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U.S. Futures Ease As Earnings Season Winds Down

This morning. Earning season begins its 4th week, with 287 of 390 S&P 500 companies having reported with better EPS and revenues than consensus, though critics argue that the better EPS is largely due to cost cutting and that revenues remain unimpressive. Notwithstanding, 2013-2015 annual EPS estimates are somewhat improved overall from estimates prior to the start of the current season. Since July 11th, the market trend is "confirmed uptrend".

In Friday's session, major U.S. equity indexes fell sharply in early trading, but found support, strengthen, and reversed higher late in the session. For a 2nd consecutive session, the S&P 500 (SPX) and DJ Industrials (DJI) closed at record highs. Notably, the DJ Transports (TRAN) closed lower and did not confirm the DJI's record close. Overall, technicals were little changed. Most SPX market segments closed higher. Volume fell, and was below average levels. All major indexes closed above their respective 5-, 10-, 20-, 50-, 100-, and 200-day moving averages.

Trading desks reported a quiet, pre-weekend session, despite indexes' record closes. The disappointing July employment report spurred early selling, but the pressure quickly dissipated, and the late reversal higher seemed probable by mid-morning. Buying activity was cautious with little supply coming on market.

Today's economic focus is on worldwide services PMIs, which generally surprised positively.

Today, in Asia, equity markets closed mixed, with better strength in Shanghai, which rose for a 5th consecutive session. Tuesday's Nikkei 225 (NKU3) equity futures are up +0.21%. Chinese equity futures are also higher. In Europe, equities are mixed, with somewhat greater losses in London. Commentary focus is on last week's U.S. employment report and argumentation as to which candidate would be best to replace Bernanke as Fed chairman.

This morning, long-term U.S. Treasury yields are 2.6248%, compared to 2.5960% at the prior close. U.S. repo rates are 11 bps, up from 7 bps the prior day, but these markets are thin and moribund. Spanish and Italian 10-year debt yields are 4.57% and 4.25%, respectively, compared to 4.57% and 4.25% the prior day. The U.S. dollar is mixed. U.S. options markets are neutral to bullish, unchanged from the prior day. The CBOE skew rose, but remains within a neutral range.

In pre-market futures trading, September SPX equity futures are modestly lower, and near the bottom of a 1701-1705 range. After a fair value adjustment of +0.82 points, SPX equity futures are at 1701.00, down -3.82 points. The SPX opens +1.61% and +3.75% above its respective 20- and 50-day moving averages, and +5.65% and +11.2% above its respective 100- and 200-day moving averages.

In Asia, equity markets closed mixed, though Chinese markets extended the past week's gains. The Japanese Nikkei (NYSEARCA:NKY) fell -1.44%, following Friday's +3.29% rise. The Hang Seng (HSI) rose +0.14%. The Shanghai composite (SHCOMP) rose +1.04%. Volumes are unavailable.

The NKY's relative strength index (RSI) closed at 52.00, down from 55.60 and in a neutral 30-70 range. The index's RSI is up from a low of 34.42 on June 13th, down from an overbought 82.61 on May 22nd and down from 64.16 on July 23rd. The HSI's RSI rose to 65.80, from 65.28 the prior day. The SHCOMP's RSI rose to 52.92, from 49.10 the prior day, but up from June 27th's grossly oversold 15.27.

Commentary focused on expanding Chinese services and the tepid U.S. July employment report.

Last week, the NKY closed up +2.38%, while the HSI and SHCOMP are up +1.01% and +0.92%, respectively. The prior week, the NKY closed down -2.59%, the HSI rose +3.25%, and the SHCOMP closed down -1.40%. In August, the NKY is up +4.31%, the HSI is up +1.55%, and the SHCOMP is up +2.84%. In July, the NKY closed down -0.07%, the HSI closed up +5.19%, and the SHCOMP rose +0.74%. In June, the NKY closed down -0.71%, the HSI -7.10%, and the SHCOMP -14.0%.

