This morning. U.S. equity markets open this morning with the S&P 500 Index (SPX), DJ Industrials (DJI), and DJ Transports (TRAN) modestly below their recent record closes. The major indexes opened lower, but improved through late afternoon before easing in the final hour. Volume rose, but remained below the 20-day moving average. The Nasdaq rose +0.08%, while the DJI, SPX, and NYSE composite fell -0.13%, -0.28%, and -0.52%, respectively. The SPX and NYSE composite distributed.
Trading desks reported early session selling pressure that quickly subsided as selling diminished more than buying increased. Markets sense the possibility that equities are at an inflection point, which may lead to either a higher record level or near term correction. Conviction is generally low, but few are posturing in an aggressive manner in either direction. Skeptics continue to hope for a sufficient pullback to make equities more attractive. With SPX equities trading at a relatively full 15.9x 2013 earnings multiple, attention focuses on 3Q2013 earnings and valuations (15.9x times survey $122.73 2014 SPX earnings suggest a 1953 SPX level next year, a +10.8% rise).
Technicals were little changed, as the SPX closed above its 5-, 10-, 20-, 50-, 100-, and 200-day moving averages. Most SPX market segments closed lower. Market breadth was negative, and up volume lagged down volume. Volatility rose. Treasury bond markets weakened. U.S. Treasury 10-year bond yields rose +6.61 basis points (bps) to 2.6696%, compared to 2.6035% the prior day.
Today, U.S. equity futures are higher after fair value adjustment. In Asia, equity markets closed mixed, with Japan closing higher for a 2nd consecutive session. In China, equities closed modestly lower ahead of this week's Communist Party meeting. The recent SHIBOR spike continued to ease, with 1-day SHIBOR at 3.66%, down from 3.92% the prior day and from 5.20% last Wednesday, up from 3.04% on October 22nd, but significantly below its June 20th 13.0% spike. Tuesday's Nikkei 225 December (NKZ3) equity futures are up +0.139%.
In Europe, equities are moderately lower, with the DAX trading at new intraday records.
This morning, 10-year U.S. Treasury yields are down -1.65 bps to 2.6531%, compared to 2.6696% at the prior close. Spanish and Italian 10-year debt yields are 4.11% and 4.16%, respectively, compared to 4.10% and 4.17% the prior day. The U.S. dollar is mixed. U.S. options markets improved to neutral to bullish, compared to neutral the prior day. The CBOE skew fell to 122.98, compared to 125.57 the prior day, above a neutral range (115-120), but below levels (above 130) that often signal short-term market tops.
In pre-market futures trading, December SPX equity futures (SPZ3) are higher and price near the top of a 1757-1764 trading range. After a fair value adjustment of +1.22 points, SPX equity futures price at 1765.00, up +7.28 points. The SPX opens +1.43% and +3.54% above its respective 20- and 50-day moving averages, and +4.86% and +8.39% above its respective 100- and 200-day moving averages. Initial resistance is 1770.62. Initial support is 1768.08, then 1756.81.
In Asia, equity markets reopened in Japan, Asian equity markets closed mixed. The Nikkei 225 (NKY) rose +0.79% after a mid-session positive reversal. The Hang Seng (HSI) fell -0.01%, while the Shanghai composite (SHCOMP) fell -0.82%. All closed at least +0.78% higher last week. The NKY and SHCOMP closed lower in October, while the HSI ended higher. The NKY and HSI are bull markets. Today's volumes are unavailable.
Economic reporting was light. Commentary focused on the mildly weaker yen and this week's Chinese communist party meeting. Chinese short term interest rates eased for a 4th consecutive day.
The NKY relative strength index (RSI) rose to 50.03, compared to 46.95 the prior day, and in the middle of 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 RSI ended at 47.79, down from 49.82 the prior day. The SHCOMP's RSI closed at 43.66, compared to 47.37 the prior session, and down from an overbought 80.85 on September 12th.
