moderately lower. Commentary focuses on the latest U.S. economic reporting.

    This morning, long-term U.S. Treasury yields are 2.6480%, down -0.72 bps from the prior close. Spanish and Italian 10-year debt yields are 4.30% and 4.25%, respectively, compared to 4.28% and 4.24% the prior day. The U.S. dollar is lower. U.S. options markets improved to neutral to bullish, from neutral the prior session. The CBOE skew moved higher, but remains in a neutral range.

    In pre-market futures trading, December SPX equity futures are modestly higher and near the top of the 1688-1692 range. After a fair value adjustment of -2.38 points, SPX equity futures are at 1692.75, up +2.63 points. The SPX opens +1.29% and +1.07% above its respective 20- and 50-day moving averages, and +2.44% and +7.06% above its respective 100- and 200-day moving averages.

    In Asia, equity markets closed mixed. The Nikkei 225 (NYSEARCA:NKY) fell -0.76%. The Hang Seng (HSI) closed up +0.13%. The Shanghai Composite (SHCOMP) fell -0.41%. The NKY and HSI are bull markets. Volumes are unavailable.

    Economic reporting is light. Commentary focused on yesterday's disappointing U.S. consumer confidence report and currency and commodity developments.

    Wednesday, the NKY's relative strength index (RSI) eased to 61.62, from 65.38 the prior day, within a neutral 30-70 range. The index's RSI is down from an overbought 82.61 on May 22nd, up from a low of 34.42 on June 13th, and down from the recent peak of 64.16 on July 23rd. The HSI's RSI ended 62.94, from 62.41 the prior day. The SHCOMP's RSI is 58.82, compared to 61.16 the prior session. The SHCOMP is up +12.7% since June 27th.

    This week, the NKY is down -0.83%, the HSI is down -1.25%, and the SHCOMP is up +0.30%. Last week, the NKY closed up +2.34%. The HSI rose +2.56%. The SHCOMP fell -0.98%. In September, the NKY is up +9.20%, the HSI is up +6.80%, and SHCOMP is up +4.77%. In August, the NKY closed up +2.27%, the HSI closed up +2.33%, and the SHCOMP closed with a +6.49% gain.

    In 2013, the NKY is up +40.7%. The HSI is up +2.44%. The SHCOMP is down -3.11%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

    In Japan, the NKY closed Wednesday at 14,620.53, compared to 14,732.61 the prior day, and -6.44% below its May 22nd 15,627.26 high. The index traded narrowly lower until late in the session, when the index fell -100 points from 14,720 to close at the intraday low. The index closed +3.77%, +3.90%, +4.53% and +14.8% above its respective 20-, 50-, 100-, and 200-day moving averages. Most market segments closed lower. Leaders were utilities, technology, and telecommunications, which rose at least +0.30%. Laggards were financials, industrials, and consumer services, which fell at least -0.97%.

    In China, the HSI closed at 23,209.63, compared to 23,179.04 at the prior close. The index closed -2.57% below its January 30th 23,882.06 high, but +27.6% above its 18,185.59 June 4, 2012 low. The HSI opened higher and traded to an early 23,281.61 intraday high, then eased back to breakeven by mid-afternoon and fell to a final hour 23,154.84 intraday low. The index closed +2.58% and +4.59% above its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were technology, consumer services, and telecommunications, which rose at least +0.69%. Financials fell -0.05%. Laggards were oil and gas, consumer goods, and basic materials, which fell at least -0.06%.

    In Shanghai, the SHCOMP closed at 2,198.52, compared to 2,207.53 at the prior close and +12.7% above the 1,950.01 June 27th closing low. The index opened lower, but reversed higher by mid-morning to 2,215, then traded narrowly through mid-session, when the index reversed lower. The index fell to a late 2,193.91 intraday low, then improved into the close to narrow the session's loss. The SHCOMP closed +1.48% and +4.97% above its respective 20- and 50-day moving averages. Most market segments closed lower. Leaders were consumer services, which rose +1.10%, and health care and basic materials, which fell -0.14% and -0.15%, respectively. Financials fell -0.34%. Laggards were utilities, telecommunications, and industrials, which fell -0.75%.

    In Europe, the major equity indexes are modestly lower and near their intraday lows. The Euro Stoxx50 (SX5E), FTSE 100, CAC 40, and DAX are down -0.34%, -0.45%, -0.45%, and -0.39%, respectively. The Spanish IBEX 35 is up +0.14%. The Italian FTSE MIB is down -0.01%.