In 2013, the NKY is up +37.2%. The HSI is down -1.92%. The SHCOMP is down -9.64%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 14,258.04, down from 14,450.00 the prior day. The index set an early 14,370.98 but trended lower through the session to a late 14,225.50 intraday low. The index ended -8.76% below its recent May 22nd 15,627.26 closing high, but +70.4% above its 8,295.63 July 18, 2012 low. The index closed -0.79% and +3.27% above its respective 20- and 50-day moving averages, and +4.67% and +20.3% above its respective 100- and 200-day moving averages. All market segments closed at least -1.05% lower. Leaders were consumer goods, basic materials, and oil and gas. Financials lost -1.39%. Laggards were utilities, telecommunications, and consumer services, which fell at least -1.54%.

In China, the HSI closed at 22,222.01, compared to 22,190.97 at the prior close. The index closed -6.72% below its January 30th 23,882.06 high, but +22.2% above its 18,185.59 June 4, 2012 low. The index gapped higher and set an early 22,273.82 intraday high, then trended lower through the session. The index ended +3.19% and +3.71% above its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were technology, consumer services, and financials, which closed up at least +0.03%. Laggards were consumer goods, basic materials, and utilities, which were at least -0.37% lower.

In Shanghai, the SHCOMP closed at 2,050.48, up moderately from 2,029.42 at the prior close, and +5.15% above the recent 1,950.01 June 27th closing low. The index traded narrowly around breakeven until late morning, then rallied through the afternoon to end just short of the 2,050.68 intraday high. The SHCOMP closed +1.60% above and -2.19% below its respective 20- and 50-day moving averages. Most market segments closed higher. Leaders were health care, consumer goods, and consumer services, which rose +1.45%. Laggards were financials and oil and gas, which rose at least +0.16%, and telecommunications, which fell -0.42%.

In Europe, the major equity indexes are mixed. The CAC 40 is up +0.12%, while the Euro Stoxx50, FTSE 100, and DAX are down -0.02%, -0.01%, and -0.14%, respectively. The Spanish IBEX 35 is up +0.08%. The Italian FTSE MIB is down -0.47%.

Commentary focuses on Chinese services PMI and Friday's U.S. employment report.

From its 2,811.00 prior day's close, the Euro Stoxx50 (SX5E) set a mid-morning 2,821.39 intraday high, but subsequently back to breakeven by mid-session. The index currently trades at 2,809.68. Most market segments are higher. Leaders are health care, consumer services, and basic materials, which are up at least +0.13%. Financials are down -0.02%. Laggards are industrials, telecommunications, and utilities, which are down at least -0.11%.

Last week, the Euro Stoxx50, CAC 40, FTSE 100, and DAX closed up +2.30%, +0.65%, +2.20%, and +2.13%, respectively. The prior week, the Euro Stoxx50 and CAC 40 closed up +0.95% and +1.11%, respectively, while the FTSE 100 and DAX closed off -1.14% and -1.04%, respectively. In August, Euro Stoxx50, FTSE100, CAC 40, and DAX are up +2.30%, +0.65%, +2.20%, and +2.13%, respectively. In July, the Euro Stoxx50, FTSE100, CAC 40, and DAX closed up +5.82%, +6.48%, +6.22%, and +3.58%, respectively. In 2013, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +6.88%, +13.0%, +11.5%, and +10.6%. In 2012, the indexes closed up +13.8%, +5.84%, +15.2%, and +29.1%, respectively.

2Q2013 SPX Earnings. Of 390 reporting companies, 287 or 73.6% surprised positively on earnings, with a +2.74% surprise average. Of reporting companies, 217 or 55.9% reported sales or revenues in excess of estimates. The average sales/revenue surprise is +0.44%.

Valuation. The SPX trades at 16.5x 2012 earnings ($103.41), 15.5x estimated 2013 earnings ($110.31), 14.0x estimated 2014 earnings ($122.37), and 12.7x estimated 2015 earnings ($135.12). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +6.67% and +10.9%, and +10.4%respectively.