This week, the NKY is up +0.96%, while the HSI and SHCOMP are down -0.92% and -0.46%, respectively. Last week, the NKY, HSI, and SHCOMP closed up +0.78%, +2.16%, and +0.80%, respectively. In October, the NKY closed down -0.88%. The HSI closed up +1.51%. The SHCOMP closed down -1.52%. 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 +37.9%. The HSI is up +1.68%. The SHCOMP is down -5.71%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.
In Japan, the NKY closed Wednesday at 14,337.31, compared to 14,225.37 the prior day, and -8.25% below its recent May 22nd 15,627.26 high. The index traded lower through the morning session, when it set an early 14,130.86, but reversed higher in early afternoon, when it set its 14,407.69 intraday high. The index traded narrowly around 14,350 through the close. The index closed -0.03% below and +0.81% above its respective 20- and 50-day moving averages, and +2.16% and +7.45% above its respective 100- and 200-day moving averages. Most market segments closed higher. Leaders were basic materials, industrials, and technology, which rose at least +1.28%. Financials added +0.54%. Laggards were consumer services, telecommunications, and oil and gas, which fell at least -0.16%.
In China, the HSI closed at 23,036.94, compared to 23,038.95 at the prior close. The index closed -3.30% below its recent January 30th 23,822.06 high, but +26.7% above its 18,185.59 June 4, 2012 low. The index traded narrowly lower through the morning session, with an early 22,954.70 intraday low. The index reversed higher by late morning and rose to an early afternoon 23,119.04 intraday high. In mid-afternoon, the index eased to breakeven and briefly moved lower before improving into the close. Most market segments closed higher. Leaders were telecommunications, consumer services, and oil and gas, which rose at least +0.29%. Financials fell -0.15%. Laggards were basic materials, utilities, and consumer goods, which fell at least -0.20%.
In Shanghai, the SHCOMP closed at 2,139.61, compared to 2,157.24 at the prior close and +9.72% above the 1,950.01 June 27th closing low. The index gapped lower to open at 2,150, but improved to breakeven by mid-session and rose to a mid-afternoon 2,165.78 intraday high. The index weakened, then reversed lower and sold off rapidly to 2,145 and then eased lower through the final hour to a late 2,139.48 intraday low. Most market segments closed lower. Leaders were oil and gas, which rose +1.69%, and technology and basic materials, which fell at least -0.32%. Financials fell -1.28%. Laggards were consumer goods, health care, and consumer services, which fell at least -1.51%.
In Europe, the major equity indexes are moderately higher. The Euro Stoxx50 (SX5E), FTSE 100, CAC 40, and DAX are up +0.68%, +0.08%, +0.90%, and +0.40%, respectively. The Spanish IBEX 35 is up +0.26%. The Italian FTSE MIB is up +0.52%. All closed higher in October and September. Intraday, the DAX is trading above its October 31st record close.
Commentary focuses on the latest 3Q2013 earnings. Overall, European EPS has a +3.45% surprise, but revenues have fallen -1.53% short of surveys.
Today, the SX5E currently trades -0.32% below its 3,067.95 October 31st post-2008 high close, but -41.8% below its 5,249.55 March 31, 2000, all-time closing high. European bourses have recently outperformed U.S. equity indexes. SX5E relative strength (RSI) is 62.21, down from 58.52 at the prior close and in a neutral 30-70 range.
From its 3,035.92 prior day close, the SX5E opened above 3,045 and rose nearly to 3,060 in early trading. The index traded as high as 3,061.08 by mid-session. The index currently trades at 3,058.14. Most market segments are higher. Leaders are health care, financials, and utilities, which are up at least +1.03%. Laggards are consumer goods and oil and gas, which are up at least +0.43%, and telecommunications, which is down -1.35%.
