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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 Fall Moderately; Financials Report Mixed Earnings; Asia And Europe Mixed 0 comments
    Jan 16, 2014 9:11 AM | about stocks: GS, C, PNC

    This morning. Today, U.S. equity futures suggest moderate losses. In Asia, equity indexes closed mixed. In Europe, bourses are modestly mixed. The DAX closed yesterday at a record high, and the Euro Stoxx50 closed at a post-2008 high. Friday's Nikkei 225 March 2014 (NKH4) equity futures are down -0.382%.

    This morning, U.S. economic news focuses on the latest weeks' initial and continuing jobless claims (in-line) and 4Q2013 earnings reports from Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), and PNC Financial Services Group (NYSE:PNC). GS and PNC surprised positively on both EPS and revenues. C disappointed on both. Otherwise, commentary focuses on the U.S. bond markets, which have weakened following Friday's and Monday's strong rallies, and currency, and commodity price developments.

    Wednesday, U.S. equity markets extended Tuesday's rally. The S&P 500 (SPX) and DJ Transports (TRAN) indexes closed at record highs. The Nasdaq rose +0.76%, followed by the DJ Industrials (DJI), S&P 500 , NYSE composite (NYA), and DJ Industrials, which closed up +0.66%, +0.52%, and +0.41%, respectively. The TRAN rose +0.64%. NYSE volume rose to 1.04x the 15-day moving average. The U.S. equity market outlook is "confirmed uptrend". The uptrend commenced on September 8th.

    Trading desks described a steady session without rushed or panicked buying, with a busier morning. Traders noted SPX resistance at 1850 in late morning and again in the final hour. Telecommunication led market segments. The general attitude remains cautious. With SPX equities trading at a full 16.8x 2013 earnings multiple, attention focuses on 2014 earnings and valuations (16.8x times survey $118.18 2014 SPX operating earnings suggests a 1983.13 SPX level next year, a +7.29% rise).

    Technicals were little changed. Most SPX market segments closed higher. Market breadth was positive, and up volume led down volume. Volatility was unchanged. Treasury bond markets weakened. The U.S. Treasury 10-year bond yield rose +2.03 bps to 2.8912%, compared to 2.8709% at the prior close.

    This morning, 10-year U.S. Treasury yields are down -1.41 bps at 2.8571%, compared to the prior close. Spanish and Italian 10-year debt yields are 3.74% and 3.86%, respectively, compared to 3.76% and 3.86% the prior day. The U.S. dollar is mixed. The Japanese yen is modestly stronger.

    U.S. options markets are unchanged at neutral to bullish, compared to neutral to bullish the prior day. The CBOE SKEW fell -0.55% to 132.69, compared to 133.43 the prior day, above a neutral range (115-120), and above 130, which generally correlates well with market tops.

    In pre-market futures trading, March SPX equity futures (SPH4) price near the bottom of a 1844-1836 trading range. After a fair value adjustment of +0.73 points, SPX equity futures price at 1837.00, down -5.23 points. The SPX opens +0.99% above its 20-day moving average, and +2.43%, +5.53%, and +9.17% above its respective 50-, 100-, and 200-day moving averages. Initial resistance is 1852.64. Initial support is 1842.32, then 1836.26.

    In Asia, equity markets closed modestly mixed. The Nikkei 225 index (NYSEARCA:NKY) closed down -0.39%. The Hang Sang index (HSI) rose +0.37%, and the Shanghai composite (SHCOMP) rose +0.02%. This week, indexes are mixed, but are at least -1.37% lower in 2014. The indexes closed mixed in December. All closed higher in November. The NKY and HSI are bull markets. Today's volumes are unavailable.

    Commentary focused on economic prospects and yesterday's U.S. equity market gains, which included new SPX and TRAN record closes. Otherwise, news flows were light. The Japanese yen weakened modestly. In China, short-term interbank lending rates rose. 7-day Shibo rates were 4.24%, compared to 3.96% the prior day, 9.00% on December 23rd and 4.45% on December 17th.