    Economic reporting is light. Commentary focuses on the latest U.S. economic reports.

    The SX5E currently trades -0.67% below its September 19th 52-week high close, and -44.4% below its March 31, 2000, all-time closing high. European bourses have recently outperformed U.S. equity indexes. SX5E relative strength (RSI) is 63.59, compared to 65.88 at the prior close, down from an overbought 72.74 on August 14th, but near the top of a neutral 30-70 range.

    From its 2,922.93 prior day's close, the SX5E opened lower and fell to a mid-morning 2,907.42 intraday low, then rallied higher to a late morning 2,929.15. Early in the afternoon session, the index reversed lower, finding support at 2,910. The index currently trades at 2,914.98. Most market segments are lower. Leaders are telecommunications, technology, and utilities, which are up at least +0.12%. Laggards are health care, basic materials, and consumer goods, which are down at least -0.58%.

    This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -0.36%, -0.57%, -0.53%, and -0.41%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +2.10%, +0.19%, +2.17%, and +1.95%, respectively. In September, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +7.17%, +2.27%, +6.29%, and +6.63%, respectively. In August, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -1.18%, -3.14%, -1.48%, and -2.09%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +10.7%, +11.2%, +14.8%, and +13.5%. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

    3Q2013 SPX Earnings. Of 13 (of 498) reporting companies, 8 or 61.5% surprised positively on earnings, with a +3.53% surprise average. Of reporting companies, 8 or 61.5% reported sales or revenues in excess of estimates. The average sales/revenue surprise is +0.06%.

    Valuation. The SPX trades at 16.4x 2012 earnings ($103.41), 15.4x estimated 2013 earnings ($110.23), 13.9x estimated 2014 earnings ($122.30), and 12.5x 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 +6.59% and +11.0%, and +10.7%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 0.87, compared to 1.17 the prior day, and worse than 5- and 10-period moving averages of 0.90 and 0.87, respectively. The index put/call ratio is 1.17, compared to 1.35 the prior day, and worse than its 5- and 10-period moving averages of 1.02 and 1.06, respectively. The equity put/call ratio closed the day at 0.77, compared to 0.87 the prior day, and better than its 5- and 10-period moving averages of 0.83 and 0.82, respectively.

    NYSE Volume, Breadth Indicators. Volume fell -2.36% to 673.77 million shares, from 690.09 million shares the prior day, 0.90x the 745.45 million share 20-day moving average. Market breadth was positive, but up volume lagged down volume. Advancing stocks led decliners by +284 (compared to -453 the prior day), or 1.21:1. Up volume was 0.91:1 down volume.

    Distribution day count. The current "confirmed uptrend" resumed on September 8th, following a corrective trend that began on August 15th. The distribution day count is 1 on the SPX, DJI, Nasdaq, and NYSE Composite.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.11110%, compared to 0.11050% the prior day. USD 3-month LIBOR is 0.24760%, up from 0.25020% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US Libor-OIS (LOIS) spread is 15.266 bps, compared to 15.720 bps the prior day, and compares to the recent June 12, 2012 46.785 bps high. Euribor-OIS is 12.000 bps, down from 12.300 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 -3.847 bps, compared to -3.763 bps the prior day, up from a trough of -147.00 bps on December 14, 2011, but far below a normal -10 bps and -40 bps range.

    · Spanish 10-year debt yields are 4.30%, unchanged from 4.28% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.25%, unchanged from 4.24% the prior day, but up from the 3.822% May 3rd low. German 10-year debt yields are 1.85%, compared to 1.85% the prior day. Japanese 10-year debt yields are 0.67%, compared to 0.67% the prior day.

    · The U.S. government overnight repo rate is 5 bps, compared to 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 mixed, with 2- and 10-year maturities yielding 0.348% and 2.643%, respectively, compared to 0.326% and 2.655% Tuesday. The yield curve narrowed -3.460 bps, with the 2- to 10-year spread at +2.294%, compared to +2.329% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.342% on November 16, 2012, to a high of +2.498% on September 10, 2013.

    · The U.S. dollar is weaker compared to the euro, British pound, and Japanese yen. The dollar trades at US$80.443, compared to US$80.400 intraday low and US$80.563 the prior day, and worse compared to its $81.549 50-day, US$82.210 100-day, and US$81.751 200-day averages. The euro trades at US$1.3513, compared to a US$1.3516 intraday high and US$1.3474 the prior day. The euro trades better compared to its US$1.3306 50-day and US$1.3180 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥98.44, compared to ¥98.75 the prior day. The yen trades worse than its 50-day moving average ¥98.62, and better than its May 17th 103.21 closing low.