This week the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +0.20, +0.30%, +0.46%, and +0.45%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +0.29%, +0.45%, +0.31%, and +0.34%, respectively. In October, the Euro Stoxx 50, FTSE 100, CAC 40, and DAX closed up +6.04%, +4.17%, +3.78%, and +5.11%, 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 +16.0%, +14.5%, +17.9%, and +18.9%. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.
3Q2013 SPX Earnings. Of 418 (of 498) reporting companies, 311 or 74.6% surprised positively on earnings, with a +3.94% surprise average. Of reporting companies, 225 or 54.2% reported sales or revenues in excess of estimates. The average sales/revenue surprise is +0.68%. Materials leads with respective +6.92% EPS surprise, but and -0.25% revenue miss, followed by consumer discretionary and information technology. Financials had a +4.84% EPS surprise and +0.61% revenue surprise.
Valuation. The SPX trades at 17.1x 2012 adjusted EPS ($103.41), 15.9x estimated 2013 earnings ($110.77), 14.4x estimated 2014 earnings ($122.73), and 13.1x estimated 2015 earnings ($135.08). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +7.12% and +10.8%, and +10.1%, respectively.
The BKX trades at 14.9x 2012 adjusted EPS ($4.32), 12.5x estimated 2013 earnings ($5.16), 11.4x estimated 2014 earnings ($5.65), and 10.4x 2015 earnings ($6.17). Analysts expect 2013, 2014, and 2015 EPS will grow +19.4%, +9.60%, and +9.21%, 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 bullish, and equity options are neutral. The composite put/call ratio is 0.77, compared to 0.75 the prior day, and better than 5- and 10-period moving averages of 0.86 and 0.84, respectively. The index put/call ratio is 0.74, compared to 0.84 the prior day, and better than its 5- and 10-period moving averages of 1.02 and 1.11, respectively. The equity put/call ratio closed the day at 0.79, compared to 0.73 the prior day, and better than its 5- and 10-period moving averages of 0.82 and 0.77, respectively.
NYSE Volume, Breadth Indicators. Volume rose +12.8% to 742.02 million shares, from 657.66 million shares the prior day, 1.02x the 727.37 million shares 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged by -1,076 (compared to +1,047 the prior day), or 0.47:1. Up volume was 0.40:1 down volume.
Distribution day count and market trend. The market trend is "confirmed uptrend". The uptrend commended on September 9th, when the SPX opened at 1655.17. After yesterday's SPX and NYSE composite distributions, the distribution count is 8 for the DJI, and 7 on the SPX and NYSE composite, and 7 on the Nasdaq.
Libor, LOIS, Currencies, Treasuries, Commodities:
· USD LIBOR is 0.10230%, compared to 0.10240% the prior day. USD 3-month LIBOR is 0.23865%, down from 0.23770% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.
· The US Libor-OIS (LOIS) spread is 15.365 bps, compared to 15.270 bps the prior day, and compares to the recent June 12, 2012 46.785 bps high. Euribor-OIS is 11.300 bps, up from 11.00 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 -4.381 bps, compared to -4.363 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 4.11%, up from 4.10% the prior day and moving above the prior 3.97% November 1st low. Italian 10-year debt yields are at 4.16%, down from 4.17% the prior day, but up from the 3.822% May 3rd low. German 10-year debt yields are 1.74%, compared to 1.74% the prior day. Japanese 10-year debt yields are 0.61%, compared to 0.60% the prior day.
· The U.S. government overnight repo rate is +7 bps, compared to +8 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The record -0.02 bps low was on October 22, 2013.
· U.S. Treasury yields are lower, with 2- and 10-year maturities yielding 0.298% and 2.662%, respectively, compared to 0.301% and 2.670% Tuesday. The yield curve narrowed -0.340 bps, with the 2- to 10-year spread at +2.365%, compared to 2.368% 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, slightly stronger compared to the euro and British pound, but stronger compared to the Japanese yen. The dollar trades at US$80.512, compared to a US$80.432 intraday low and US$80.722 the prior day, and mixed compared to its $80.576 50-day, US$81.404 100-day, and US$81.780 200-day averages. The euro trades at US$1.3510, compared to a US$1.3468 intraday low and US$1.3474 the prior day. The euro trades better compared to its US$1.3495 50-day and US$1.3341 100-day averages, and compares to a multi-year high of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥98.63, compared to ¥98.50 the prior day. The yen trades worse than its 50-day moving average ¥98.48, and better than its May 17th 103.21 closing low, its weakest multi-year closing low.