Composite, index, and equity options. Options markets are neutral to bullish, unchanged from neutral to bullish the prior session. Composite options are bullish, index options are neutral, and equity options are neutral. The composite put/call ratio is 0.88, compared to 0.85 the prior day, and worse compared to its 5- and 10-period moving averages of 0.84 and 0.90, respectively. The index put/call ratio is 1.15, compared to 1.04 the prior day, and worse compared to its 5- and 10-period moving averages of 1.07 and 1.14, respectively. The equity put/call ratio closed the day at 0.76, compared to 0.76 the prior day, and worse compared to its 5- and 10-period moving averages of 0.76 and 0.82, respectively.

NYSE Volume, Breadth Indicators. Volume fell -14.6% to 681.53 million shares, from 798.38 million shares the prior day, 0.98x the 694.91 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led decliners by +60 (compared to +752 the prior day), or 1.04:1. Up volume was 1.05:1 down volume.

Distribution day count. Volumes fell on all the major exchanges. Since the current market uptrend commenced on July 11th, the distribution count is 2 SPX, 2 NYSE composite, and 1 Nasdaq.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.11860%, up from 0.11703% the prior day. USD 3-month LIBOR is 0.26540%, down from 0.26660% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 16.84 bps, up from 16.86 bps the prior day, and compares to the January 6th high of 50.050 bps. Euribor-OIS is 12.20 bps, down from 12.50 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 -9.00 bps, compared to -8.75 bps the prior day, up from a trough of -147.00 bps on December 14, 2011, and at the below a normal -10 bps and -40 bps range.

· Spanish 10-year debt yields are 4.57%, unchanged from 4.57% the prior day and up from the 4.039% May 3rd low. Italian 10-year debt yields are at 4.25%, unchanged from 4.25% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.65%, compared to 1.65% the prior day. Japanese 10-year debt yields are 0.78%, compared to 0.82% the prior day.

· The U.S. government overnight repo rate is 11 bps, up from 7 bps the prior day. The January 2, 2013, 45 bps rate was the highest since late 2008. The 0.00 bps low was on January 31, 2009.

· U.S. Treasury yields are higher, with 2- and 10-year maturities yielding 0.301% and 2.613%, respectively, compared to 0.297% and 2.596% Friday. The yield curve widened +1.3400 bps, with the 2- to 10-year spread at +2.312%, compared to 2.299% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.5484% on August 31, 2012, to a high of +2.3812% on August 1, 2013.

· The U.S. dollar is mixed, stronger compared to the euro and British pound, but weaker compared to the Japanese yen. The dollar trades at US$81.943, compared to a US$81.751 intraday low and US$82.451 the prior day, and mixed compared to its $82.451 50-day, US$82.640 100-day, and US$81.561 200-day averages. The euro trades at US$1.3264, compared to a US$1.3256 intraday low and US$1.3276 the prior day. The euro trades better compared to its US$1.3135 50-day and US$1.3058 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥98.48, compared to ¥99.94 the prior day. The yen trades better than its 50-day moving average ¥98.79, and better than its May 17th 103.21 closing low.

· Citigroup Economic Surprise Index worsened to +10.90, from +14.50 the prior day, its 2nd consecutive positive reading. The index is better compared to its respective +3.26 and -1.73 5-day and 10-day moving averages. The index signaled exhaustion on December 20th, and from 55.76 moved lower to -30.80 on January 30th. The index turned positive on February 25th and moved to a March 25th high of 30.20, but turned negative again on May 6th and fell to a low of -32.90 on June 10th. After a lag, the CESIUSD correlates with EPS revisions.

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

Volatility, Skew:

· The VIX closed at 11.98, down -7.42% from 12.94 at the prior close. The VIX is -10.8% below its 13.57 20-day moving average. Its 30-day high is 21.91. Its 30-day low is 11..98. The index's all-time closing low is 11.26 on June 30, 1993. The long-term average is 20.28.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 17.15, up +1.98% from 16.82 at the prior day's close. The V2X index trades -7.44% below its 18.53 20-day moving average, -30.8% below the 24.78 30-day high, and +2.14% above the 16.79 30-day low.