    · Citigroup Economic Surprise Index improved to 46.20, compared to 45.90 the prior day. The index is mixed compared to its respective +44.02 and +46.70 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. The index improved and turned positive on July 30th. After a lag, the CESIUSD correlates with EPS revisions.

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

    Volatility, Skew:

    · The CBOE SPX Volatility Index (VIX) closed at 14.08, down -1.61% from 14.31 at the prior close. The VIX is -6.38% below its 15.04 20-day moving average. Its 30-day high is 17.81. Its 30-day low is 12.29. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.18.

    · At mid-session, the Euro Stoxx 50 volatility index (V2X) is 16.66, up +0.20% from 16.62 at the prior day's close. The V2X index trades -15.5% below its 19.72 20-day moving average, -31.3% below the 24.27 30-day high, and +3.86% above the 16.04 30-day low.

    · The Hang Seng volatility index (VHSI) closed Wednesday at 16.17, down -1.76% from 16.46 the prior day. The VHSI index trades -15.5% below its 17.78 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) closed at 119.31, up +0.19% from 119.08 at the prior day's close, and moving back within a neutral (115-120) range. The recent low was 112.47 on May 25, 2013. Spikes in excess of 130 (as on February 15 and 18, 2013 and previously on September 21, and March 12, 15, and 16, 2012) 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:

    · The latest week's MBA mortgage applications rose 5.5%, compared to +11.2% prior.

    · At 8:30, August durable goods rose +0.01%, compared to -0.2% survey and -8.1% revised prior.

    · August capital goods shipments, non-defense, ex-aircraft rose 1.3%, compared to +2.0% survey and -1.4% revised prior.

    · At 10:00, August MoM new home sales, with +6.6% survey and -13.4% prior.

    Overseas Economic Reporting and News:

    · Japan - September small business confidence is 49.8, compared to 49.7 prior. August final YoY machine tool orders fell -1.7%, compared to -1.8% prior.

    · France - September business confidence fell to 97, with 99 survey and 98 prior.

    · Germany - September GfK consumer confidence is 7.1, compared to 7.0 survey and 6.9 prior.

    · Italy - September consumer confidence rose to 101.1, with 98.5 survey and 98.4 revised prior.

    Company Ratings/News:
     

    • None.


    Tuesday's Trade. On lower and below average volume, U.S. equity markets fell in early trading, reversed higher by late morning, rose to mid-afternoon highs, then reversed lower in the final hour to end with mostly lower. The Nasdaq managed a +0.08% gain, but the DJI, SPX, and NYSE composite fell -0.43%, -0.26%, and -0.18%, respectively. The DJ Transport Index (TRAN) closed with a slight gain. Since September 10th, the U.S. equity market trend is in "confirmed uptrend".

    Market breadth was positive, with gainers 1.21:1 losing stocks. Most SPX market segments closed lower. Leaders were industrials and oil and gas, which rose at least +0.05%, and utilities, which fell -0.10%. Laggards were health care, financials, and telecommunications, which fell at least -0.47%.

    NYSE volume fell -2.36% to 673.77 million shares, from 690.09 million shares the prior day, 0.90x the 745.45 million share 20-day moving average volume. U.S. 10-year yields fell -4.47 bps to 2.6552%, from 2.6999% at the prior close.

    SPX futures suggested a modestly lower open, and the SPX moved lower to a 1694.90 intraday low, then reversed higher by mid-morning to a mid-afternoon 1707.63 intraday high. The index weakened and reversed lower in the final hour to support at 1696. The SPX closed at 1697.42, -1.63% below its September 18th 1725.52 record close. The index closed +57.9% above the 1074.77 October 4, 2011, intraday low.

    The TRAN ended at 6,655.12, up +0.06% compared the DJI's -0.43% loss. From its 6,651.30 prior close, the TRAN opened lower and set an early 6,643.83 intraday low, but immediately reversed higher and traded to a mid-afternoon 6,703.06 intraday high. The index lost all its gains in the final two hours and briefly reversed modestly lower before rebounding in the final minutes to close modestly higher. Volume rose +7.02% to 0.62:1 average volume. The TRAN closed +2.50%, +2.67%, +3.97%, and +8.71% above its respective 20-, 50-, 100-, and 200-day moving averages.