· Citigroup Economic Surprise Index improved to 0.00, compared to -3.80 the prior day. The index is worse compared to its respective +0.64 5-day and +7.23 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 and rose to a recent high of 53.30 on October 1st, but subsequently fell on dollar weakness to -2.10 on October 31st. After a lag, the CESIUSD correlates with EPS revisions.
· Commodities prices are mostly higher, with higher energy, higher precious metals, mixed aluminum and copper, and mostly higher agriculture prices.
Volatility, Skew:
· The CBOE SPX Volatility Index (VIX) closed at 13.28, down -2.64% from 13.28 at the prior close. The VIX is -12.2% below its 14.73 20-day moving average. Its 30-day high is 21.34. Its 30-day low is 12.34. 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 16.60, down -0.94% from 16.75 at the prior day's close. The V2X index trades -3.01% below its 17.11 20-day moving average, -29.4% below the 23.49 30-day high, and +10.6% above the 15.01 30-day low.
· The Hang Seng volatility index (VHSI) closed at 14.99, up +0.87% from 14.86 the prior day. The VHSI index trades -6.37% below its 16.01 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.
· CBOE SKEW (SKEW) closed at 122.98, down -2.06% from 125.57 at the prior day's close, above a neutral (115-120) range for a 27th consecutive day. The recent low was 112.47 on May 25, 2013. The 52-week high was 135.42 on October 25th. Spikes in excess of 130 (as on October 11, 15, 18, 21, and 24, 25, 26, 28, and 31 and on February 15 and 18, 2013, and previously on September 21, 2012, and March 12, 15, and 16, 2012) correlate well with short-term market tops. The record high was 139.25, on March 12, 2012. 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 fell -7.0%, compared to +6.4% prior.
· October YoY Challenger job cuts fell -4.2%, compared to 19.1% prior.
· At 10:00, September leading index with +0.6% survey and +0.7% prior.
Overseas Economic Reporting and News:
· Eurozone - October final PMI services were 51.6, compared to 50.9 survey and prior. PMI composite rose 51.9. compared to 51.5 survey and prior. September MoM retail sales fell -0..6%, compared to -0.4% survey and +0.5% revised prior.
· France - October PMI services was 50.9, compared to 50.2 survey and prior.
· Germany - October final PMI services was 52.9, compared to 52.3 survey and prior.
· Italy - October PMI services was 50.5, compared to 551.2 survey and 52.7 prior.
· Spain - October PMI services was 49.6, compared to 49.0 survey.
· United Kingdom - September MoM industrial production rose +0.9%, compared to +0.6% survey and -1.1% prior. September MoM manufacturing production rose +1.2% and +1.1% survey and -1.2% prior.
Company Ratings/News:
- None.
Tuesday's Trade. On lower and below average volume, U.S. equity markets opened lower, briefly reversed higher by mid-afternoon, but faded to close modestly mixed. The Nasdaq added +0.08%, while the DJI, SPX, and NYSE composite fell -0.13%, -0.28%, and -0.52%, respectively. Volumes rose. The SPX and NYSE composite distributed.
The U.S. equity market trend is "confirmed uptrend". The uptrend commenced on September 8th.
Market breadth was negative, with gainers 0.47:1 losing stocks. Most SPX market segments closed lower. Leaders were consumer services and consumer goods, which rose at least +0.04%, and technology, which fell -0.11%. Financials fell -0.38%. Laggards were oil and gas, utilities, and telecommunications, which fell at least -0.42%.