· The Hang Seng volatility index (VHSI) closed at 15.67, down -2.73% from 16.11 the prior day. The VHSI index trades -19.3% below its 19.41 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE skew closed at 116.89, up +1.59% from 115.06 at the prior day's close, and within a neutral (115-120) range. The recent low was 112.47 on May 25, 2013. Spikes in excess of 130 (as on February 15th and 18th and previously on September 21st, and March 12th, 15th, and 16th) correlate well with short-term market tops. The recent high closes were 130.46 on February 15th and 130.60 on September 21st. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

· At 10:00 July ISM non-manufacturing composite, with 53.1 survey and 52.2 prior.

· 2Q2013 mortgage delinquencies, with +7.25% prior.

· 2Q2013 mortgage foreclosures, with +3.55% prior.

Overseas Economic Reporting and News:

· Australia - July AiG services performance was 39.4, compared to 41.5 prior. June retail sales were unchanged, compared to +0.4% survey and +0.2% revised prior.

· China - July HSBC/Markit services PMI was 51.3, compared to 51.3 prior.

· Hong Kong - July HSBC/Markit PMI was 49.7, compared to 48.7 prior.

· Eurozone - July final PMI services was 49.8, compared to 49.6 survey and prior. July final PMI composite was 50.5, compared to 50.4 survey and prior.

· France - July final PMI services was 48.6, compared to 48.3 survey and prior.

· Germany - July final PMI services was 51.3, compared to 52.5 survey and prior.

· Italy - July PMI services was 48.7, compared to 46.5 survey and 45.8 prior.

· Spain - July PMI services was 48.5, compared to 48.1 survey.

· United Kingdom - July PMI services was 60.2, compared to 57.4 survey and 56.9 prior.

Company Ratings/News:

· None.

Friday. On lower, and below average volume, U.S. equity markets gapped lower at the open, fell to early session intraday lows, then improved and reversed higher late in the session, with the SPX and DJI ending at new record highs. The Nasdaq rose +0.38%, followed by the DJI, NYSE composite, and SPX, which rose +0.19%, +0.17%, and +0.16%, respectively. Market breadth was modestly positive, with gainers 1.04:1 losing stocks. Most SPX market segments closed higher. Leaders were consumer services, technology, and basic materials, which rose at least +0.46%. Financials rose +0.07%. Laggards were health care, which rose +0.07%, and utilities and oil and gas, which fell at least -0.13%.

NYSE volume fell -14.6% to 681.53 million shares, from 798.38 million shares the prior day and +0.98x the 694.91 million share 20-day moving average volume. U.S. 10-year yields fell -11.00 bps to 2.5960%, from 2.7060% at the prior close.

After the disappointing July employment report, futures indicated a lower open, and the SPX gapped lower and set an early 1700.68 intraday low. Support held above 1700 and the index improved to breakeven by mid-afternoon and then reversed higher in the final hour. The index closed at 1709.67, the intraday high, a new record close, and +0.16% above the prior day's close, which was itself a record. The index closed +59.1% above the 1074.77 October 4, 2011, intraday low.

The TRAN also gapped lower, but rallied back to breakeven by mid-morning, then weakened to the 6,625.67 intraday low by late morning. The TRAN traded around 6,650 resistance through the close. The index closed at 6,651.69, -0.28% below its August 1st 6,670.06 record close and failing to confirm the DJI's August 2nd record. On +10.4% higher and above average volume, the TRAN fell -0.28%, compared to the DJI's +0.19% gain. The TRAN closed +2.63% and +4.83% above its respective 20- and 50-day moving averages. The index ended +6.02% and +13.3% above its respective 100- and 200-day moving averages.

Market volatility fell. From its prior 12.94 close, the VIX opened at 12.70, set an early 12.74 intraday high, then eased through the session to end at 11.98, down -7.42%. The all-time closing low was 11.26, set June 30, 1993.