    Regional relative strength indexes (RSI) suggest that Japanese and Hong Kong equities are in a neutral range, while Chinese equity markets are in the lower end of a neutral (30-70) range. The NKY RSI eased to 51.29, compared to 52.54 the prior day and 61.15 at the December 30th close. The HSI RSI ended at 47.70, compared to 45.08 the prior day. The SHCOMP's RSI improved to 31.95, compared to 31.82 the prior session and lower than the 27.45 December 20th low. On June 27, 2013, the index's RSI fell to a low of 15.27, which was also last year's low index close.

    This week, the NKY is down -1.04%, the HSI is up +0.61%, and the SHCOMP is up +0.52%. Last week, the NKY closed down -2.33%, the HSI rose +0.13%, and the SHCOMP fell -3.35%, respectively. In January, the NKY is down -3.34%, and the HSI and SHCOMP are down -1.37% and -4.36%, respectively. In December, the NKY rose +4.02%. The HSI and SHCOMP closed down -2.41% and -4.71%, respectively.

    In 2014, the NKY is down -3.34%. The HSI and SHCOMP are down -1.37% and -4.36%, respectively. In 2013, the NKY rose +56.7%. The HSI closed up +2.87%. The SHCOMP closed down -6.75%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

    In Japan, the NKY closed at 15,747.20, compared to 15,808.73 the prior day and -59.5% below its late-1989 38,915.87 high close. The index gapped higher to open at 15,850 and traded to an early morning 15,941.08, where it found resistance and eased back below 15,900 by mid-session. The index reversed lower by mid-afternoon and fell to a late 15,710.14 intraday low before improving modestly into the close. The index surrendered its 20-day moving average. The index closed -0.15% below its 20-day moving average, but +2.82%, +6.88%, and +10.6% above its respective 50-, 100-, and 200-day moving averages. Most market segments closed lower. Leaders were utilities, oil and gas, and technology, which rose at least +0.37%. Laggards were industrials, financials, and consumer services, which fell -0.47%.

    In China, the HSI closed at 22,986.41, compared to 22,902.00 at the prior day close. The index closed -3.86% below its recent December 3rd 23,910.47 high, but +26.4% above its 18,185.59 June 4, 2012 low. The index opened at its 23,085.14 intraday high, but fell immediately to the 22,936.74 intraday low. The index found support at 22,940 through the session's remainder, with resistance at 23,000. Most market segments closed higher. Leaders were technology, industrials, and financials, which rose at least +0.41%. Laggards were consumer services, consumer goods, and basic materials, which fell at least -0.01%.

    In Shanghai, the SHCOMP closed at 2,023.70, compared to 2,023.35 at the prior close and +3.78% above the 1,950.01 June 27th close, last year's low. The index opened lower and set and early 2,014.46 intraday low, the rallied back to breakeven by mid-morning. The index rose to a mid-afternoon 2,034.71 intraday high, but eased through the final two hours to end with a fractional gain. Most market segments closed higher. Leaders were utilities, basic materials, and consumer services, which rose at least +0.25% Financials fell -0.04%. Laggards were technology, oil and gas, and telecommunications, which fell at least -0.45%.

    In Europe, the major equity indexes are mostly lower. Yesterday, the DAX closed at a record high. The Euro Stoxx50 closed at a post-2008 record intraday. The FTSE 100 rose +0.05%, while the Euro Stoxx50, CAC 40, and DAX are down -0.26, -0.25%, and -0.22%, respectively. The Euro Stoxx50 closed yesterday at a post-2008 high. The indexes are at least +1.26% higher on the week and +0.72% higher in January. All closed higher in December.

