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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 Lower, But Improving; Asia Mostly Higher, Europe Mixed 0 comments
    Oct 3, 2013 9:08 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, U.S. economic reporting includes the latest week's jobless claims, which come despite the government shutdown. Most other government data releases are postponed. Other foci are the Congress, the presidency, the 2014 Federal budget, and pending Treasury debt reauthorization. This morning, U.S. equity futures are lower, but off their intraday lows.

    Wednesday, U.S. equity markets modestly lower on lower and below average volume; however, the DJ Industrial (DJI) lost -0.39% on increased volume. Despite the early sell-off, trading desks reported calm and confident equity markets, as investors show greater interest in this month's earnings reports than the grim developments in Washington. The market seems to expect a resumed rally once the current "consolidation and digestion" of recent gains complete. Treasury bond markets strengthened.

    Technicals were little changed. Most S&P 500 (SPX) market segments closed lower. Market breadth was negative, but up volume led down volume. Volatility rose. U.S. Treasury 10-year bond yields fell -3.27 basis points (bps) to 2.6173%, from 2.6500% the prior day.

    In Asia, equity markets were again closed for holiday in China. Japan closed with a modest loss, but Hong Kong closed +1.00% higher. Shanghai is closed through October 7th. In September, all closed with strong gains. Friday's Nikkei 225 (NKZ3) equity futures are up +0.283%. In Europe, equities are moderately mixed. Commentary focuses on the U.S. government shutdown and currency and commodities developments.

    This morning, long-term U.S. Treasury yields are 2.6391%, up +2.14 bps from the prior close. Spanish and Italian 10-year debt yields are 4.27% and 4.38%, respectively, compared to 4.25% and 4.37% the prior day. The U.S. dollar is mixed. U.S. options markets are unchanged at neutral to bullish. The CBOE skew moved slightly lower, and remains above a neutral range.

    In pre-market futures trading, December SPX equity futures are lower, but in the middle of the 1677-1682 range. After a fair value adjustment of +4.17 points, SPX equity futures price at 1680.50, down -6.92 points. The SPX opens +0.11% and +0.83% above its respective 20- and 50-day moving averages, and +1.98% and +6.29% above its respective 100- and 200-day moving averages.

    In Asia, equity markets remain closed for holiday in China and will remain closed through October 7th. In Japan, the Nikkei 225 (NYSEARCA:NKY) fell -0.09%. In Hong Kong, the Hang Seng (HSI) closed up +1.00%. The NKY and HSI are bull markets. Volumes are unavailable.

    Economic reporting focused on Chinese non-manufacturing PMI, which surprised positively. Otherwise, commentary focused on the U.S. government shutdown and its effects on currency and commodity valuations. Thursday, the NKY's relative strength index (RSI) fell to 46.45, down from 46.77 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 below the most recent peak of 64.16 on July 23rd. The HSI's RSI ended at 59.60, up from 55.02 the prior day. The SHCOMP's RSI closed Monday at 53.08, up from 50.09 the prior session, but down from an overbought 80.85 on September 12th. The SHCOMP is up +11.5% since June 27th, but down -4.16% from its recent September 12th 2,255.60 close.

    This week, the NKY is down -4.08%, while the HSI is up +0.03%. The SHCOMP is up +0.68%. Last week, the NKY closed up +0.12%. The HSI closed down -1.26%, and the SHCOMP lost -1.45%. In October, the NKY is down -2.07%, and the HSI is up +1.55%. The SHCOMP has yet to trade this month. In September, the NKY closed up +7.97%, the HSI closed up +5.19%, and SHCOMP closed up +3.64%.

    In 2013, the NKY is up +36.2%. The HSI is up +2.46%. The SHCOMP is down -4.16%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

    In Japan, the NKY closed at 14,157.25, compared to 14,170.49 the prior day, and -9.41% below its May 22nd 15,627.26 high. The index traded lower through most of the morning session, with an early 14,082.31 intraday low, but also traded briefly higher to nearly 14,220. The index traded narrowly around breakeven through the afternoon session, with a final hour 14,219.89 intraday high before reversing lower at the close. The index closed -1.74% below its 20-day moving average, but +0.68%, +1.03%, and +9.88% above its respective 50-, 100-, and 200-day moving averages. Most market segments closed lower. Leaders were telecommunications, utilities, and technology, which rose at least +0.12%. Laggards were basic materials, oil and gas, and financials, which fell at least -0.77%.