    Market volatility fell. From its prior 14.31 prior close, the VIX moved to a mid-morning 14.37 intraday high, then turned lower and fell to a mid-afternoon 13.75 intraday low. The index moved back to 14.20 late in the session before easing into the close. The index closed at 14.08, down -1.61% on the day and -6.38% below its 15.04 20-day moving average. The VIX's all-time closing low was 11.26, set June 30, 1993.

    The broader market's technical factors worsened marginally. The SPX closed again below its 5-day moving average and surrendered its 10-day moving average. The index closed above its 20-, 50-, 100-, and 200-day moving averages. SPX relative strength (RSI) fell to a 565.60, from 58.83 the prior day, and down from an overbought 72.13 last Wednesday, when indexes closed at new records. The CBOE put/call skew rose +0.19% to 119.31, from 119.08 the prior day, within a neutral 115-120 range.

    Last week, the SPX, DJI, Nasdaq, and NYSE composite closed up +1.30%, +0.49%, +1.41%, and +1.40%, respectively. The prior week the SPX, DJI, Nasdaq, and NYSE composite closed up +1.98%, +3.04%, +1.70%, and +2.07%, respectively. In September, the SPX, DJI, Nasdaq, and NYSE composite are up +4.22%, +3.99%, +4.89%, and +4.99%, respectively. In August, the SPX, DJI, Nasdaq, and NYSE composite closed down -3.01%, -4.36%, -0.91%, and -2.61%, respectively.

    In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +19.3%, +17.5%, +24.7%, +15.3%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX resistance is 1710. Immediate support is 1695, then 1689.

    KBW Bank Index (BKX). On lower, but above average volume, the BKX closed at 62.29, down -0.42% from 62.55 at the prior day's close. The index opened lower and set a mid-morning 62.11 intraday low, then rallied and reversed higher in early afternoon. The index rose to a mid-afternoon 62.85 intraday high, but then weakened and reversed lower in the final two hours. Volume fell -16.9% to 57.320 million shares, from 68.973 million shares the prior day, 1.05x the 54.358 million share 15-day moving average.

    Large cap banks underperformed the regional banks' performance, as the KBW regional banking index (KRX) rose +0.73%.

    This week, the BKX is down -2.04%, compared to a loss of -0.14% the prior week. In September, the BKX is up +0.13%. In August, the BKX closed down -5.41%. For the year, the BKX is up +21.5%, better than the SPX's +19.0% rise. In 2012, the index rose +18.1%, compared to a +13.4% rise in the SPX.

    The BKX is now +5.24% better than the June 24th 59.19 close, its worst since May 13th. The index crossed above 50 on December 17th and 60 on August 5, 2012. The BKX closed +91.3% 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 +57.9% in the same period.

    The BKX index closed -48.6% below its February 20, 2007, record 121.06 high. The BKX is up +234.5% from its 18.62 March 6, 2009, closing low.

    Technical indicators worsened. The index closed below its 5-, 10-, 20-, 50-, and 100-day moving averages. The index closed -1.61% and -1.60% below its respective 20- and 50-day moving averages. The index closed -0.88% below and +6.28% above its respective 100- and 200-day moving averages. The index last closed above its 100-day moving average from August 6, 2012 through September 20, 2013. The 20-day moving average fell -10 bps. The 50-day moving average fell -5 bps. Its 100-day moving average rose +6 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by -1.30 points) below the 50-day, and the gap widened -5 bps. The 50-day moving average closed (by +6.00 points) above the 200-day moving average, and the gap narrowed -12 bps. The 100-day moving average closed (by +4.24 points) above the 200-day moving average, and the gap narrowed -1 bp.

    The directional movement indicator worsened to a -15.490, from -9.482 the prior day, its 2nd consecutive negative reading. Relative strength fell to 37.63, from 39.25 the prior day, down from 56.62 on September 18th, but up from the recent 34.64 August 27th low and in the middle of a neutral 30-70 range. The most recent lowest RSI level was 31.08 on November 14, 2012, which is also the date of the BKX's 52-week closing low. Next resistance is 62.72; next support is at 61.98.

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

    S&P 500 Index (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 August, the index closed at 1632.97, down -3.13% from 1685.73 the prior month and 1597.57 four months prior. The May 2013 3 sell countdown is unchanged since June. The index closed -8.93% 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. On August 2nd, the March 1st sell countdown completed and set a 1737.48 risk level, based on the week's 27.81 point range and 1709.67 high. The week ending August 16th, a bearish price flip initiated a buy setup. In the week ending September 20th, the index rose +1.30% to 1709.91, compared to 1687.99 the prior week and its 1663.50 close four weeks prior. The September 13th sell setup progressed to 2. The index closed -1.59% below the 1737.48 risk level.