    Today, the Euro Stoxx50 trades at 3,154.98, -0.26% below its 3,168.76 January 15th post-2008 high close, and -39.8% below its 5,249.55 March 31, 2000, all-time closing high. The index opened slightly higher and set an early 3,170.03 intraday high, then fell to an early 3,154.13 intraday low. The index subsequently traded narrowly. Most market segments are lower. Leaders are consumer goods and health care, which are up at least +0.04%, and basic materials, which is down -0.13%. Laggards are financials, consumer services, and technology, which are down at least -0.90%. European bourses have recently outperformed U.S. equity indexes. Euro Stoxx50 relative strength (RSI) is 64.19, compared to 67.49 at the prior close, and much better than December 13th's oversold 32.71. Its lowest recent RSI level was 25.77 on June 24th, which marked the year's 2,494.54 closing low.

    This week, the Euro Stoxx 50, FTSE 100, CAC 40, and DAX are up +1.82%, +1.26%, +1.79%, and +2.66%, respectively. The prior week, the Euro Stoxx 50, FTSE 100, CAC 40, and DAX closed up +0.97%, +0.14%, +0.07%, and +0.40%, respectively. In January, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.66%, +1.12%, +0.72%, and +1.81%, respectively. In December, the Euro Soxx50, FTSE 100, CAC 40, and DAX closed up +0.72%, +1.48%, +0.02%, and +1.56%, respectively. In 2013, the indexes closed up +18.0%, +14.4%, +18.0%, and +25.5%, respectively, compared to +13.8%, +5.84%, +15.2%, and +29.1% the prior year.

    4Q2013 SPX Earnings. Of 35 (of 499) reporting companies, 22 or 62.9% surprised positively on earnings, with an average +12.1% surprise average. Of reporting companies, 23 or 66.7% reported sales or revenues above estimates. The average sales/revenue surprise is +0.98%. Financials lead with +21.5% EPS and +2.12% revenue surprises.

    Valuation. The SPX trades at 16.7x estimated 2013 earnings ($110.15), 15.6x estimated 2014 earnings ($118.13), 14.0x estimated 2015 earnings ($131.17), and 12.7x estimated 2016 earnings ($145.22). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, 2015, and 2016 earnings to grow +6.52%, +14.2%, +11.0%, and 10.7%, respectively.

    The BKX trades at 16.3x 2012 adjusted EPS ($4.32), 12.5x estimated 2013 earnings ($5.61), 11.4x estimated 2014 earnings ($6.15), and 10.2x 2015 earnings ($6.90). Analysts expect 2013, 2014, and 2015 EPS will grow +29.8%, +9.68%, and +12.3%, respectively.

    Composite, index, and equity options. Options markets are unchanged at neutral to bullish, compared to 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 0.68 the prior day, and worse than 5- and 10-period moving averages of 0.73 and 0.75, respectively. The index put/call ratio is 0.79, compared to 0.70 the prior day, and better than its 5- and 10-period moving averages of 0.96 and 0.99, respectively. The equity put/call ratio closed the day at 0.73, compared to 0.66 the prior day, and worse than its 5- and 10-period moving averages of 0.71 and 0.68, respectively.

    NYSE Volume, Breadth Indicators. Volume rose +10.5% to 717.90 million shares, compared to 649.76 million shares the prior day, 1.04x the 687.02 million shares 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led by +900 (compared to +1,252 the prior day), or 1.851:1. Up volume was 2.14:1 down volume.

    Distribution day count and market outlook. The market outlook is "confirmed uptrend". The current uptrend commenced on September 9th, when the SPX opened at 1655.17, with a subsequent gain of +11.9%. The distribution count is 8 for the DJI, and 7 on the SPX, NYSE composite, and Nasdaq.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.08960%, compared to 0.09000% the prior day. USD 3-month LIBOR is 0.23635%, down from 0.23785% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US Libor-OIS (LOIS) spread is 15.005 bps, compared to 14.885 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 9.900 bps, up from 9.500 bps the prior day, and down from the December 27, 2011, high of 98.800 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

    · The 3-month Euro basis swap is +1.345, compared to +1.111 bps the prior day, up from a trough of -147.00 bps on December 14, 2011, but far better than a normal -10 bps and -40 bps range.