    In China, the HSI closed at 23,214.40, compared to 22,984.48 at the prior close. The index closed -2.55% below its recent January 30th 23,207.04 high, but +27.7% above its 18,185.59 June 4, 2012 low. The HSI gapped higher to open above 23,160 and subsequently traded narrowly between 23,240 resistance and 23,160 support. The 23,241.50 intraday high was set at mid-session. The index closed +1.05% and +3.76% above its respective 20- and 50-day moving averages. Most market segments closed lower. Leaders were consumer services, consumer goods, and basic materials, which rose at least +1.76%. Laggards were financials and telecommunications, which rose at least +0.41%, and utilities, which fell at least -0.32%.

    In Shanghai, the SHCOMP closed Monday at 2,174.67, compared to 2,160.03 at the prior close and +11.5% above the 1,950.01 June 27th closing low. The index opened at 2,168 and traded to an early 2,176.01 intraday high. The index found support at 2,166.00 through the session and rallied strongly in the final hour to extend the session's gains. The SHCOMP closed -0.11% below and +3.50% above its respective 20- and 50-day moving averages. All market segments closed at least +0.11% higher. Leaders were technology, consumer services and consumer goods, which rose at least +1.77%. Laggards were health care, financials, and oil and gas.

    In Europe, the major equity indexes are mixed, but near their lowest levels of the session. The FTSE 100 is up +0.29%, while the Euro Stoxx50 (SX5E), CAC 40, and DAX are down -0.13, -0.30%, and -0.01%, respectively. The Spanish IBEX 35 is down -0.53%. The Italian FTSE MIB is down -0.03%. All closed higher in September.

    Commentary focuses on Chinese services PMI and U.S. budgetary issues and associated currency and commodities developments.

    The SX5E currently trades -0.84% below its September 19th 52-week high close, and -44.5% below its March 31, 2000, all-time closing high. European bourses have recently outperformed U.S. equity indexes. SX5E relative strength (RSI) is 58.89, compared to 59.96 at the prior close, down from an overbought 72.74 on August 14th, but in a neutral 30-70 range.

    From its 2,918.31 prior day close, the SX5E set an early 2,926.72 intraday high, but reversed lower by mid-morning and fell to a 2,909.54 intraday low by mid-session. The index trades currently at 2,913.51. Most market segments are lower. Leaders are consumer goods, technology, and basic materials, which are up at least +0.08%. Financials are down -0.24%. Laggards included consumer services, industrials, and oil and gas, which are down at least -0.39%.

    This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -0.26%, -0.97%, -1.07%, and -0.47%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -0.27%, -1.27%, -0.40%, and -0.16%, respectively. In October, the Euro Stoxx 50 and DAX are up +0.64% and +0.30%, respectively, while the FTSE 100 and CAC 40 are down -0.19% and -0.03%, respectively. In September, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +6.31%, +0.77%, +5.33%, and +6.06%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +10.8%, +8.70%, +14.4%, and +13.6%. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

    3Q2013 SPX Earnings. Of 21 (of 498) reporting companies, 14 or 67.7% surprised positively on earnings, with a +3.28% surprise average. Of reporting companies, 13 or 61.9% reported sales or revenues in excess of estimates. The average sales/revenue surprise is +0.42%.

    Valuation. The SPX trades at 16.4x 2012 earnings ($103.41), 15.3x estimated 2013 earnings ($111.04), 13.8x estimated 2014 earnings ($123.13), and 12.6x estimated 2015 earnings ($134.72). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +7.38% and +10.9%, and +9.41%, respectively.

    Composite, index, and equity options. Options markets are neutral to bullish, unchanged from neutral to bullish the prior session. Composite options are bullish, index options are bullish, and equity options are neutral. The composite put/call ratio is 0.75, compared to 0.85 the prior day, and better than 5- and 10-period moving averages of 0.87 and 0.90, respectively. The index put/call ratio is 0.79, compared to 0.98 the prior day, and better than its 5- and 10-period moving averages of 0.95 and 1.05, respectively. The equity put/call ratio closed the day at 0.76, compared to 0.79 the prior day, and better than its 5- and 10-period moving averages of 0.84 and 0.85, respectively.