    On a daily basis, the SPX perfected a sell setup on March 13th, with a 1552.52 close. On April 29th, the March 13th sell countdown. On May 2nd, a bullish price flip initiated a follow-on sell setup, and on May 14th, the sell setup perfected and initiated a sell countdown, which completed on July 8th. On June 26th, a bullish price flip initiated another follow-on sell setup, and this setup perfected on July 9th and initiated a sell countdown. On September 3rd, a bullish price flip initiated a sell setup, which perfected on September 13th. The associated sell countdown initiated on September 16th. Also on September 16th, the July 9th sell countdown completed and set a 1718.66 risk level, based on the day's 13.25 point range and 1704.95 intraday high. On Tuesday, the SPX fell -0.26% to 1697.42, compared to 1701.84 the prior day and 1725.52 4 days prior. The September 24th buy setup progressed to 2. The September 16th 4 sell countdown is unchanged since September 19th. The index closed -1.24% below the 1718.66 risk level.

    KBW Bank Index (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 August, the index closed at 62.98, down -5.41% from 65.77 at July-end and 61.60 four months prior. The May 2013 sell countdown progressed to 4.

    On a weekly basis, a bullish price flip occurred on July 27, 2012, and the sell setup perfected the following September 21st. Subsequent trends were weak until December 7, when the index initiated a new sell setup, which perfected on February 1, 2013. On February 22nd, the September 21st sell countdown completed and set a 56.93 risk level. On July 19th, the February 1st sell countdown completed and set a 68.29 risk level, based on the day's 2.24 point range and 66.05 intraday high. For the week ending September 20th, the BKX closed at 63.59, down -0.14% from 63.68 the prior week and 64.91 four weeks prior. The August 16th buy setup progressed to 6. The index closed -6.88% below the 68.29 risk level.

    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. On August 8th a bearish price flip initiated a buy setup, which completed on August 19th and initiated a buy countdown. On September 16th, the September 4th sell setup perfected and initiated a sell countdown. Monday, the index fell -1.64% to 62.55, compared to 63.59 the prior day and 64.58 four days prior. The September 20th buy setup progressed to 3. September 16th 3 sell countdown is unchanged since September 18th. The index closed -2.76% below its 64.06 risk level.

    CBOE SPX Volatility Index (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 August at 17.01, up +26.5% from 17.01, compared to 13.45 at the end of July and 13.52 at the end of April. The May 2013 sell setup progressed to 4.

    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 September 20th, the VIX fell -7.34% to 13.12, compared to 14.16 the prior week, and 13.98 4 weeks prior. The September 13th buy setup progressed to 2. The index closed +43.1% 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. On September 13th, the September 4th buy setup perfected. On September 18th, a bearish flip initiated a buy setup. On September 20th, the July 9th buy countdown completed. Tuesday, the VIX fell -1.61% to 14.08, compared to 14.31 the prior day and 13.59 at the 4 days' prior close. The bearish flip canceled the September 18th 4 buy setup and initiated a sell setup. The VIX closed +35.2% above the 10.41 risk level.

    U.S. 10-year Bond Index (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 August at 2.7839%, compared to 2.5762% the prior month and 1.6717% 4 months prior. The May 2013 sell setup progressed to 4.

    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%. For the week ended September 20th, the rate ended at 2.7337%, down -15.08 bps from 2.8846% the prior Friday and 2.8146% four weeks prior. The bearish price flip initiated a buy setup. The February 1st 12 sell countdown was unchanged. The rate closed 162.18 bps above the 1.119% risk level.

    On a daily basis, 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 Tuesday, the rate fell -4.47 bps to 2.6552%, compared to 2.6881% the prior day and 2.6878% four days prior. The September 11th buy setup perfected. The rate closed -16.0 bps below the 2.8150% risk level.

    EURUSD Spot Exchange Rate (EURUSD 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 August at 1.3222, down -0.60% from 1.3302 the prior month and 1.3168 4 months prior. The July 2013 sell setup progressed to 2. 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 September 20th, the index rose +0.88% to end at 1.3524, compared to 1.3294, compared to 1.3178 the prior week and 1.3388 4 weeks prior. The bullish price flip initiated a sell setup. The sell countdown associated with the January 18th perfection completed. The cross closed +12.9% 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. On September 16th, the July 2nd sell countdown completed. On September 19th, the September 9th sell setup perfected and initiated a sell countdown. With Tuesday's -0.14% lower close, the EURUSD cross ended at 1.3474, compared to 1.3493 the prior day and 1.3521 four days prior. The bearish price flip initiated a buy setup. The September 19th 1 sell countdown is unchanged since September 19th. The cross closed -0.24% below the 1.3537 risk level.