    · Spanish 10-year debt yields are 3.74%, unchanged from 3.76% the prior day. Italian 10-year debt yields are at 3.86%, unchanged from 3.86% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.79%, compared to 1.83% the prior day. Japanese 10-year debt yields are 0.68%, compared to 0.66% the prior day.

    · The U.S. government overnight repo rate is +3 bps, compared to +3 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 lower, with 2- and 10-year maturities yielding 0.387% and 2.872%, respectively, compared to 0.391% and 2.891% Wednesday. The yield curve narrowed -1.540 bps, with the 2- to 10-year spread at +2.485%, compared to 2.501% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.429% on May 1, 2013, to a high of +2.648% on December 31, 2013.

    · The U.S. dollar is slightly weaker compared to the Japanese yen, euro, and British pound. The dollar trades at US$81.017, compared to a US$80.921 intraday low and US$81.027 the prior day, and mixed compared to its $80.605 50-day, US$80.579 100-day, and US$81.485 200-day averages. The euro trades at US$1.3607, compared to a US$1.3628 intraday high and US$1.3605 the prior day. The euro trades mixed compared to its US$1.3624 50-day and US$1.3561 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥104.64, compared to ¥104.556 the prior day. The yen trades worse than its 50-day moving average ¥102.86, but better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

    · Citigroup Economic Surprise Index rose to 72.70, compared to 70.30 the prior day, its best level in the past 52-weeks. The index is better compared to its respective +67.70 5-day and +61.87 10-day moving averages. 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 53.30 on October 1st, but subsequently fell on dollar weakness to -2.10 on October 31st. It has subsequently consistently strengthened. 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 12.28, unchanged from 12.28 at the prior close. The VIX is -7.58% below the 13.29 20-day moving average. Its 30-day high is 16.75. Its 30-day low is 11.69. The index's all-time closing low is 9.31 on December 22, 1993. The long-term average is 20.14.

    · The Euro Stoxx 50 volatility index (V2X) is 16.32, down -1.12% from 16.51 at the prior day's close. The V2X index trades -5.38% below its 17.25 20-day moving average, -14.4% below the 19.07 30-day high, and +10.7% above the 14.74 30-day low.

    · The Hang Seng volatility index (VHSI) closed at 14.45, down -2.30% from 14.79 the prior day. The VHSI index trades -4.58% below its 15.14 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) fell -0.55% to 132.69, compared to 133.43 the prior day, above a neutral (115-120) range and above 130, a level which correlates well with market tops. The recent high was a record 143.20 on December 20th. Its recent low was 112.47 on May 25, 2013. Spikes in excess of 130 correlate well with short-term market tops, though not in October or November. The prior record high was 139.25, on March 12, 2012. 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 326K and 3030K, respectively, compared to 328K and 2850K survey and 328k and 2856K revised prior.

    · December MoM CPI rose +0.3%, compared to +0.3% survey and +0.0% prior. Ex food and energy CPI rose +0.1%, compared to +0.1% prior and +0.2% prior.

    Overseas Economic Reporting and News:

    · Australia - December employment fell -22.6K, compared to +10.0 K survey and 125.4K revised prior.

    · China - December YoY FDI rose +3.3%, compared to +2.5% survey and +2.4% prior.

    · Japan - November MoM machine orders rose +9.3%, compared to +1.1% survey and +0.6% prior. YoY machine orders rose +16.6%, compared to +11.7% survey and +17.8 revised prior.

    Company Ratings/News:
     

    • C - Reports 4Q2013 adjusted EPS of $0.82, worse than the $0.953 estimate. Revenues were $17.8 billion, compared to $18.307 billion estimate.
    • GS - Reports 4Q2013 adjusted EPS of $4.60, better than the $4.180 estimate. Revenues were $8.78 billion, compared to $7.745 billion estimate.
    • PNC - Reports 4Q2013 adjusted EPS of $1.83, better than the $1.636 estimate. Revenues were $4.102 billion, compared to $3.837 billion estimate.


