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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 Rally; Japan Soars, Europe Mixed 0 comments
    Nov 21, 2013 9:31 AM

    This morning. Today, U.S. equity futures are moderately higher after fair value adjustment. In Asia, Japanese markets rallied strongly as the yen weakened further. Chinese equity markets closed modestly lower. In Europe, equities are modestly lower. Friday's Nikkei 225 December (NKZ3) equity futures are up +0.324%. Commentary focuses on 3Q2013 retailers' earnings, yesterday's October FOMC meeting minutes release, and prospects for tapering of Fed asset purchases.

    The U.S. equity market trend is "confirmed uptrend". The uptrend commenced on September 8th. There were no distributions yesterday.

    Wednesday, U.S. equity markets traded modestly higher but sideways until the 2:00 release of the FOMC minutes, then moved lower as selling pressure rose. The DJ Industrials (DJI) fell -0.41%. The DJ Transport (TRAN) index closed -0.29% lower and again failed to confirm the DJI's November 18th record close. The NYSE composite fell -0.39%, followed by the S&P 500 (SPX) and Nasdaq, which fell -0.36% and -0.26%, respectively. Volumes fell.

    Trading desks reported another quiet day, with nervous sentiment and greater attention to sell-offs than to rallies. Flows remain anemic. Expectations for the beginning of long term asset purchases (LSAP) taper have been pushed forward to the January FOMC meeting, from the end of 1Q2014, but that its zero interest rate policy (ZIRP) will remain a long-term market attribute. Skeptics continue to hope for a significant pullback, which could be occasioned by the start of FOMC tapering at its January meeting. With SPX equities trading at a relatively full 16.1x 2013 earnings multiple, attention focuses on 2014 earnings and valuations (16.1x times survey $122.40 2014 SPX earnings suggest a 1970.23 SPX level next year, a +10.6% 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 slightly. Treasury bond markets weakened. U.S. Treasury 10-year bond yields rose +9.18 bps to 2.7987%, compared to 2.7069% at the prior close.

    This morning, 10-year U.S. Treasury yields are up +0.89 bps to 2.8078%, compared to 2.7987% at the prior close. Spanish and Italian 10-year debt yields are 4.11% and 4.09%, respectively, compared to 4.09% and 4.08% the prior day. The U.S. dollar is stronger. U.S. options markets worsened to neutral, from neutral to bullish the prior day. The CBOE skew fell -0.28% to 133.25, compared to 133.62 the prior day, well above a neutral range (115-120) and above 130, a level that often signals short-term market tops.

    In pre-market futures trading, December SPX equity futures (SPZ3) price near the top of a 1776-1786 trading range. After a fair value adjustment of -0.98 points, SPX equity futures price at 1784.75, up +5.98 points. The SPX opens +0.59% and +2.96% above its respective 20- and 50-day moving averages, and +4.79% and +8.51% above its respective 100- and 200-day moving averages. Initial resistance is 1792.32. Initial support is 1773.82, then 1766.28.

    In Asia, equity markets closed mixed. The Nikkei 225 (NYSEARCA:NKY) rose +1.92% and closed near its intraday high. The Hang Seng (HSI) fell -0.51%, while the Shanghai composite (SHCOMP) fell -0.04%. All are at least +1.32% higher this week, and closed at least +1.27% higher last week. All are at least +1.61% higher in November. 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 focused on a Chinese flash PMI report, which disappointing slightly. Commentary focused on currency developments, recent FOMC minutes, and Chinese PMI.

    The NKY relative strength index (RSI) rose to 68.97, compared to 63.97 the prior day, moving to the top 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 moving up the most recent peak of 64.16 on July 23rd. The HSI RSI ended at 59.11, compared to 61.93 the prior day. The SHCOMP's RSI closed at 59.83, compared to 60.03 the prior session, and down from an overbought 80.85 on September 12th.