    NYSE Volume, Breadth Indicators. Volume fell -3.66% to 690.81 million shares, from 717.02 million shares the prior day, 0.92x the 748.70 million share 20-day moving average. Market breadth was negative, but up volume led down volume. Advancing stocks lagged by -357 (compared to +1,340 the prior day), or 0.79:1. Up volume was 1.34:1 down volume.

    Distribution day count. The current "confirmed uptrend" resumed on September 8th, following a corrective trend that began on August 15th. The distribution count is 4 for the DJI, and 3 on the SPX, Nasdaq, and NYSE Composite.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.10320%, compared to 0.10510% the prior day. USD 3-month LIBOR is 0.24285%, down from 0.24435% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US Libor-OIS (LOIS) spread is 14.785 bps, compared to 14.935 bps the prior day, and compares to the recent June 12, 2012 46.785 bps high. Euribor-OIS is 12.100 bps, up from 12.400 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 -5.711 bps, compared to -6.051 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 4.27%, up from 4.25% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.38%, up from 4.37% the prior day, but up from the 3.822% May 3rd low. German 10-year debt yields are 1.84%, compared to 1.81% the prior day. Japanese 10-year debt yields are 0.64%, compared to 0.64% the prior day.

    · The U.S. government overnight repo rate is 7 bps, compared to 7 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 0.321% and 2.639%, respectively, compared to 0.317% and 2.617% Wednesday. The yield curve widened +1.770 bps, with the 2- to 10-year spread at +2.318%, compared to 2.300% 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 mixed, stronger compared to the British pound and Japanese yen, but weaker compared to the euro. The dollar trades at US$79.848, compared to a US$81.288 intraday low and US$79.990 the prior day, and worse compared to its $81.288 50-day, US$82.016 100-day, and US$81.768 200-day averages. The euro trades at US$1.3604, compared to a US$1.3578 intraday low and US$1.3579 the prior day. The euro trades better compared to its US$1.3348 50-day and US$1.3216 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥97.74, compared to ¥97.36 the prior day. The yen trades better than its 50-day moving average ¥98.40, and better than its May 17th 103.21 closing low, its weakest multi-year closing low.

    · Citigroup Economic Surprise Index worsened to 51.70, compared to 53.30 the prior day. The index is better compared to its respective +49.96 and +47.77 5-day and 10-day moving averages. The index signaled exhaustion on December 20, 2012, 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 mixed energy, lower precious metals, higher aluminum and copper, and mostly higher agriculture prices.

    Volatility, Skew:

    · The CBOE SPX Volatility Index (VIX) closed at 16.60, up +6.82% from 15.54 at the prior close. The VIX is +13.1% above its 14.67 20-day moving average. Its 30-day high is 17.81. Its 30-day low is 12.52. 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 19.54, up +1.42% from 19.26 at the prior day's close. The V2X index trades +6.41% above its 18.36 20-day moving average, -19.5% below the 24.27 30-day high, and +21.8% above the 16.04 30-day low.

    · The Hang Seng volatility index (VHSI) closed Monday at 16.50, down -1.55% from 16.76 the prior day. The VHSI index trades -2.62% below its 16.94 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) closed at 123.52, down -0.18% from 123.74 at the prior day's close, and above a neutral (115-120) range for a 5th consecutive day. 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:

    · September YoY Challenger job cuts rose 19.1%, compared to 56.5% prior.

    · The latest weeks' initial and continuing jobless claims were 308K and 2,925K, compared to 315K and 2805K survey and 307K and 2821K revised prior.

    · At 10:00, September ISM non-manufacturing composite, with 57.0 survey and 58.6 prior.

    Overseas Economic Reporting and News:

    · Australia - September AiG services performance index was 47.1, compared to 39.0 prior.

    · China - September non-manufacturing PMI was 55.4, compared to 53.9 prior.

    · Hong Kong-August YoY retail sales rose +8.1%, compared to 10.1% survey and 9.3% revised prior.

    · Eurozone - September final PMI services was 52.2, compared to 52.1 survey and prior. August MoM retail sales rose +0.7%, compared to +0.2% survey and +0.5% revised prior.

    · France - September final PMI services was 51.0, compared to 50.7 survey and prior.

    · Germany - September final PMI services was 53.7, compared to 54.4 survey and prior.

    · Italy - September PMI services rose to 52.7, compared to 49.1 survey and 48.8 prior.