The broader market's technical factors were little changed. The SPX closed above its 5-, 10-, 20-, 50-, 100-, and 200-day moving averages. SPX relative strength (RSI) rose to 70.10, from 69.25 the prior day and moving above a neutral range. The CBOE put/call skew rose +1.59% to 116.89, from 115.06 the prior day, and within a neutral 115-120 range. Last week, the SPX, DJI, and NYSE composite closed up +1.07%, +0.64%, +2.12%, and +0.73%, respectively. The prior week, the SPX closed down -0.03%, while the DJI, Nasdaq, and NYSE composite closed up +0.10%, +0.71%, and +0.02%, respectively. In August, the SPX, DJI, Nasdaq, and NYSE composite are up +1.42%, +1.02%, +1.74%, and +1.37%, respectively. In July, the SPX, DJI, Nasdaq, and NYSE composite closed up +4.95%, +3.96%, +6.56%, and 4.90%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +19.9%, +19.5%, +22.2%, +14.8%, respectively. All closed at least +5.91% higher in 2012. Immediate SPX resistance is 1713. Immediate support is 1695, then 1683.

KBW Bank Index (BKX). On lower, and below average volume, the BKX closed off -0.13% to 66.95, from 67.04 at the prior day's close. The index gapped lower and set an early 66.55 intraday low, but rallied back to 66.90 by mid-morning, where it found resistance through the session's remainder. Volume fell -16.2% to 43.546 million shares, from 51.950 million shares the prior day, or 0.79:1x the 54.871 million share 15-day moving average.

Large cap banks outperformed the regional banks' performance, as the KBW regional banking index (KRX) fell -0.195.

Last week, the BKX rose +1.47%, compared to a loss of -0.11% the prior week. In August, the BKX is up +1.79%. In July, the BKX closed up +7.10%. For the year, the BKX is up +30.6%, better than the SPX's +19.9% rise. In 2012, the index rose +18.9%, compared to a +13.4% rise in the SPX.

The BKX is now +13.1% better than the June 24th 59.19 close, its worst since May 13th. The index crossed above 50 on December 17th and 60 on May 31st. The BKX closed +105.6% 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 +59.1% in the same period.

The BKX index closed -44.7% below its February 20, 2007, record 121.06 high. The BKX is up +259.6% from its 18.62 March 6, 2009, closing low.

Technical indicators were little changed. improved. The index closed above its 5-, 10-, 20-, 50-, 100-, and 200-day moving averages. The index closed +2.27% and +6.45% above its respective 20- and 50-day moving averages. The index closed +11.6% and +19.8% above its respective 100- and 200-day moving averages. The index has closed above its 100-day moving average since August 7, 2012. The 20-day moving average rose +15 bps. The 50-day moving average rose +12 bps. Its 100-day moving average rose +10 bps, and the 200-day moving average rose +8 bps. The 20-day closed (by +2.57 points) above the 50-day, and the gap widened +3 bps. The 50-day moving average closed (by +7.00 points) above the 200-day moving average, and the gap rose +1 bp. The 100-day moving average closed (by +4.09 points) above the 200-day moving average since March 19th, and the gap widened +2 bps.

The directional movement indicator narrowed to +15.812, from +16.498 the prior day, its 25th consecutive positive reading. Relative strength fell to 68.10, from 69.03 the prior day, near the top of a neutral 30-70 range. Next resistance is 67.11; next support is at 66.67.

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

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 July, the index closed at 1685.73, up +4.95% from 1606.28 the prior month and 1569.19 four months prior. The May 2013 sell countdown progressed to 3. The index closed -5.99% 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 and generated a 1525.36 risk level. In the week ending August 2nd, the index closed up +1.07% at 1709.67, from 1691.65 the prior week and 16311.89 close four weeks prior. The July 12th sell setup progressed to 4. The March 8th sell countdown completed. The index closed +12.1% above the 1525.36 risk level.

