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U.S. Futures Higher Pre FOMC; Tokyo And Europe Equities Rally

This morning. Today, U.S. equity futures suggest moderate gains, despite uncertainty pertaining to this afternoon's 2:00 release of the FOMC meeting report at and Chairman Bernanke's final news conference immediately following. In Asia, equity markets closed mixed, but with particular strength in Tokyo. In Europe, where relative strength indexes last week suggested oversold conditions, equities are rallying strongly. Thursday's Nikkei 225 March 2014 (NKH4) equity futures are up +0.321%. Commentary focuses on today's FOMC meeting, and currency and commodity price developments.

The U.S. equity market trend remains "uptrend under pressure". The uptrend commenced on September 8th.

Tuesday, U.S. equity markets closed modestly lower. The NYSE composite fell -0.36%, followed by the S&P 500 (SPX), Nasdaq, and DJ Industrials (DJI), which fell -0.31%, -0.14%, and -0.06%, respectively. The DJI closed -1.38% off its record 16,097.33 November 27th close. The DJ Transport (TRAN) index closed down -0.44%, -1.87% off its recent high. Volumes fell.

Trading desks reported another quiet and slow session. Skeptics continue to hope for a significant pullback, but the more anticipated scenario is weakness leading up to the FOMC meeting, followed by a strong recovery rally. With SPX equities trading at a relatively full 16.0x 2013 earnings multiple, attention focuses on 2014 earnings and valuations (16.0x times survey $122.34 2014 SPX earnings suggests a 19763.09 SPX level next year, a +10.2% rise).

Technicals were little changed. Most SPX market segments closed lower. Market breadth was negative, and up volume lagged down volume. Volatility rose. Treasury bond markets weakened. The U.S. Treasury 10-year bond yield fell -4.20 bps to 2.8354%, compared to 2.8784% at the prior close.

This morning, 10-year U.S. Treasury yields are up +3.39 bps to 2.8693%, compared to the prior close. Spanish and Italian 10-year debt yields are 4.09% and 4.05%, respectively, compared to 4.11% and 4.09% the prior day. The U.S. dollar is modestly mixed. U.S. options markets are unchanged at neutral to bullish, compared to neutral to bullish the prior day. The CBOE skew rose +0.42% to 128.75, compared to 128.21 the prior day, well above a neutral range (115-120).

In pre-market futures trading, December SPX equity futures (SPZ3) price near the middle of a 1772-1780 trading range. After a fair value adjustment of +0.45 points, SPX equity futures price at 1776.50, up +3.05 points. The SPX opens -0.72% below and +0.86% above its respective 20- and 50-day moving averages, and +3.39% and +6.85% above its respective 100- and 200-day moving averages. Initial resistance is 1786.16. Initial support is 1776.44, then 1771.89.

In Asia, equity markets closed mixed, though the Nikkei 225 (NYSEARCA:NKY) rallied strongly, up +2.02% and near its late intraday high. The Hang Seng (HSI) closed up +0.32%, and Shanghai Composite (SHCOMP) closed down -0.13%. Indexes are at least -0.47% lower in December. All closed higher in November. The NKY and HSI are bull markets. Today's volumes are unavailable.

Commentary focused on the FOMC stimulus decision optimism.

Regional relative strength indexes (RSI) are in a neutral 30-70 range. The NKY RSI improved to 57.89, compared to 51.25 the prior day. The index's RSI is down from an overbought 70.20 on December 3rd. The HSI RSI ended at 41.61, compared to 38.94 the prior day. The SHCOMP's RSI eased to 37.94, down from 38.52 the prior session.

This week, the NKY is up +1.20%, while the HSI and SHCOMP are down -0.44% and -2.18%, respectively. Last week, the NKY rose +0.67%, while the HSI and SHCOMP closed off -2.09% and -1.83%, respectively. In December, the NKY is down -0.47%. The HSI and SHCOMP are down -3.09% and -3.25%, respectively. In November, the NKY closed down -2.31%. The HSI closed down -0.58%. The SHCOMP closed up +0.75%.

In 2013, the NKY is up +50.0%. The HSI is up +2.15%. The SHCOMP is down -5.33%. In 2012, the NKY rose +1.37%. The HSI rose +22.9%. The SHCOMP rose +3.17%.