    · Spain - September PMI services was 49.0, compared to 50.9 survey.

    · United Kingdom - September PMI services was 60.3, compared to 60.5 survey and prior. September Halifax MoM house prices rose +0.3%, compared to +0.5% survey and prior.

    Company Ratings/News:

    • None.

    Wednesday's Trade. On lower and below average volume, U.S. equity markets sold off in early trading, but rallied through the session's remainder, with immaterial losses on all the major exchanges save the DJI. On higher volume, the DJI distributed with a loss -0.39%, while the NYSE composite, SPX, and Nasdaq closed down -0.04%, -0.07%, and -0.08%, respectively. The DJ Transport Index (TRAN) also distributed. Since September 10th, the U.S. equity market trend is in "confirmed uptrend".

    Market breadth was negative, with gainers 0.79:1 losing stocks. Most SPX market segments closed lower. Leaders were consumer goods, technology, and basic materials, which rose at least +0.09%. Financials fell -0.295. Laggards were industrials, utilities, and oil and gas, which fell at least -0.47%.

    NYSE volume fell -3.66% to 690.81 million shares, from 717.02 million shares the prior day, 0.92x the 748.70 million share 20-day moving average volume. U.S. 10-year yields fell -3.27 bps to 2.6173%, from 2.6500% at the prior close.

    SPX futures suggested a sharply lower open, and from its 1695.00 prior close, the SPX fell through 1687 in early trading and dropped to an early 1,680.34 intraday low, where it found support. The index improved to 1688 by mid-session and rose to 1692 by mid-afternoon, then tested support at 1689 until late in the final hour. The index rallied into the close to at the intraday high. The SPX closed at 1693.87, -1.83% below its September 18th 1725.52 record close. The index closed +57.6% above the 1074.77 October 4, 2011, intraday low.

    The TRAN ended at 6,643.89, down -0.42%, compared to the DJI's -0.39% loss. From its 6,672.24 prior close, the TRAN opened below 6,650 and fell to a low of 6,598.13 in early trading before finding support and improving through the rest of the session. The TRAN closed -1.23% below its record 6,726.94 September 19th record close. Volume fell -2.09% to 1.03:1 average volume. The TRAN closed +0.82%, +2.31%, +3.52%, and +7.76% above its respective 20-, 50-, 100-, and 200-day moving averages.

    Market volatility rose. From its prior 15.54 prior close, the VIX opened at 16.40 and traded as high as 16.81 in early session, and as low as 16.13 in mid-afternoon. The index ended at 16.60, up +6.82%. The VIX ended +13.1% above its 14.67 20-day moving average. The VIX's all-time closing low was 11.26, set June 30, 1993.

    The broader market's technical factors were little changed. The index closed below its 10-day moving average, but above its 5-, 20-, 50-, 100-, and 200-day moving averages. The DJI closed below its 5-, 10-, 20-, 50-, and 100-day moving averages. SPX relative strength (RSI) fell to 53.66, from 54.22 the prior day, but down from an overbought 72.13 on September 18th, when indexes closed at new records. The CBOE put/call skew fell -0.18% to 123.52, from 123.74 the prior day, and above a neutral 115-120 range for a 5th consecutive day.

    This week, the SPX, Nasdaq, and NYSE composite are up +0.13%, +0.88%, and +0.05%, respectively, while the DJI is down -0.82%. Last week, the Nasdaq closed up +0.18%, while the SPX, DJI, Nasdaq, and NYSE composite closed down -1.06%, -1.25%, and -0.88%, respectively. In October, the SPX, DJI, Nasdaq, and NYSE composite are up +0.73%, +0.02%, +1.15%, and +0.71%, respectively. In September, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.97%, +2.16%, +5.06%, and +3.787%, 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 +18.8%, +15.5%, +26.4%, +14.8%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX resistance is 1698. Immediate support is 1685, then 1676.

    KBW Bank Index (BKX). On increased, but below average volume, the BKX closed at 62.50, down -0.49% from 62.81 at the prior day's close. In early trading, the index gapped lower to open at 62.30, set an early 62.16 intraday low, then recovered by mid-session to 62.60, with an early afternoon 62.67 intraday high. In the final hour, the index tested 62.35 support successfully, then rallied into the close. Volume rose +20.8% to 51.692 million shares, from 42.809 million shares the prior day, 0.93x the 55.774 million share 15-day moving average.