On a daily basis, the SPX perfected a sell setup on March 13th, with a 1552.52 close. On April 29th, the March 13th sell countdown. On May 2nd, a bullish price flip initiated a follow-on sell setup, and on May 14th, the sell setup perfected and initiated a sell countdown, which completed on July 8th. The completion set a risk level of 1725.50, based on the 38.32 point May 22nd trading range and 1,687.18 intraday high. On June 26th, a bullish price flip initiated another follow-on sell setup, and this setup perfected on July 9th and initiated a sell countdown. On August 1st, a bullish price flip initiated a sell setup. On Friday, the SPX rose +0.16% to 1709.67, from 1706.87 the prior day and 1685.33 4 days prior. The August 1st sell setup progressed to 2. The July 9th sell countdown progressed to 11. The index closed -0.92% below the 1725.50 risk level.

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 July, the index closed at 65.77, up +7.10% from 61.41 at June-end and 56.28 four months prior. The May 2013 sell countdown progressed to 3.

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 August 2nd, the BKX closed at 66.95, up +1.47% from 65.98 the prior week and 63.94 four weeks prior. The July 5th sell setup progressed to 5. The index closed -1.96% below the 68.29 risk level.

On a daily basis, on December 17th, the 50.62 close above the November 1st 50.45 close and above the prior two days' close completed a sell countdown and initiated a sell setup, which perfected on February 13th. On March 14th, the sell setup closed above 57.22 and perfected. On March 19th, a bearish price flip initiated a buy setup with a 56.84 close. On April 1st, the buy setup perfected. On May 3rd, a bullish price flip initiated a sell setup. On May 15th, the sell setup perfected. On June 26th, a bullish price flip initiated a sell setup, which perfected on July 9th and initiated a sell countdown. On July 2nd, the index completed its May 15th sell countdown, which set a 64.06 risk level, based on the May 30th 1.14 point high/low range and 62.92 close. On July 24th, the July 12th sell setup perfected, but did not initiate a sell countdown. Friday, the index closed at 66.95, down -0.13% from 67.04 the prior day and 65.39 four days prior. The August 1st sell setup progressed to 2. The July 9th sell countdown progressed to 8. The index closed +4.51% above its 64.06 risk level.

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 July at 13.45, down -20.2% from 16.86 at the end of June and 12.70 at the end of March. The May 2013 sell setup progressed to 3.

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 August 2nd, the VIX fell -5.82% to 11.98, from 12.72 the prior week, and 14.89 4 weeks prior. The July 5th sell setup progressed to 5. The index closed +30.6% above the risk level.

On a daily basis, on May 20th a bullish flip initiated a sell setup, which perfected on May 31st and initiated a sell countdown. On June 26th, a bearish flip initiated a buy countdown, which perfected on July 9th, when a sell countdown was initiated. Friday, the VIX closed at 11.98, down -7.42% from 12.94 at the prior close and 13.39 at the 4 days' prior close. The bearish flip canceled the July 25th 6 sell setup and initiated a buy setup. The July 9th buy countdown is progressed to 9. The VIX closed +15.1% above the 10.41 risk level.

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 July at 2.5762%, compared to 2.4857% the prior month and 1.8487% 4 months prior. The May 2013 sell setup progressed to 3.

On a weekly basis, on December 7th, a bullish rate flip (at 1.6215%) initiated a sell setup, which perfected on February 1st. The perfection initiated a sell setup. Subsequent trends were weak until a May 3rd bullish rate flip (at 1.7382%) initiated a sell setup, which perfected on June 28th, when the rate ended at 2.4857%. For the week ended August 2nd, the rate ended at 2.5960%, down from 2.5624% the prior Friday and 2.7391% four weeks prior. The bearish rate flip initiated a sell setup. The February 1st 9 sell countdown is unchanged since July 5th.