    This week, the NKY is up +1.32%, while the HSI and SHCOMP are up +2.38% and +3.27%, respectively. Last week, the NKY closed up a remarkable +7.66%, while the HSI and SHCOMP closed with gains of +1.27% and +1.41%, respectively. In November, the NKY is up +5.22%. The HSI and SHCOMP are up +2.13% and +3.04%, respectively. In October, the NKY closed down -0.88%. The HSI closed up +1.51%. The SHCOMP closed down -1.52%.

    In 2013, the NKY is up +47.8%. The HSI is up +4.08%. The SHCOMP is down -2.79%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

    In Japan, the NKY closed at 15,365.60, compared to 15,076.08 the prior day, and -1.01% below its recent May 22nd 15,627.26 high. The index gapped higher to open above 15,175 and then rallied strongly to a mid-morning 15,377.00 intraday high. The index eased back to 15,275 by early afternoon, then trended higher to the close. The index closed +5.80% and +6.33% above its respective 20- and 50-day moving averages, and +8.05% and +13.3% above its respective 100- and 200-day moving averages. All market segments closed at least +0.26% higher. Leaders were telecommunications, consumer services, and industrials, which closed up at least +2.02%. Laggards were oil and gas, utilities, and financials.

    In China, the HSI closed at 23,580.29, compared to 23,700.86 at the prior close. The index closed -1.01% below its recent January 30th 23,822.06 high, but +29.7% above its 18,185.59 June 4, 2012 low. The index opened at its 23,661.42 intraday high, slipped to an early afternoon 23,508.79 intraday low, then improved modestly to the close. Most market segments closed lower. Leaders were basic materials, technology, and utilities, which rose at least +0.21%. Financials fell -0.63%. Laggards were consumer goods, oil and gas, and telecommunications, which fell at least -0.71%.

    In Shanghai, the SHCOMP closed at 2,205.77, compared to 2,206.61 at the prior close and +13.1% above the 1,950.01 June 27th closing low. The index opened at 2,197, and fell to an early afternoon 2,178.26 intraday low. The index rallied through the afternoon but never traded above the prior close. All market segments rose at least +0.11%. Leaders were oil and gas, technology, and health care, which rose at least +0.21%. Laggards were industrials, utilities, and consumer goods, which fell at least -0.4455.

    In Europe, the major equity indexes are modestly lower. The Euro Stoxx50 (SX5E), FTSE 100, CAC 40, and DAX are down -0.36%, -0.01%, -0.53%, and -0.36%, respectively. The Spanish IBEX 35 is down -0.09%. The Italian FTSE MIB is up +0.20%. The indexes are modestly mixed on the week and in November. All closed higher in October and September.

    Economic reporting focuses on November PMIs. Commentary focuses on Wednesday's FOMC minutes and currency and commodities developments.

    Today, the SX5E currently trades -0.97% below its 3,067.95 October 31st post-2008 high close, but -42.1% 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 52.33, compared to 53.00 at the prior close and in a neutral 30-70 range.

    From its 3,047.32 prior day close, the SX5E opened below 3,030 and set an early 3,016.67 intraday low. The index recovered to an early afternoon 3,042.79 intraday high. The index currently trades at 3,036.97. Most market segments are lower. Leaders are utilities and oil and gas, which are up at least +0.12%, and financials, which is down -0.01%. Laggards are technology, consumer goods, and industrials, which are down at least -0.55%.

    This week, the Euro Stoxx50, FTSE 100, and CAC 40 are down -0.53%, -0.17%, and -1.00%, respectively, while the DAX is up +0.02%. In November, the Euro Stoxx 50, FTSE 100, and 40 are down -0.89%, -0.92%, and -0.99%, respectively, while the DAX is up +1.64%. 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 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +15.3%, +13.3%, +16.7%, and +20.5%. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

    3Q2013 SPX Earnings. Of 477 (of 499) reporting companies, 355 or 74.4% surprised positively on earnings, with a +4.04% surprise average. Of reporting companies, 259 or 54.4% reported sales or revenues in excess of estimates. The average sales/revenue surprise is +0.49%. Materials leads with respective +6.92% EPS surprise, but a -0.25% revenue miss, followed by consumer discretionary with +5.80% and +0.77%, respectively. In 3rd place, financials had a +5.57% EPS surprise, but with a 2nd place +0.16% revenue surprise.