    Wednesday's Trade. On greater and above average volume, U.S. equity markets extended Tuesday's strong rally. The Nasdaq rose +0.76%, followed by the DJI, SPX, and NYSE composite, which rose +0.66%, +0.52%, and +0.41%, respectively.

    The U.S. equity market outlook is "confirmed uptrend". The uptrend commenced on September 8th.

    Market breadth was positive, with gainers 1.85:1 losing stocks. Most SPX market segments closed higher. Leaders were telecommunications, technology, and financials, which rose at least +1.13%. Laggards were health care, utilities, and oil and gas, which fell at least -0.16%.

    NYSE volume rose +10.5% to 717.90 million shares, compared to 649.76 million shares the prior day, 1.04x the 687.02 million share 20-day moving average volume. On the day, bond markets weakened. The U.S. 10-year yield opened at 2.8709%, traded narrowly through early afternoon, then spiked to the 2.9098 intraday high. The rate ended at 2.8912%, up 2.03 bps compared to the prior close.

    From its prior day 1819.20 close, SPX futures suggested modest opening gains. The index opened above 1842, and rallied strongly to a late-morning 1850.84 intraday high and again unsuccessfully retested resistance at 1850 in the final hour. The index traded narrowly though the close, finding support at 1846. The index ended at 1848.38, fractionally above the December 31st prior record 1848.36 close. The index closed +72.0% above the 1074.77 October 4, 2011, intraday low.

    The DJ Transportation index (TRAN) rose +0.64%, compared to the DJI's +0.66% gain, and closed at a record high. From its prior 7,456.26 close, the TRAN opened narrowly higher, but rallied through mid-afternoon to its 7,508.74 intraday high. The index closed at 7,503.83. Volume rose +17.7% to 1.48:1 average 15-day volume. The TRAN closed +2.41% and +3.98% above its respective 20- and 50-day moving averages, and +8.32% and +13.4% above its respective 100- and 200-day moving averages.

    Market volatility fell, as the VIX ended unchanged at 12.28, compared to 12.28 at the prior close. The VIX rose to an early 12.40 intraday high, fell to a mid-morning 11.81 intraday low, then moved narrowly between 12.00 and 12.40 through the close. The VIX closed -7.58% below the 13.29 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. All exchanges closed above the 5-, 10-, 20-, 50-, 100-, and 200-day moving averages. SPX relative strength (RSI) rose to 61.69, compared to 58.39 the prior day, in a neutral range. The RSI is down from an overbought 71.26 on December 31st, when the SPX closed at its record high, but up from an oversold 39.19 on October 9th. The CBOE put/call skew fell -0.55% to 132.69, compared to 133.43 the prior day, well 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 up +0.33%, +0.27%, +0.96%, and +0.14%, respectively. Last week, the SPX, Nasdaq, and NYSE composite closed up +0.60%, +1.03%, and +0.72%, respectively, while the DJI closed off -0.20%. In January, the Nasdaq is up +0.92%, the SPX is unchanged, and the DJI and NYSE composite are down -0.57% and -0.14%, respectively. In December, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.36%, +3.05%, +2.87%, and +2.13%, respectively.

    In 2013, the SPX, DJI, Nasdaq, and NYSE composite closed up +29.6%, +26.5%, +38.2%, +23.2%, respectively. All closed at least +5.91% higher in 2012.

    KBW Bank Index (BKX). On greater and above average volume, the BKX closed at 71.19, up +1.40% from 70.21 at the prior day's close, its 5th close above 70.0 in the past 6 sessions and its best close since September 2008. After strong earnings reports from Bank of America (NYSE:BAC), the index gapped higher to open above 70.60, and rallied to a mid-morning 71.27 intraday high. The index traded narrowly to the close. Volume rose +69.4% to 78.063 million shares, compared to 46.072 million shares the prior day, 1.73x the 45.137 million share 15-day moving average.