On a daily basis, after a late October 2012 intraday spike to 1.861%, the trend was lower until November 16th, when the rate closed at 1.580%. A bullish price flip on December 7th initiated a sell setup. On December 19th, the rate perfected its sell setup and initiated a sell countdown. 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 July 11th, a bearish rate flip initiated a buy setup. On Friday, the rate ended at 2.5960%, down 11.00 bps from 2.7060% the prior day and 2.6023% four days prior. The bearish price flip canceled the July 23rd 8 sell setup and initiated a buy setup. The rate closed -10.9 bps below the 2.8150% risk level.

EUR, USD 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 July at 1.3302, up +0.45% from 1.3010 the prior month and 1.2815 4 months prior. The June 2013 sell setup progressed to 2. The 9 buy countdown progressed is unchanged since March.

On a weekly basis, the cross perfected a buy setup on January 6th, followed by another buy setup and completed countdown on June 1, 2012, when the cross closed at 1.2434. The cross completed a buy countdown on July 27th, and set a 1.1964 risk level. The index initiated an sell setup the week ended August 3rd, when it closed at 1.2387, and the setup perfected on September 28, with a 1.2860 close. On January 18th, the index completed a sell setup at 1.336. The week of August 2nd, the index fell -0.02% to end at 1.3276, from 1.3279 the prior week and 1.2829 4 weeks prior. The July 19th sell setup progressed to 3. The sell countdown associated with the September 28th perfection is a deferred 13, unchanged since June 7th. The cross closed +11.0% above the 1.1964 risk level.

On a daily basis, on February 14th, a bearish price flip initiated a sell setup, which subsequently perfected on February 26th. On April 4th, a bullish price flip initiated a sell setup, which perfected on April 12th. On June 7th, the sell countdown associated with the April 12th perfection completed. The completion set a 1.3537 risk level, based on the June 6th 0.0231 trading range and 1.3306 intraday high. On June 11th, the May 29th sell setup perfected and initiated a sell countdown. On July 2nd, the June 20th buy setup perfected and initiated a buy countdown. On July 10th, a bullish price flip initiated a sell setup, which perfected on July 22nd. The perfection canceled the July 2nd buy countdown. With Friday's +0.52% higher close, the EURUSD cross ended at 1.3276, up from 1.3207 the prior day and 1.3262 four days prior. The bullish price flip canceled the August 1st 1 buy setup and initiated a sell setup. The July 22nd 5 sell countdown is unchanged since July 31st. The cross closed -2.44% below the 1.3537 risk level.

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 July, the index closed at 2,753.97, up +5.82% from 2,602.59 the prior month and 2,624.02 four months prior. The bullish price flip canceled a 1 buy setup and initiated a sell setup. The May 2013 sell countdown is unchanged since May 2013.

On a weekly basis, a bullish price flip the week of November 23rd (2,557.03 close) initiated a sell setup that perfected on January 18th at 2,709.59, up +5.97%. The sell countdown associated with the August 10th perfection also completed on January 18th, when the index closed at 2,709.59, up +24.2% over the June 15th bullish price flip. The completion set a 2,785.45 risk level. Since January 18th, the subsequent trend was lower, until a bullish price flip in the week ending July 12th. In the week ended August 2nd, the index rose +2.58% to 2,811.00, from 2,741.96 the prior week and 2,596.01 at the 4 weeks' prior close. The July 12th sell setup progressed to 4. The sell countdown stemming from the January 18th perfection progressed to 11. The index closed +1.10% above the risk level.

On a daily basis, on January 3rd, the index completed the associated countdown (with a 2,701.22 close) and set a 2,786.57 risk level, based on the prior day's 2,711.25 high and 51.46 intraday range. On March 14th, the March 4th sell setup perfected. On March 18th, a bearish price flip initiated a buy setup, which perfected on March 28th, and initiated a buy countdown. On April 23rd, a bullish price flip initiated a sell countdown, which perfected on May 3rd. On June 12th, the May 31st buy setup perfected and initiated a buy countdown. On July 8th, a bullish price flip initiated a sell setup, which perfected on July 18th and initiated a sell countdown. Friday, the index rose +0.08% to 2,811.00, from 2,808.64 the prior day and 2,741.73 at the prior 4 days' close. The July 18th sell countdown progressed to 8.