    Consumer staples and energy were the poorest performing sectors, though with positive earnings surprises of +1.11% and 1.17%, respectively.

    Valuation. The SPX trades at 17.2x 2012 adjusted EPS ($103.41), 16.1x estimated 2013 earnings ($110.66), 14.6x estimated 2014 earnings ($122.40), and 13.2x estimated 2015 earnings ($134.95). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +7.01% and +10.6%, and +10.3%, respectively.

    The BKX trades at 15.3x 2012 adjusted EPS ($4.32), 12.9x estimated 2013 earnings ($5.15), 11.7x estimated 2014 earnings ($5.65), and 10.7x 2015 earnings ($6.19). Analysts expect 2013, 2014, and 2015 EPS will grow +19.3%, +9.57%, and +9.51%, respectively.

    Composite, index, and equity options. Options markets worsened to neutral, compared to neutral to bullish the prior session. Composite options are neutral, index options are neutral, and equity options are neutral. The composite put/call ratio is 0.95, compared to 0.81 the prior day, and worse than 5- and 10-period moving averages of 0.82 and 0.83, respectively. The index put/call ratio is 1.09, compared to 0.70 the prior day, and worse than its 5- and 10-period moving averages of 0.96 and 0.97, respectively. The equity put/call ratio closed the day at 0.89, compared to 0.90 the prior day, and worse than its 5- and 10-period moving averages of 0.78 and 0.79, respectively.

    NYSE Volume, Breadth Indicators. Volume fell -3.65% to 622.14 million shares, compared to 645.71 million shares the prior day, 0.87x the 715.45 million share 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged by -1,016 (compared to -1,166 the prior day), or 0.50:1. Up volume was 0.51:1 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. 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 0.10310%, compared to 0.10360% the prior day. USD 3-month LIBOR is 0.23760%, down from 0.23810% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US Libor-OIS (LOIS) spread is 15.360 bps, compared to 15.510 bps the prior day, and compares to the recent June 12, 2012 46.785 bps high. Euribor-OIS is 11.250 bps, up from 10.900 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 -2.563 bps, compared to -2.623 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 4.09% the prior day. Italian 10-year debt yields are at 4.09%, up from 4.08% the prior day, but up from the 3.822% May 3rd low. German 10-year debt yields are 1.77%, compared to 1.71% the prior day. Japanese 10-year debt yields are 0.63%, compared to 0.62% the prior day.

    · The U.S. government overnight repo rate is +9 bps, compared to +9 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The record -2 bps low was on October 22, 2013.

    · U.S. Treasury yields are slightly higher, with 2- and 10-year maturities yielding 0.276% and 2.795%, respectively, compared to 0.274% and 2.799% Wednesday. The yield curve narrowed -0.570 bps, with the 2- to 10-year spread at +2.519%, compared to 2.525% 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$80.972, compared to a US$80.955 intraday low and US$801.112 the prior day, and mixed compared to its $80.352 50-day, US$81.199 100-day, and US$81.841 200-day averages. The euro trades at US$1.3470, compared to a US$1.3477 intraday high and US$1.3439 the prior day. The euro trades mixed compared to its US$1.3546 50-day and US$1.3385 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥100.75, compared to ¥100.03 the prior day. The yen trades worse than its 50-day moving average ¥98.53, and better than its May 17th 103.21 closing low, its weakest multi-year closing low.

    · Citigroup Economic Surprise Index improved to +6.90, compared to +5.20 the prior day. The index is better compared to its respective +7.10 5-day and +12.24 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 13.40, up +0.07% from 13.39 at the prior close. The VIX is +2.41% above its 13.08 20-day moving average. Its 30-day high is 18.67. Its 30-day low is 11.99. The index's all-time closing low is 9.31 on December 22, 1993. The long-term average is 20.18.