In Japan, the NKY closed at 15,587.80, compared to 15,278.63 the prior day, and -0.89% below its recent November 29th 15,727.12 multi-year high. The index opened higher and rallied quickly to 15,450, then trended higher through the session's remainder to a late 1,588.42 intraday high. The index closed +0.88% and +5.00% above its respective 20- and 50-day moving averages, and +7.94% and +11.7% above its respective 100- and 200-day moving averages. All market segments closed at least +0.93% higher. Leaders were financials, industrials, and consumer services, which rose at least +2.24%. Laggards were health care, technology, and oil and gas.

In China, the HSI closed at 23,143.82, compared to 23,069.23 at the prior close. The index closed -3.21% below its recent December 3rd 23,910.47 high, but +27.3% above its 18,185.59 June 4, 2012 low. The index fell to an early 22,993.54 intraday low, but quickly reversed higher and to a mid-morning 23,240.71 intraday high. The index eased through the close to narrow the day's gains. Most market segments closed higher. Leaders were industrials, basic materials, and consumer goods, which rose at least +0.70%. Financials gained +0.30%. Laggards were technology, which rose +0.24%, and telecommunications and consumer services, which fell at least -0.26%.

In Shanghai, the SHCOMP closed at 2,148.29, compared to 2,151.08 at the prior close and +10.2% above the 1,950.01 June 27th closing low. The index fell to 2,144.00 in early trading, reversed to a late morning 2,156.54 intraday high, but then eased lower in early afternoon to a late 2,142.90 intraday low. Most market segments closed lower. Leaders were health care, basic materials, and oil and gas, which rose at least +0.02%. Financials fell -0.02%. Laggards were industrials, consumer goods, and telecommunications, which fell at least -0.44%.

In Europe, the major equity indexes are rallying strong. The Euro Stoxx50 (SX5E), FTSE 100, CAC 40, and DAX are up +1.04%, +0.27%, +0.89%, and +1.05%, respectively. The Spanish IBEX 35 is up +1.03%. The Italian FTSE MIB is up +1.09%. All are at least +0.95% higher this week. All closed at least -1.69% lower last week and are at least -2.25% lower in December. All closed mixed in November, but higher in October and September.

Market commentary focuses on this week's FOMC meeting, and currency and commodities price developments.

Today, the SX5E currently trades -4.09% below its 3,092.42 November 28th post-2008 high close, but -43.5% 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) improved to 46.14, from 40.19 yesterday, but much better than last Friday's oversold 32.71, near the bottom of a neutral 30-70 range. Its lowest recent level was 25.77 on June 24th, which marked the year's 2,494.54 closing low.

From its 2,941.76 prior day close, the SX5E gapped higher to open above 2,955 and now trades at it 2,974.18 intraday high. All market segments are at least +0.67% higher. Leaders are telecommunications, financials, and utilities, which are up at least +1.37%. Laggards are industrials, consumer services, and oil and gas.

This week the Euro Stoxx50, FTSE 100, and CAC 40 are up +1.50%, +0.95%, +0.83%, and +1.82%, respectively. Last week, the Euro Stoxx50, FTSE 100, and CAC 40 closed down -1.95%, -1.71%, -1.69%, and -1.81%, respectively. In December, the Euro Stoxx 50, FTSE 100, CAC 40, and DAX are down -3.91%, -2.25%, -4.70%, and -2.50%, respectively. In November, the Euro Stoxx 50 and DAX closed up +1.13% and +4.41%, respectively. The FTSE 100 and CAC 40 closed down -1.20% and -0.11%, respectively. In 2013, the indexes are up +12.5%, +10.2%, +12.4%, and +20.5%, respectively, compared to +13.8%, +5.84%, +15.2%, and +29.1% the prior year.

4Q2013 SPX Earnings. Of 3 (of 499) reporting companies, 2 or 66.7% surprised positively on earnings, with an average -3.25% surprise average. Of reporting companies, 1 or 33.3% reported sales or revenues above estimates. The average sales/revenue surprise is -1.17%. Consumer discretionary leads with +0.33% EPS surprise, but a -0.37% revenue miss.

Valuation. The SPX trades at 17.2x 2012 adjusted EPS ($103.41), 16.0x estimated 2013 earnings ($111.00), 14.6x estimated 2014 earnings ($122.34), and 13.2x estimated 2015 earnings ($135.21). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, and 2015 earnings to grow +7.34% and +10.2%, and +10.5%, respectively.