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. The index ended July at 13668.32, down -0.07% from 13,677.32 the prior month and 12,397.91 four months prior. The November 2012 sell setup progressed to 9 and perfected.

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 August 2nd, the index closed up +2.38% at 14,466.16, from 14,129.98 the prior week and 14,309.97 four weeks' prior. The July 5th sell setup progressed to 5. The index closed -1.22% below the risk level.

On a daily basis, on March 27th, a bearish price flip initiated a buy setup, which perfected on April 15th. On May 7th, a bullish price flip initiated a sell setup. On May 17th, the sell setup perfected; also, the sell countdown associated with the April 26th perfection completed. The completion set a 15,412.34 risk level, which is based on the May 16th 15,155.72 intraday high and 276.21 point range. On June 4th, the May 23rd buy setup perfected and initiated a buy countdown. On July 10th, the June 28th sell setup perfected, cancelled the June 4th 7 buy countdown, and initiated a sell countdown. On August 2nd, a bullish price flip initiated a sell setup. Monday, the index fell -1.44% to 14,258.04, from 14,466.16 the prior day and 13,869.82 four days prior. The August 2nd sell setup progressed to 2. The July 10th sell countdown progressed to 6. The index closed -7.49% below the 15,412.34 risk level.

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. The index ended July at 21,883.66, up +5.19% from 20,803.29 the prior month and 22,299.63 four months prior. The May 2013 buy setup progressed to 3. The index closed -19.5% 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 August 2nd, the index closed at 22,190.97, up +1.01% from 21,968.95 the prior week and 20,854.67 four weeks prior. The July 12th sell setup progressed to 3. The April 5th 6 buy countdown is unchanged since June 21st. The index closed -0.74% below 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 Monday, the index rose +0.14% to 22,222.01, from 22,190.97 the prior day and 21,953.96 four days prior. The August 1st sell setup progressed to 3. The index closed +17.8% above the 18,860.42 risk level.

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 July, the index closed at 1,993.80, up +0.74% from 1,979.21 the prior month and 2,236.62 four months prior. The April 30th buy setup progressed to 4. The January 2012 buy countdown progressed to 9.

On a weekly basis, the SHCOMP last perfected a buy setup on April 8, 2011. The index has subsequently trended lower, with a downward perfected setup on September 23, 2011, and January 6, 2012 countdown completion, when it closed at 2,163.40. The index rallied to a high of 2,476.22 during the week ending March 16th, but without perfecting an upward setup. On July 13th, the index perfected a buy setup. In subsequent weeks, it traded below the sales exhaustion target of 2148.45 to a 1980.12 close on November 30th, when the buy countdown reached 11. On December 14th, a bullish price flip initiated a sell setup at 2,059.47. That setup perfected on February 8th, with a 2,432.40 close, up +18.1%. On August 2nd, the index closed the week up +0.92% at 2,029.42, from 2,010.85 the prior week and 2,007.20 four weeks prior. The July 26th sell setup progressed to 2.

On a daily basis, On December 4th, a bullish price flip initiated a sell setup. On January 14th, the sell setup that began on December 25th perfected; also, the bullish price flip initiated a follow-on sell setup. On March 26th, a bearish price flip initiated a buy setup, which perfected on April 9th. On June 3rd, a bearish price flip initiated a buy setup, which perfected on June 19th, and initiated a buy countdown. On June 7th, the April 9th buy countdown completed and set a 2,142.63 buy risk level. On July 29th, a bullish price flip initiated a sell setup. On July 30th, the June 19th buy countdown completed and set a 1,735.74 risk level, based on the June 25th 113.91 point trading range and 1,849.65 intraday low. Monday, the index rose +1.04% to 2,050.48, from 2,029.42 at the prior close and 1,990.06 4 days prior. The August 1st sell setup progressed to 3. The index closed +18.1% above the July 30th risk level.