    · At mid-session, the Euro Stoxx 50 volatility index (V2X) is 15.52, down -0.01% from 15.52 at the prior day's close. The V2X index trades -3.90% below its 16.15 20-day moving average, -24.4% below the 20.54 30-day high, and +3.84% above the 14.95 30-day low.

    · The Hang Seng volatility index (VHSI) closed at 17.10, up +0.47% from 17.02 the prior day. The VHSI index trades +9.20% above its 15.66 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) closed at 133.25, down -0.28% from 133.62 at the prior day's close, above a neutral (115-120) range. The recent low was 112.47 on May 25, 2013. Spikes in excess of 130 (as on November 14, 15, and 19 and 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. Other 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 weeks' initial and continuing jobless claims were 323K and 2876K, compared to 335k and 2870K survey and 344K and 2810K revised prior.

    · At 8:58, Markit US preliminary November PMI, with 52.3 survey.

    · At 10:00, November Philadelphia Fed, with 15.0 survey and 19.8 prior.

    Overseas Economic Reporting and News:

    · China - HSBC/Markit flash manufacturing PMI was 50.4, with 50.8 survey and 50.9 prior.

    · Japan - October final YoY machine tool orders rose +8.4%, compared to +8.4% prior.

    · Eurozone - November PMI manufacturing was 51.5, compared to 51.5 survey and 51.3 prior. PMI services was 50.9, compared to 51.9 survey and 51.6 prior.

    · France - November preliminary PMI was 47.8, compared to 49.5 survey and 49.1 prior.

    · Germany - November PMI rose to 52.5, compared to 52.0 survey and 51.7 prior.

    Company Ratings/News:
     

    • None.


    Wednesday's Trade. On lower and below average volume, U.S. equity markets fell modestly in another quiet session. The DJI fell -0.41%. The NYSE composite, SPX, and Nasdaq closed off -0.39%, -0.36%, and -0.26%, respectively. The TRAN also closed lower.

    The U.S. equity market trend is "confirmed uptrend". The uptrend commenced on September 8th. There were no distributions yesterday.

    Market breadth was negative, with gainers 0.50:1 losing stocks. Most SPX market segments closed lower. Leaders were health care, which rose +0.28%, and technology and oil and gas, which fell at least -0.23%. Laggards were basic materials, telecommunications, and utilities, which fell at least -0.83%.

    NYSE volume fell -3.65% to 622.14 million shares, compared to 645.71 million shares the prior day, 0.87x the 715.45 million share 20-day moving average volume. On the day, bond markets traded narrowly through 2:00, then weakened. U.S. 10-year yields rose +9.18 bps to 2.7987%, compared to 2.7069% at the prior close.

    From its prior day 1791.53 close, SPX futures suggested modest gains. The SPX initially traded narrowly, but strengthened to 1795.73 by mid-morning. Markets traded sideways through 2:00, then weakened as FOMC minutes stimulated a modest increase in selling. The SPX fell to a late afternoon 1777.23 intraday low, then improved to the close. The index closed at 1781.37, down -0.93% below its November 15th record close. The index closed +65.7% above the 1074.77 October 4, 2011, intraday low.

    The DJ Transportation index (TRAN) closed at 7,094.72, down -0.29% compared to the DJI's -0.41% loss. The TRAN has not confirmed the DJI's November 18th record. The TRAN ended -1.61% below its November 15th record 7,211.04 high. From the prior day's close, the index rose to an early 7,139.00 intraday high, then traded sideways to 2:00. The TRAN moved lower with the broader market to a final hour 7,077.76 intraday low, but then narrowed the loss. Volume fell -13.8% to 0.79:1 average 15-day volume. The TRAN closed +0.33% and +4.00% above its respective 20- and 50-day moving averages, and +7.05% and +10.9% above its respective 100- and 200-day moving averages.