The BKX trades at 15.4x 2012 adjusted EPS ($4.32), 12.8x estimated 2013 earnings ($5.22), 11.8x estimated 2014 earnings ($5.65), and 10.8x 2015 earnings ($6.18). Analysts expect 2013, 2014, and 2015 EPS will grow +20.9%, +8.22%, and +9.36%, 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 neutral, index options are bullish, and equity options are neutral. The composite put/call ratio is 0.87, compared to 0.79 the prior day, and worse than 5- and 10-period moving averages of 0.83 and 0.84, respectively. The index put/call ratio is 1.03, compared to 0.92 the prior day, and worse than its 5- and 10-period moving averages of 0.98 and 1.08, respectively. The equity put/call ratio closed the day at 0.79, compared to 0.73 the prior day, and worse than its 5- and 10-period moving averages of 0.76 and 0.74, respectively.

NYSE Volume, Breadth Indicators. Volume fell -1.98% to 667.69 million shares, compared to 681.15 million shares the prior day, 1.00x the 668.77 million share 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks led by -251 (compared to +1,019 the prior day), or 0.85:1. Up volume was 0.70:1 down volume.

Distribution day count and market trend. The market trend is "uptrend under pressure". The uptrend commenced on September 9th, when the SPX opened at 1655.17, with a subsequent gain of +7.27%. The distribution count is 10 for the DJI, and 9 on the SPX, NYSE composite, and Nasdaq.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.10210%, compared to 0.10180% the prior day. USD 3-month LIBOR is 0.24510%, up from 0.24435% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 15.810 bps, compared to 14.835 bps the prior day, and compares to the recent June 12, 2012 46.785 bps high. Euribor-OIS is 12.500 bps, up from 10.800 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 -1.011 bps, compared to +0.363 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 4.11%, up from 4.09% the prior day. Italian 10-year debt yields are at 4.05%, up from 4.04% the prior day, and up from the 3.822% May 3rd low. German 10-year debt yields are 1.82%, compared to 1.83% the prior day. Japanese 10-year debt yields are 0.67%, compared to 0.67% the prior day.

· The U.S. government overnight repo rate is +11 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 lower, with 2- and 10-year maturities yielding 0.336% and 2.847%, respectively, compared to 0.318% and 2.835% Tuesday. The yield curve flattened -0.600 bps, with the 2- to 10-year spread at +2.511%, compared to 2.517% 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 +2.548% on December 16, 2013.

· The U.S. dollar is modestly mixed, slightly stronger compared to the British pound, but weaker compared to the euro and Japanese yen. The dollar trades at US$80.113 compared to a US$80.129 intraday high and US$80.061 the prior day, and worse compared to its $80.353 50-day, US$80.759 100-day, and US$81.706 200-day averages. The euro trades at US$1.3750, compared to a US$1.3778 intraday high and US$1.3768 the prior day. The euro trades better compared to its US$1.3607 50-day and US$1.3489 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥102.98, compared to ¥102.67 the prior day. The yen trades worse than its 50-day moving average ¥100.04, but better than its December 12th 103.38 closing low, its weakest multi-year closing low.

· Citigroup Economic Surprise Index rose to +45.20, compared to +35.40 the prior day. The index is better compared to its respective +35.70 5-day and +29.88 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 a recent high of 53.30 on October 1st, but subsequently fell on dollar weakness to -2.10 on October 31st. It has subsequently strengthened. 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 mixed agriculture prices.

Volatility, Skew:

· The CBOE SPX Volatility Index (VIX) closed at 16.21, up +1.21% from 16.03 at the prior close. The VIX is +14.7% above its 14.14 20-day moving average. Its 30-day high is 16.67. 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 20.14.

· At mid-session, the Euro Stoxx 50 volatility index (V2X) is 16.93, down -6.98% from 18.18 at the prior day's close. The V2X index trades +4.16% above its 16.25 20-day moving average, -11.1% below the 19.04 30-day high, and +22.7% above the 13.79 30-day low.

· The Hang Seng volatility index (VHSI) closed at 16.13, up +1.32% from 15.92 the prior day. The VHSI index trades +0.39% above its 16.07 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE SKEW (SKEW) remains elevated at 128.75, up +0.42% from at the prior day's close, and well above a neutral (115-120) range. The recent high was 137.06 on November 18th. Its recent low was 112.47 on May 25, 2013. Spikes in excess of 130 (as on November 14, 15, 18, 19, and 20 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 week's MBA mortgage applications fell -5.5%, compared to +1.0% the prior week.

· At 8:30, November MoM housing starts rose

· November MoM building permits fell %, compared to -4.7% survey and +6.7% revised prior.