    Large cap banks underperformed the regional banks' performance, as the KBW regional banking index (KRX) rose +1.60%.

    This week, the BKX is up +0.13%. Last week, the BKX closed down -1.84%, compared to a loss of -0.14% the prior week. In October, the BKX is up +0.40%, compared to September, when the BKX closed up +0.06%. For the year, the BKX is up +21.9%, better than the SPX's +18.8% rise. In 2012, the index rose +18.1%, compared to a +13.4% rise in the SPX.

    The BKX is now +5.59% better than the June 24th 59.19 close, its worst since May 13th. The index crossed above 50 on December 17, 2012, and 60 on May 15th, 2013. The BKX closed +92.0% 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 +57.6% in the same period.

    The BKX index closed -48.4% below its February 20, 2007, record 121.06 high. The BKX is up +235.7% from its 18.62 March 6, 2009, closing low.

    Technical indicators improved marginally, as the index recaptured its 5-day moving average. The index closed below its 10-, 20-, 50-, and 100-day moving averages. The index closed -1.29% and -2.69% below its respective 20- and 50-day moving averages. The index closed -0.97% below and +5.93% above its respective 100- and 200-day moving averages. The index closed above its 100-day moving average from August 6, 2012 through September 20, 2013, when the average rose from 46.12 to 62.72. Tuesday, the 20-day moving average fell -2 bps. The 50-day moving average fell -8 bps. Its 100-day moving average rose +4 bps, and the 200-day moving average rose +7 bps. The 20-day closed (by -0.91 points) below the 50-day, and the gap narrowed +7 bps. The 50-day moving average closed (by +5.23 points) above the 200-day moving average, and the gap narrowed -15 bps. The 100-day moving average closed (by +4.11 points) above the 200-day moving average, and the gap narrowed -3 bps.

    The directional movement indicator worsened to -10.700, from -10.201 the prior day, its 8th consecutive negative reading. Relative strength fell to 42.20, within a neutral 30-70 range, from 44.69 the prior day. RSI is down from the recent high of 56.62 on September 18th, but up from the recent 34.64 August 27th low. 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 63.46; next support is at 62.22.

    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 September, the index closed up +2.97% at 1681.55, compared to 1632.97 the prior month and 1630.74 four months prior. The May 2013 3 sell countdown is unchanged since June. The index closed -6.22% 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 27th, the index fell -1.06% to 1691.75, compared to 1709.91 the prior week and its 1632.97 close four weeks prior. The September 13th sell setup progressed to 3. The index closed -2.63% 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 Wednesday, the SPX fell -0.07% to 1693.87, compared to 1695.00 the prior day and 1698.67 4 days prior. The bearish price flip canceled the October 1st 1 sell setup and initiated a buy setup. The September 16th sell countdown progressed to 5, its first changed since September 19th. The index closed -1.44% 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 September, the index closed up +0.06% at 62.25, compared to 62.21 at August-end and 61.41 four months prior. The May 2013 sell countdown is unchanged since August 30th.

    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 27th, the BKX closed down -1.84% at 62.42, compared to from 63.59 the prior week and 62.21 four weeks prior. The bearish price flip canceled the September 20th 1 sell setup and initiated a buy setup. The index closed -8.60% 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. Wednesday, the index fell -0.49% to 62.50, compared to 62.81 the prior day and 62.53 four days prior. The bearish price flip canceled the October 1st 1 sell setup and initiated a buy setup. The September 16th 4 is unchanged since October 1st. The index closed -2.44% 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 September down -2.41% at 16.60, compared to 17.01 at the end of August and 16.30 at the end of May. The May 2013 sell setup progressed to 5.

    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 27th, the VIX rose +17.8% to 15.46, compared to 13.12 the prior week, and 17.01 4 weeks prior. The September 13th buy setup progressed to 3. The index closed +48.5% 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. Wednesday, the VIX rose +6.82% to 16.60, compared to 15.54 the prior day and 14.06 at the 4 days' prior close. The September 24th sell setup progressed to 7. The VIX closed +59.5% 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 September 2013 down -17.21 bps at 2.6136%, compared to 2.7839% the prior month and 2.1282% 4 months prior. The May 2013 sell setup progressed to 5.