    Market volatility rose +0.07% to 13.40, compared to 13.39 at the prior close. The VIX rose to an early 13.94 intraday high, but reversed lower by mid-morning and fell to a late afternoon 12.97 intraday low. The VIX closed +2.41% above the 13.08 20-day moving average. The VIX's all-time closing low was 9.31, on December 22, 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 62.42, compared to 62.80 the prior day, in a neutral range. The RSI is down from an overbought 72.13 on September 18th, when the SPX closed at an earlier record high, but up from an oversold 39.19 on October 9th. The CBOE put/call skew fell -0.28% to 133.25, compared to 133.62 the prior day, above a neutral 115-120 range and above 130, which correlates well with short-term market tops.

    This week, the SPX, DJI, Nasdaq, and NYSE composite are down -0.93%, -0.38%, -1.62%, and -0.92%, respectively. Last week, the SPX, DJI, Nasdaq, and NYSE composite closed up +1.56%, +1.27%, +1.70%, and +1.57%, respectively. In November, the SPX, DJI, Nasdaq, and NYSE composite are up +1.41%, +2.28%, +0.04%, and +0.87%, respectively. In October, the SPX, DJI, Nasdaq, and NYSE composite gained +4.46%, +2.75%, +3.93%, and +4.04%, respectively.

    In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +24.9%, +21.3%, +29.9%, +19.6%, respectively. All closed at least +5.91% higher in 2012.

    KBW Bank Index (BKX). On lower, but above average volume, the BKX closed at 66.29, down -0.06% from 66.33 at the prior day's close. The index rallied to an early afternoon 66.68 intraday high, then eased to the 2:00 release of the FOMC minutes, and reversed lower to a 66.06 intraday low. A late rally narrowed the loss. Volume fell -11.9% to 46.344 million shares, compared to 52.620 million sales the prior day, 0.93:1 the 50.040 million share 15-day moving average.

    Large cap banks outperformed the regional banks' performance, as the KBW regional banking index (KRX) rose +0.13%.

    This week, the BKX is unchanged. Last week, the BKX closed up +0.55%, compared to a +2.47% increase the prior week. In November, the BKX is up +3.22%. 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 +29.3%, better than the SPX's +24.9% rise. In 2012, the index rose +18.1%, compared to a +13.4% rise in the SPX.

    The BKX is now +12.0% better than the June 24th 59.19 close, its worst since May 13th, but -1.12% below its recent 67.05 August 1st post-2008 high close. The index crossed above 50 on December 17, 2012, and 60 on May 15, 2013. The BKX closed +103.6% 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 +65.7% in the same period.

    The BKX index closed -45.2% below its February 20, 2007, record 121.06 high. The BKX is up +256.0% from its 18.62 March 6, 2009, closing low.

    Technical indicators were little changed, as the index closed above its 5-, 10-, 20-, 50-, 100- and 200-day moving averages. The index closed +1.70% and +3.37% above its respective 20- and 50-day moving averages. The index closed +2.96% and +8.64% above its respective 100- and 200-day moving averages. The 20-day moving average rose +8 bps to 65.18. The 64.13 50-day moving average rose +5 bps. Its 100-day moving average rose +5 bps to 64.39, and the 200-day moving average rose +6 bps to 61.02. The 20-day closed (by +1.05 points) below the 50-day, and the gap widened +3 bps. The 50-day moving average closed (by +3.11 points) above the 200-day moving average, and the gap widened -1 bp. The 100-day moving average closed (by +3.37 points) above the 200-day moving average, and the gap narrowed -1 bp.

    The directional movement indicator worsened to +5.945, compared to +7.489 the prior day, its 3rd consecutive positive reading. Relative strength fell to 62.42, compared to 62.90 the prior day, and 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 66.63; next support is at 66.01.