Overseas Economic Reporting and News:

· Australia - November MoM Westpac leading index fell -0.1%, compared to +0.1% prior.

· Eurozone - October MoM construction output fell -1.2%, compared to -0.5% revised prior. YoY construction output fell -2.4%, compared to -0.7% revised prior.

· Germany - December IFO business climate is 109.5, compared to 109.5 survey and 19.3 prior.

· United Kingdom - October ILO unemployment fell to 7.4%, compared to 7.6% survey and prior.

Company Ratings/News:
 

  • None.


Tuesday's Trade. On lower and below average volume, U.S. equity markets closed modestly lower. The NYSE composite fell -0.36%, followed by the SPX, Nasdaq, and the DJI, which closed down -0.31%, -0.14%, and -0.06%, respectively. The TRAN closed down -0.44%.

The U.S. equity market trend remains "uptrend under pressure". The uptrend commenced on September 8th.

Market breadth was negative, with gainers 0.85:1 losing stocks. Most SPX market segments closed lower. Leaders were basic materials and industrials, which rose at least +0.02%, and technology, which fell -0.04%. Financials fell -0.45%. Laggards were consumer services, oil and gas, and telecommunications, which fell at least -0.51%.

NYSE volume fell -1.98% to 667.69 million shares, compared to 681.15 million shares the prior day, 1.00x the 668.77 million share 20-day moving average volume. On the day, bond markets traded narrowly through the morning session, but strengthen in late afternoon. The U.S. 10-year yield opened at 2.88784%, rose to a 2.8830% by early afternoon, then fell to 2.8354% at the close, down -4.30 bps compared to the prior close.

From its prior day 1786.54 close, SPX futures suggested modest gains, but the index opened lower, traded to a late morning 1777.05 intraday low. The index strengthened in the afternoon, but a mid-afternoon rally failed at 1785, and the index closed at 1781.00, -1.90% below its December 9th record 1808.37 close. The index closed +65.7% above the 1074.77 October 4, 2011, intraday low.

The DJ Transportation index (TRAN) distributed and closed at 7,119.53, down -0.44% compared to the DJI's -0.06% loss. The TRAN ended -1.87% below its November 27th record 7,255.00 closing high, which confirmed the DJI record 16,097.33 close that same day. The index traded briefly higher at the open, but immediately tracked lower to a late morning 7,100.66 intraday low. A mid-afternoon rally stalled at 7,140. Volume rose +22.0% to 1.22:1 average 15-day volume. The TRAN closed -0.65% below and +1.40% above its respective 20- and 50-day moving averages, and +5.30% and +9.40% above its respective 100- and 200-day moving averages.

Market volatility rose, as the VIX ended up +1.12% at 16.21, compared to 16.03 at the prior close. The VIX opened higher and moved to a late morning 16.67 intraday high, then trended lower to a mid-afternoon 15.81 intraday low. The index eased higher in late session. The VIX closed +14.7% above the 14.14 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 again closed above its 5-day moving average, but remains below its 10- and 20-day moving averages. SPX relative strength (RSI) worsened to 48.74, compared to 51.38 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 rose +0.42% to 128.75, compared to 128.21 the prior day, above a neutral 115-120 range, but below 130, which correlates well with short-term market tops.

This week, the SPX, DJI, Nasdaq, and NYSE composite are up +0.32%, +0.76%, +0.57%, and +0.34%, respectively. Last week, the SPX, DJI, Nasdaq, and NYSE composite closed down -1.65%, -1.65%, -1.51%, and -1.74%, respectively. In December, the SPX, DJI, Nasdaq, and NYSE composite are down -1.37%, -1.31%, -0.89%, and -1.91%, respectively. In November, the SPX, DJI, Nasdaq, and NYSE composite closed up +2.80%, +3.48%, +3.58%, and +1.73%, respectively.

In 2013, the SPX, DJI, Nasdaq, and NYSE composite are up +24.9%, +21.2%, +33.3%, +18.3%, respectively. All closed at least +5.91% higher in 2012.

KBW Bank Index (BKX). On lower, but above average volume, the BKX closed at 66.58, down -0.79% from 67.11 at the prior day's close. The index moved lower at the open and slipped to a mid-morning 66.41 intraday low, then moved narrowly higher through the close. Volume fell -5.13% to 46.758 million shares, compared to 49.285 million shares the prior day, 1.003:1 the 47.264 million share 15-day moving average.