NYSE volume rose +12.8% to 742.02 million shares, from 657.66 million shares the prior day, 1.02x the 727.37 million share 20-day moving average volume. Bond markets weakened. U.S. 10-year yields rose +6.61 bps to 2.6696%, from 2.6035% at the prior close.
From its prior day 1767.93 close, SPX futures suggested moderate losses, and the SPX gapped lower to open below 1764 and fell to an early 1755.76 intraday low. The index improved to 1764 by mid-morning, then traded narrowly around 1766 through late afternoon. The index eased into the close. The index closed at 1762.97. The index closed +64.0% above the 1074.77 October 4, 2011, intraday low.
The DJ Transportation index (TRAN) closed at 7,091.23, off -0.53% from its prior day record high close, compared to the DJI's -0.13% gain. The DJI closed -0.37% off its October 29th record close. From the prior day's 7,129.19 close, the index fell to an early 7,060.64 intraday low. The index improved back to 7,112.99 by mid-afternoon, then weakened through the final 90 minutes. Volume rose +0.62% to 0.96:1 average volume. The TRAN closed +3.19% and +6.41% above its respective 20- and 50-day moving averages, and +8.64% and +12.1% above its respective 100- and 200-day moving averages.
Market volatility rose. From its prior 12.93 close, the VIX rose to an early 13.64 intraday high, then fell to a mid-session 12.86 intraday low. The VIX closed at 13.27, up +2.63% on the day and -7.71% below its 14.38 20-day moving average. The VIX's all-time closing low was 11.26, on June 30, 1993.
The broader market's technical factors were little changed. The SPX index closed above its 5-, 10-, 20-, 50-, 100-, and 200-day moving averages. SPX relative strength (RSI) fell to 63.16, from 65.89 the prior day, in a neutral range. The RSI is down from an overbought 72.13 on September 18th, when the SPX also closed at a previous record high, but up from an oversold 39.19 on October 9th. The CBOE put/call skew fell -2.06% to 122.98, down from 125.57 the prior day, above a neutral 115-120 range for an 25th consecutive day, but below the key 130 level, which correlates well with short-term market tops.
This week, the SPX, DJI, and Nasdaq are up +0.08%, +0.02%, and +0.45%, respectively, while the NYSE composite is down -0.06%. Last week, the SPX and DJI closed up +0.11% and +0.29%, respectively, while the Nasdaq and NYSE composite closed down -0.54% and -0.36%. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +0.88%, +1.11%, +0.74%, and +0.69%, respectively. In October, the SPX, DJI, Nasdaq, and NYSE composite gained +4.46%, +2.75%, +3.93%, and +4.04%, respectively. In September, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.97%, +2.16%, +5.06%, and +3.787%, respectively.
In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +23.6%, +19.2%, +30.5%, +18.6%, respectively. All closed at least +5.91% higher in 2012.
KBW Bank Index (BKX). On higher, but below average volume, the BKX closed at 64.26, down -0.03% from 64.28 at the prior day's close. The index opened lower and set an early 63.88 intraday low, but rallied and reversed higher in early afternoon. The index set a mid-afternoon high of 64.45, but faded in the final hour to end with a modest loss. Volume rose +37.1% to 43.316 million shares, from 31.595 million shares the prior day, 0.83:1 the 52.209 million share 15-day moving average.
Large cap banks outperformed the regional banks' performance, as the KBW regional banking index (KRX) fell -0.12%.
This week, the BKX is down -0.12%. Last week, the BKX closed down is -0.80%, compared to a -1.01% decline the prior week. In October, the BKX closed up +3.16%, compared to September, when the BKX closed up +0.06%. For the year, the BKX is up +25.3%, better than the SPX's +23.6% rise. In 2012, the index rose +18.1%, compared to a +13.4% rise in the SPX.
The BKX is now +8.57% 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 15, 2013. The BKX closed +97.4% 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 +64.0% in the same period.