    Euro Stoxx 50 (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 August, the index closed at 2,721.37, down -1.18% from 2,753.97 the prior month and 2,712.00 four months prior. The July 31st sell setup progressed to 2. The May 2013 sell countdown is unchanged since May 2013.

    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. On August 16th, the sell countdown stemming from the January 18th perfection completed and set a 2,909.37 risk level, based on the August 16th week's 53.48 range and 2,855.89 intraweek high. In the week ended September 20th, the index rose +2.10% to 2,927.19, compared to 2,867.11 the prior week and 2,826.05 at the 4 weeks' prior close. The September 13th sell setup rose to 2. The index closed +1.77% above the 2,909.37 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. On August 15th, the July 18th sell countdown completed and set a 2,876.19 risk level, based on the day's 32.11 point range and 2835.86 close. On September 17th, the September 5th sell setup perfected and initiated a sell countdown. Tuesday, the index rose +0.57% to 2,922.93, compared to 2,906.35 the prior day and 2,908.92 at the prior 4 days' close. The September 17th 4 sell countdown is unchanged since September 20th. The index closed -0.67% below the 2,876.19 risk level.

    Nikkei 225 (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. In July 2013, the November 2012 sell setup progressed to 9, but did not perfect. In August, the index fell -2.04% at 13,388.86, compared to 13,668.32 the prior month and 13,860.86 four months prior. The bearish price flip initiated a buy setup.

    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 September 20th, the index closed up +2.34% at 14,742.42, compared to 14,404.67 the prior week and 13,660.55 four weeks prior. The September 6th sell setup progressed to 3. The index closed -1.64% 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 August 2nd, a bullish price flip initiated a sell setup. On September 4th, the July 10th sell countdown completed. The completion set a 15,493.30 risk level, based on the July 19th 540.01 point range and 14,953.29 high. On September 12th, the September 2nd sell setup perfected. Wednesday, the index fell -0.76% to 14,620.53, compared to 14,732.61 the prior day and 14,505.36 four days prior. The September 18th sell setup progressed to 5. The September 18th 3 sell countdown was unchanged. The index closed -5.63% below the 15,493.30 risk level.

    Hang Sang Index (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. In August, the index declined -0.70% to 21,731.37, compared to 21,883.66 the prior month and 22,737.01 four months prior. The May 2013 buy setup progressed to 4. The index closed -20.1% 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 September 19th, the index closed up +2.56% to 23,502.51, compared to 22,915.28 the prior week and 21,863.51 four weeks prior. The September 6th sell setup progressed to 3. The April 5th 7 buy countdown is unchanged since August 30th. The index closed +5.12% above 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 September 12th, the September 2nd sell setup perfected and on September 16th, a sell countdown initiated. On Wednesday, the index rose +0.13% to 23,209.63, compared to 23,179.04 the prior day and 23,180.52 four days prior. The bullish price flip canceled the buy setup and initiated a sell setup. The September 16th 4 sell countdown progressed is unchanged since September 23. The index closed +23.1% above the 18,860.42 risk level.

    Shanghai Composite Index (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. The perfection initiated a buy setup. In April 2013, a bearish price flip initiated a buy setup. In August, the index closed up +5.25% at 2,098.38, compared to 1,993.80 the prior month and 2,177.91 four months prior. The April 30th buy setup progressed to 5. The January 2012 9 buy countdown 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 September 18th, the index closed the week down -1.98% at 2,191.85, compared to 2,236.22 the prior week and 2,057.46 four weeks prior. The July 26th sell setup perfected and initiated a sell countdown.

    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 30th, the June 19th buy countdown completed and set a 1,735.74 risk level, based on the June 25th 113.91 point trading range and 1,849.65 intraday low. On August 13th, the August 1st sell setup perfected and initiated a sell countdown. On September 3rd a bullish price flip initiated a sell setup, which perfected on September 13th and initiated a sell countdown. Wednesday, the index fell -0.41% to 2,198.52, compared to 2,207.53 at the prior close and 2,185.56 4 days prior. The bullish price flip canceled the September 16th 5 buy setup and initiated a sell setup. The August 13th sell countdown was unchanged. The index closed +26.6% above the July 30th 1,735.74 risk level.

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