    Large cap banks outperformed the regional banks, as the KBW regional banking index (KRX) rose +0.51%.

    This week, the BKX is up +0.59%, compared to last week's +1.87% gain. In January, the BKX is up +2.79%. In December, the BKX rose +2.18%. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise. In 2012, the index rose +18.1%, compared to a +13.4% rise in the SPX.

    The BKX is now +20.3% better than the June 24th 59.19 close, its worst since May 13th. The index crossed above 50 on December 17, 2012, 60 on May 15, 2013, and 70 on January 8, 2014. The BKX closed +118.6% 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 +72.0% in the same period.

    The BKX index closed -41.2% below its February 20, 2007, record 121.06 high. The BKX is up +282.3% from its 18.62 March 6, 2009, closing low.

    Technical indicators were little changed. The index closed +2.65% and +5.25% above its respective 20- and 50-day moving averages. The index closed +8.51% and +12.3% above its respective 100- and 200-day moving averages. The 20-day moving average rose +20 bps to 69.35. The 67.64 50-day moving average rose +14 bps. Its 100-day moving average rose +6 bps to 65.60, and the 200-day moving average rose +7 bps to 63.38. The 20-day closed (by +1.71 points) below the 50-day, and the gap rose +6 bps. The 50-day moving average closed (by +4.26 points) above the 200-day moving average, and the gap widened +6 bps. The 100-day moving average closed (by +2.22 points) above the 200-day moving average, and the gap narrowed -2 bps.

    The directional movement indicator narrowed to +18.168, compared to +10.321 the prior day, its 18th consecutive positive reading. Relative strength rose to 68.65, compared to 62.79 the prior day, in the upper end of a neutral range, but down from an overbought 71.88 and 75.56 in last week's final two days. The lowest most recent RSI level was 31.08 on November 14, 2012, which is also the date of the BKX's 2012 closing low. Next resistance is 71.54; next support is at 70.57.

    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 December, the index closed up +2.36% at 1848.36, compared to 1805.81 the prior month and 1632.97 four months prior. The May 2013 sell countdown progressed to 6. The index closed +3.08% above the risk level.

    On a weekly basis, on January 4th, a bullish price flip initiated a sell setup, which perfected the week ending March 1. 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. On September 13th, a bullish price flip initiated a sell countdown which completed on November 8th and initiated a sell countdown. In the week ending January 10th, the index rose +0.60% to 1842.37, compared to 1831.37 the prior week and its 1775.32 close four weeks prior. The December 20th sell setup progressed to 4. The November 8th 8 sell countdown was unchanged. The index closed +6.04% 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, which completed on November 29th. The completion set a 1,823.12 risk level, based on the day's 9.57 point range and 1803.98 intraday high. On December 11, 2013, a bearish price flip initiated a buy setup. December 31st, the December 18th sell setup perfected and initiated a sell countdown. On January 14th, a bullish price flip initiated a sell setup. On Wednesday, the SPX rose +0.52% to 1848.38, compared to 1838.88 the prior day and 1838.13 4 days prior. The January 14th sell setup progressed to 2. The December 31st sell countdown progressed to 4. The index closed +1.39% above the 1823.12 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 December, the index closed up +2.18% at 69.26, compared to 67.78 November-end and 62.21 four months prior. The May 2013 sell countdown progressed to 6.