    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 8th, the index rose +0.51% to 1770.61, compare to 1761.64 the prior week and its 1703.20 close four weeks prior. The September 13th sell setup completed and initiated a sell countdown. The index closed +1.74% 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 Wednesday, the SPX fell -0.36% to 1781.37, compared to 1787.87 the prior day and 1782.00 4 days prior. The bearish price flip canceled the November 13th 5 sell setup and initiated a buy setup. October 22nd 9 sell countdown was unchanged. The index closed +0.42% above 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 8th, the BKX closed up +2.47% at 65.93, compared to 64.34 the prior week and 63.58 four weeks prior. The October 18th sell setup progressed to 4. The index closed -4.63% 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. Wednesday, the index fell -0.06% to 66.29, compared to 66.33 the prior day and 66.11 four days prior. The November 8th sell setup progressed to 9. The October 28th 7 sell countdown is unchanged since November 18th.

    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 8th, the VIX fell -2.86% to 12.90, compared to 13.28 the prior week, and 15.72 4 weeks prior. The October 18th buy setup progressed to 5. The index closed +39.8% 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. Wednesday, the VIX rose +0.07% to 13.40, compared to 13.39 the prior day and 12.37 at the 4 days' prior close. The Noverber 18th sell setup progressed to 3. The October 25th 8 buy countdown is unchanged since November 15th. The VIX closed +19.2% 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 8th, the rate rose +12.59 bps to 2.7477%, compared to 2.6218% the prior Friday and 2.6871% four weeks prior. The bullish rate flip initiated a sell setup. The September 20th buy setup progressed to 6. The rate closed -47.83 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 Wednesday, the rate rose +9.18 bps to 2.7987%, compared to 2.7069% the prior day and 2.6900% four days prior. The November 19th sell setup progressed to 2. The September 24th 10 buy countdown was unchanged. The rate closed -1.99 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 8th, the index fell -0.89% to end at 1.3367, compared to 1.3487 the prior week and 1.3544 4 weeks prior. The bearish price flip canceled the September 20th 5 sell setup and initiated a buy setup. The cross closed -4.20% below the 1.4008 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. On November 8th, the October 29th buy setup perfected and initiated a buy countdown. With Tuesday's -0.73% lower close, the EURUSD cross ended at 1.3439, compared to 1.3538 the prior day and 1.3496 four days prior. The bearish price flip canceled the November 13th 5 sell setup and initiated a buy setup. The November 8th buy setup progressed to 2. The cross closed -1.04% 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. Wednesday, the index fell -0.06% to 3,047.32, compared to 3,049.17 the prior day and 3,053.69 at the prior 4 days' close. The bearish price flip canceled the November 14th 4 sell setup and initiated a buy setup. The October 21st 6 sell countdown was unchanged. The index closed -0.32% 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 15th, the index closed up +7.66% at 15,165.92, compared to 14,086.80 the prior week and 14,561.54 four weeks prior. The bullish price flip initiated a sell setup. The index closed +3.55% above 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. Thursday, the index rose +1.92% to 15,365.60, compared to 15,076.08 the prior day and 15,165.92 four days prior. The November 11th sell setup progressed to 9 and perfected. The index closed +2.88% above 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 15th, the index closed up +1.27% to 23,032.15, compared to 22,744.39 the prior week and 23,698.34 four weeks prior. The November 8th buy setup progressed to 2. The April 5th 8 buy countdown is unchanged since October 25th. The index closed +3.02% above the 22,357.00 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 Thursday, the index fell -0.51% to 23,580.29, compared to 23,700.86 the prior day and 23,032.15 four days prior. The November 15th sell setup progressed to 4. The index closed -1.71% 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 15th, the index closed the week up +1.41% to 2,135.83, compared to 2,106.13 the prior week and 2,132.96 four weeks prior. The October 25th buy setup progressed to 4. 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. Thursday, the index fell -0.04% to 2,205.77, compared to 2,206.61 at the prior close and 2,135.83 4 days prior. The November 15th sell setup progressed to 5. The September 3rd sell countdown is a deferred 13 since November 20th.

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

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