The BKX index closed -46.9% below its February 20, 2007, record 121.06 high. The BKX is up +245.1% from its 18.62 March 6, 2009, closing low.
Technical indicators were little changed. The index closed below its 5-, 10-, and 20-day moving averages, but above its 50-, 100-, and 200-day moving averages. The index closed -0.22% below and +1.11% above its respective 20- and 50-day moving averages. The index closed +0.64% and +6.41% above its respective 100- and 200-day moving averages. The 20-day moving average rose +15 bps to 64.40. The 63.55 50-day moving average fell -2 bps. Its 100-day moving average rose +4 bps to 63.85, and the 200-day moving average rose +5 bps to 60.39. The 20-day closed (by +0.85 points) below the 50-day, and the gap widened +16 bps. The 50-day moving average closed (by +3.16 points) above the 200-day moving average, and the gap narrowed -6 bps. The 100-day moving average closed (by +3.46 points) above the 200-day moving average, and the gap narrowed -1 bp.
The directional movement indicator worsened to -2.095, from +1.262 the prior day, and its first negative reading since October 11th. Relative strength fell to 51.00, from 51.22 the prior day, but up from 35.75 on October 8th. The lowest most recent 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 64.51; next support is at 63.94.
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 November 1st, the index rose +0.88% to 1761.64, compared to 1759.77 the prior week and its 1690.50 close four weeks prior. The September 13th sell setup progressed to 8. The index closed +1.39% above the 1737.48 risk level.
On a daily basis, on October 22nd, the SPX completed the September 16th sell countdown and set a 1774.00 risk level, based on the day's 12.85 high/low range and 1759.33 intraday high. Also, the October 10th sell setup perfected, initiating a sell countdown. On Tuesday, the SPX fell -0.28% to 1762.97, compared to 1767.93 the prior day and 1763.31 4 days prior. The October 31st buy setup progressed to 4. October 22nd 4 sell countdown is unchanged since October 29th. The index closed -0.62% below the 1774.00 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 November 1st, the BKX closed down -0.80% at 64.34, compared to 64.86 the prior week and 62.98 four weeks prior. The October 18th sell setup progressed to 3. The index closed -5.78% below the 68.29 risk level.
On a daily basis, 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. The October 22nd, the October 10th sell setup progressed to an unperfected 9. On October 23rd a bearish price flip initiated a buy setup. Tuesday, the index fell -0.03% to 64.26, compared to 64.28 the prior day and 64.93 four days prior. The October 31st buy setup progressed to 4. The October 28th 2 sell countdown is unchanged since October 29th.
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 November 1st, the VIX rose +1.45% to 13.28, compared to 13.09 the prior week, and 16.74 4 weeks prior. The October 18th buy setup progressed to 3. The index closed +42.8% above the 9.17 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. On October 7th, the September 24th sell setup perfected, and a sell countdown initiated the following day. The bearish flip initiated a buy setup. On October 22nd, the October 10th buy setup perfected and initiated a buy countdown. Tuesday, the VIX rose +2.63% to 13.27, compared to 12.93 the prior day and 13.65 at the 4 days' prior close. The November 1st buy setup progressed to 3. The October 25th 3 buy countdown was unchanged. The VIX closed +18.1% above the 11.24 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%. On October 18th, the February 1st sell countdown completed, setting a 3.2260% risk level, based on the September 6th weekly 22.110 bps range and 3.0050% intraweek high. For the week ended November 1st, the rate ended at 2.6218%, up +11.30 bps, compared to 2.5088% the prior Friday and 2.6447% four weeks prior. The September 20th buy setup progressed to 7. The rate closed -60.42 bps below the 3.2260% 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 Tuesday, the rate rose 6.61 bps to 2.6696%, compared to 2.6035% the prior day and 2.53778% four days prior. The October 28th sell setup progressed to 7. The September 24th 8 buy countdown is unchanged since October 23rd. The rate closed -16.28 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 November 1st, the index fell -2.28% to end at 1.3487, compared to 1.3802 the prior week and 1.3558 4 weeks prior. The bearish price flip canceled the September 20th 5 sell setup and initiated a buy setup. The cross closed +12.9% above the 1.1964 risk level.