    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. On October 18th, a bullish price flip initiated a sell setup, which perfected on December 20th. For the week ending January 10th, the BKX closed up +1.87% at 70.77, compared to 69.47 the prior week and 66.62 four weeks prior. The December 20th sell countdown progressed to 3. The index closed +1.68% above 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 perfected and initiated a sell countdown. On November 8th, a bullish price flip initiated a sell setup, which perfected on November 21st, initiating a sell countdown with completed on December 16th. The completion set a 69.11 risk level. On December 31st, the December 17th sell setup perfected and initiated a sell countdown. On January 2nd, the October 22nd sell countdown completed and set a 69.69 risk level. On January 13th, a bearish price flip initiated a buy setup. Wednesday, the index rose +1.40% to 71.19, compared to 70.21 the prior day and 71.02 four days prior. The bullish price flip canceled the January 13th 2 buy setup and initiated a sell setup. The December 31st sell countdown progressed to 7. The index closed +2.88% above the 69.69 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 December down -0.15% at 13.72, compared to 13.70 at the end of November and 17.01 at the end of August. The bearish index flip canceled a 1 sell setup and initiated a buy setup.

    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 January 10th, the VIX fell -11.8% to 12.14, compared to 13.76 the prior week, and 15.76 4 weeks prior. The December 27th buy setup progressed to 3. The index closed +32.4% 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 10th, a bearish index flip initiated a buy setup, which perfected on October 22nd. The associated sell countdown commenced on October 23rd, which completed on December 26th and set a 10.88 risk level. On January 13th, the bullish index flip initiated a sell setup. Wednesday, the VIX fell -0.00% to 12.28, compared to 12.28 the prior day and 12.89 at the 4 days' prior close. The January 14th buy setup progressed to 2. The VIX closed +12.9% above the 10.88 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 December 2013 up +28.37 bps at 3.0282%, compared to 2.7445% the prior month and 2.7839% 4 months prior. The May 2013 sell setup perfected and initiated a sell setup.

    On a weekly basis, 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. On November 8th, a bullish rate flip initiated a sell setup. For the week ended January 10th, the rate fell -13.69 bps to 2.8579%, compared to 2.9948% the prior Friday and 2.8646% four weeks prior. The bearish rate flip canceled the November 8th 7 sell setup and initiated a buy setup. The June 28th 11 sell countdown was unchanged. The rate closed -23.12 bps below the 3.2260% risk level.

    On a daily basis, 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. On December 31st, the December 18th sell setup perfected and initiated a sell countdown. On Wednesday, the rate rose +2.03 bps to 2.8912%, compared to 2.8709% the prior day and 2.8579% four days prior. The January 9th buy setup progressed to 3. The December 31st sell countdown progressed to 3. The rate closed +7.62 bps above 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 December up +1.12% at 1.3743, compared to 1.3591 the prior month and 1.3222 4 months prior. The July 2013 sell setup progressed to 6. The 9 buy countdown progressed is unchanged since March 2013.

    On a weekly basis, on September 27th, the April 12th sell countdown completed, setting a 1.4008 risk level. On November 29th a bullish rate flip initiated a sell setup. The week of January 10th, the index fell -1.16% to end at 1.3670, compared to 1.3589 the prior week and 1.3742 4 weeks prior. The bearish price flip canceled the November 29th 5 sell setup and initiated a buy setup. The cross closed -2.46% 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. On January 14th, a bearish price flip initiated a buy setup. With Wednesday's -0.54% lower close, the EURUSD cross ended at 1.3605, compared to 1.3679 the prior day and 1.3670 four days prior. The November 8th buy countdown progressed to 11. The cross closed +0.18% above 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 December, the index closed up +0.60% at 3,105.22, compared to 3,086.64 the prior month and 2,721.37 four months prior. The July 31st sell setup progressed to 6. The May 2013 sell countdown progressed to 5.

    On a weekly basis, a November 23, 2012, bullish price flip initiated a sell setup that perfected January 18, 2013. On August 16th, the January 19th sell countdown 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. The week of September 13th, a bullish price flip initiated a sell setup which perfected on November 11th, which initiated a sell countdown. The week of December 6th, a bearish price flip initiated a buy setup. In the week ended January 10th, the index rose +0.15% to 3,104.15, compared to 3,074.43 the prior week and 2,921.92 at the 4 weeks' prior close. The December 27th sell setup progressed to 3. The November 11th 3 sell countdown was unchanged. The index closed +6.69% above the 2,909.37 risk level.