    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 2.6245%, down -10.92 bps from 2.7337% the prior Friday and 2.7839% four weeks prior. The September 20th buy setup progressed to 2. The February 1st 12 sell countdown is unchanged since September 13th. The rate closed 151.27 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 September 24th, the September 11th buy setup perfected and initiated a buy countdown. On Wednesday, the rate fell -3.27 bps to 2.6173%, compared to 2.6500% the prior day and 2.6498% four days prior. The bearish rate flip canceled the prior day's sell setup and initiated a buy setup. The September 24th 3 buy countdown is unchanged since September 30th. The rate closed -19.77 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 September up +2.28% at 1.3222, compared to 1.3322 the prior month and 1.2999 4 months prior. The July 2013 sell 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. On September 20th, the April 12th sell countdown completed. The week of September 27th, the index fell -0.01% to end at 1.3522, compared to 1.3524 the prior week and 1.3222 4 weeks prior. The September 20th sell setup progressed to 2. The cross closed +12.8% 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 Wednesday's +0.39% higher close, the EURUSD cross ended at 1.3579, compared to 1.3526 the prior day and 1.3522 four days prior. The October 2nd sell setup progressed to 2. The September 19th sell countdown progressed to 3. The cross closed +0.31% above 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 September, the index closed up +6.31% at 2,893.15, compared to 2,721.37 the prior month and 2,769.64 four months prior. The July 31st sell setup progressed to 3. The May 2013 sell countdown progressed to 2, its first changed 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 27th, the index fell -0.27% to 2,919.34, compared to 2,927.19 the prior week and 2,721.37 at the 4 weeks' prior close. The September 13th sell setup rose to 3. The index closed +1.50% 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. Wednesday, the index fell -0.50% to 2,918.31, compared to 2,933.02 the prior day and 2,922.99 at the prior 4 days' close. The October 1st buy setup progressed to 2. The September 17th sell countdown progressed to 5, its first changed since September 20th. The index closed +1.46% above 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 September, the index rose +7.97% to 14,455.80, compared to 13,388.86 the prior month and 13,774.54 four months prior. The bullish price flip canceled the August 31st 1 buy setup and initiated a sell 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 27th, the index closed up +0.12% at 14,760.07, compared to 14,742.42 the prior week and 13,388.86 four weeks prior. The September 6th sell setup progressed to 4. The index closed +0.66% above the 14,645.46 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. Thursday, the index fell -0.09% to 14,170.49, compared to 14,484.72 the prior day and 14,760.07 four days prior. The September 30th buy setup progressed to 4. The September 18th 5 sell countdown is unchanged since September 27th. The index closed -8.62% 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 September, the index rose +5.19% to 22,859.86, compared to 21,731.37 the prior month and 22,392.16 four months prior. The bullish price flip cancelled the May 2013 4 buy setup and initiated a sell setup. The index closed -15.9% 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. For the week ended September 27th, the index closed down -1.26% to 23,207.04, compared to 23,502.51 the prior week and 21,731.37 four weeks prior. The September 6th sell setup progressed to 4. The April 5th 7 buy countdown is unchanged since August 30th. The index closed +3.80% 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 Thursday, the index rose +1.00% to 23,214.40, compared to 22,984.48 the prior day and 23,125.03 four days prior. The bullish price flip canceled the September 26th 4 buy setup and initiated a sell setup. The September 16th sell countdown progressed to 5. 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 September, the index closed up +3.64% at 2,174.67, compared to 2,098.38 the prior month and 2,300.60 four months prior. The April 30th buy setup progressed to 6. The January 2012 9 buy countdown is unchanged since July 2013.

    On a weekly basis, 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 20th, the July 26th sell setup perfected and initiated a sell countdown. On September 27th, the index closed the week down -1.45% at 2,160.03, compared to 2,191.85 the prior week and 2,098.38 four weeks prior. The September 20th sell countdown 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. 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. Monday, the index rose +0.68% to 2,174.67, compared to 2,160.03 at the prior close and 2,207.53 4 days prior. The September 26th buy setup progressed to 3. The August 13th 12 sell countdown is unchanged since September 24th. The index closed +25.3% above the July 30th 1,735.74 risk level.

    SPX, DJI, RTY, TRAN, CCMP, NYA, VIX, SKEW, NKY, EURUSD, USGG10YR, HSI, SHCOMP, SX5E, CAC, DAX, FTSE, JPY, GBP, EUR

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