On a daily basis, 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. On October 28th, the October 16th sell setup perfected. With Tuesday's +0.30% higher close, the EURUSD cross ended at 1.3474, compared to 1.3514 the prior day and 1.3736 four days prior. The October 29th buy setup progressed to 6. The September 19th 10 sell countdown is unchanged since October 25th. The cross closed -0.78% below the 1.3580 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 November 1st, the index rose +0.58% to 3,052.14, compared to 3,034.50 the prior week and 2,928.31 at the 4 weeks' prior close. The September 13th sell setup rose to 8. The index closed +4.81% above the 2,909.37 risk level.
On a daily basis, 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, which completed on October 21st. On October 21st, the October 9th sell setup perfected and initiated a sell countdown, which established a 3,056.96 risk level. Tuesday, the index fell -0.83% to 3,035.92, compared to 3,061.18 the prior day and 3,040.69 at the prior 4 days' close. The bearish price flip canceled the October 29th 4 sell setup and initiated a buy setup. The October 21st 4 sell countdown is unchanged since October 31st. The index closed -0.69% below the 3,056.96 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 October, the index fell -0.88% to 14,327.94, compared to 14,455.80 the prior month and 13,677.32 four months prior. The September 30th sell setup progressed to 2.
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 November 1st, the index closed up +0.80% at 14,201.57, compared to 14,088.19 the prior week and 14,024.31 four weeks prior. The bullish price flip canceled the October 18th 2 buy setup and initiated a sell setup. The index closed -3.03% below the 14,645.46 risk level.
On a daily basis, on September 2nd a bullish price flip initiated a sell setup, which perfected on September 12th. The associated sell countdown initiated on September 18th. On October 10th, a bullish price flip initiated a sell setup. On October 22nd, the September 18th sell countdown completed and set a risk level of 14,935.79. Wednesday, the index rose +0.79% to 14,337.31, compared to 14,201.57 the prior day and 14,502.35 four days prior. The November 1st buy setup progressed to 3. The index closed -4.01% below the 14,935.79 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 October, the index rose +1.52% to 23,206.37, compared to 22,859.86 the prior month and 20.803.29 four months prior. The September 2013 sell setup progressed to 2. The index closed -14.7% below the risk level.
On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. For the week ended November 1st, the index closed up +2.16% to 23,249.79, compared to 22,698.34 the prior week and 23,218.32 four weeks prior. The bearish price flip initiated a buy setup. The April 5th 8 buy countdown is unchanged since October 25th. The index closed +3.72% 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 November 4th, the September 16th sell countdown completed and set a 23,991.23 risk level. On Wednesday, the index fell -0.01% to 23,036.94, compared to 23,038.95 the prior day and 23,206.37 four days prior. The November 4th buy setup progressed to 2. The index closed -3.98% below the 23,991.23 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 October, the index closed down -1.52% to 2,141.61, compared to 2,174.67 the prior month and 1,979.21 four months prior. The bullish price flip canceled the April 30th 6 buy setup and initiated a sell setup. 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 November 1st, the index closed the week up +0.78% at 2,149.56, compared to 2,132.96 the prior week and 2,174.67 four weeks prior. The October 25th buy setup progressed to 2. The September 20th 3 sell countdown is unchanged since October 18th.
On a daily basis, On August 13th, the August 1st sell setup perfected and initiated a sell countdown, which perfected on October 10th. On September 3rd a bullish price flip initiated a sell setup and initiated a sell countdown. Wednesday, the index fell -0.82% to 2,139.61, compared to 2,157.24 at the prior close and 2,141.61 4 days prior. The bearish price flip canceled the October 31st 3 sell setup and initiated a buy setup. The September 3rd 9 sell countdown is unchanged since October 30th.