    On a daily basis, 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. On December 3rd, a bearish price flip initiated a buy setup, which perfected on December 13th. On January 7th, a bullish price flip initiated a sell setup. Wednesday, the index rose +2.54% to 3,168.76, compared to 3,119.53 the prior day and 3,090.26 at the prior 4 days' close. The January 7th sell setup progressed to 7. The index closed +3.66% above 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 perfected. In September, a bullish price flip initiated a sell setup. In December, the index rose +4.02% to 16,291.31, compared to 15,661.87 the prior month and 13,388.86 four months prior. The September 30th sell setup progressed to 4. The sell countdown associated with the July 2013 perfection 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 January 10th, the index closed down -2.33% at 15,912.06, compared to 16,291.31 the prior week and 15,403.11 four weeks prior. The November 13th sell setup progressed to 9 and perfected. The index closed +11.2% 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. On November 21st, the November 11th sell setup perfected and initiated a sell countdown. On December 26th, the November 21st sell countdown completed and set a 16,362.09 risk level. On January 14th, a bearish price flip initiated a buy setup. Thursday, the index fell -0.39% to 15,747.20, compared to 15,808.73 the prior day and 15,880.33 four days prior. The January 14th buy setup progressed to 3. The index closed -3.76% below the 16,362.09 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 December, the index fell -2.41% to 23,306.39, compared to 23,881.29 the prior month and 21,743.10 four months prior. The September 2013 sell setup progressed to 4. The index closed -14.3% below the risk level.

    On a weekly basis, the HSI perfected a sell setup on March 2, 2012, and the associated sell countdown completed on September 21, 2012, and set a 22,357.00 risk level, based on the September 14, 2012, when it set a 22,357.00 risk level. The index perfected two sell setups on November 9th and February 1st. A buy setup initiated the following week and perfected on April 5th, initiating a sell countdown. On December 20th, a bearish price flip initiated a buy setup. For the week ended January 10th, the index closed up +0.13% to 22,846.25, compared to 22,817.28 the prior week and 23,245.96 four weeks prior. The December 20th buy setup progressed to 4. The April 5th buy countdown progressed to 11. The index closed +2.19% 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 December 11th, a bearish price flip initiated a buy setup, which perfected on December 23rd. On Thursday, the index rose +0.37% to 22,986.41, compared to 22,902.00 the prior day and 22,846.25 four days prior. The bullish price flip canceled the January 14th sell setup progressed to 2. The December 23rd 3 buy countdown is unchanged since January 7th. The index closed -4.19% 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 December, the index closed down -4.71% to 2,115.98, compared to 2,220.50 the prior month and 2,098.38 four months prior. The October 2013 sell setup progressed to 3. 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 December 20th, a bearish price flip initiated a buy setup. On January 10th, the index closed the week down -3.35% to 2,013.30, compared to 2,083.14 the prior week and 2,196.08 four weeks prior. The December 20th buy setup progressed to 4. The September 20th 6 sell countdown is unchanged since December 6th.

    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. On November 28th, the October 10th sell countdown completed, setting a 2,259.57 risk level. On December 10th, a bearish price flip initiated a buy setup, which perfected on December 20th and initiated a buy countdown. On January 3rd, a bearish price flip initiated a buy setup. Thursday, the index rose +0.02% to 2,023.70, compared to 2,023.35 at the prior close and 2,013.30 4 days prior. The bullish price January 3rd buy setup remains an unperfected 9. The bullish price flip initiated a sell setup. The December 20th 9 buy countdown is unchanged since January 13th. The index closed -10.4% below the 2,259.57 risk level.

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

    Themes: SPX, DJI, RTY, TRAN, CCMP, NYA, VIX, SKEW, NKY, EURUSD, USGG10YR, HSI, SHCOMP, SX5E, CAC, DAX, FTSE, JPY, GBP, EUR Stocks: GS, C, PNC
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