Large cap banks underperformed the regional banks, as the KBW regional banking index (KRX) fell -0.69%.

This week, the BKX is down -0.06%. Last week, the BKX closed down -1.195%, compared to a loss of -0.53% the prior week. In December, the BKX is down -1.77%. In November, the BKX closed up +5.54%, compared to October, when the BKX closed up +3.16%. For the year, the BKX is up +29.8%, better than the SPX's +25.3% rise. In 2012, the index rose +18.1%, compared to a +13.4% rise in the SPX.

The BKX is now +12.5% better than the June 24th 59.19 close, its worst since May 13th, but -1.90% off its recent November 26th post-2008 high close. The index crossed above 50 on December 17, 2012, and 60 on May 15, 2013. The BKX closed +104.5% 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 +66.2% in the same period.

The BKX index closed -45.0% below its February 20, 2007, record 121.06 high. The BKX is up +257.6% from its 18.62 March 6, 2009, closing low.

Technical indicators worsened, as the index surrendered its 5- and 10-day moving averages. The index closed -0.89% below and +1.43% above its respective 20- and 50-day moving averages. The index closed +2.71% and +7.11% above its respective 100- and 200-day moving averages. The 20-day moving average rose +2 bps to 67.18. The 65.64 50-day moving average rose +9 bps. Its 100-day moving average rose was unchanged at 64.82, and the 200-day moving average rose +6 bps to 62.16. The 20-day closed (by +1.53 points) below the 50-day, and the gap narrowed -8 bps. The 50-day moving average closed (by +3.49 points) above the 200-day moving average, and the gap widened +4 bps. The 100-day moving average closed (by +2.66 points) above the 200-day moving average, and the gap narrowed -6 bps.

The directional movement indicator narrowed to -1.541, compared to -4.387 the prior day, its 4th consecutive negative reading. Relative strength improved to 49.89, compared to 54.78 the prior day, in the middle of a neutral range, down from an overbought 72.62 on November 26th, but up from an oversold 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 66.96; next support is at 66.31.

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 November, the index closed up +2.80% at 1805.81, compared to 1756.54 the prior month and 1685.96 four months prior. The May 2013 sell countdown progressed to 6. The index closed -0.61% 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. 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 December 13th, the index rose -0.04% to 1805.09, compare to 1805.81 the prior week and its 1770.61 close four weeks prior. The bearish price flip initiated a buy setup. The November 8th 5 sell countdown was unchanged. The index closed -2.62% 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. On Tuesday, the SPX fell -0.31% to 1781.00, compared to 1786.54 the prior day and 1782.22 4 days prior. The December 11th buy setup progressed to 5. The index closed -2.31% below 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 November, the index closed up +5.54% at 67.78, compared to 64.22 at October-end and 65.77 four months prior. The May 2013 sell countdown progressed o 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. For the week ending December 13th, the BKX closed down -1.19% at 66.62, compared to 67.42 the prior week and 66.29 four weeks prior. The October 18th sell setup progressed to 9, but did not perfect. The index closed -2.45% 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 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. Tuesday, the index fell -0.79% to 66.58, compared to 67.11 the prior day and 66.48 four days prior. The index closed -3.66% below the 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 November down -0.36% at 13.70, compared to 13.75 at the end of October and 13.45 at the end of July. The bullish index flip canceled a 1 buy setup and initiated a sell 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 December 13th, the VIX rose +14.3% to 15.76, compared to 13.79 the prior week, and 12.19 4 weeks prior. The November 29th sell setup progressed to 3. The index closed +71.9% 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. On December 11th, a bearish price flip initiated a buy setup. Tuesday, the VIX rose +1.12% to 16.21, compared to 16.03 the prior day and 15.42 at the 4 days' prior close. The December 11th sell setup progressed to 5. The October 25th 12 buy countdown is unchanged since December 9. The VIX closed +44.2% 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 November 2013 up +19.03 bps at 2.7445%, compared to 2.5542% the prior month and 2.5762% 4 months prior. The May 2013 sell setup progressed to 7.

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 December 13th, the rate rose +0.93 bps to 2.8646%, compared to 2.8553% the prior Friday and 2.7033% four weeks prior. The November 8th sell setup progressed to 6. The June 28th sell countdown progressed to 9. The rate closed -36.14 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 and initiated a buy countdown. On Tuesday, the rate fell -4.30 bps to 2.8354%, compared to 2.8784% the prior day and 2.8535% four days prior. The bearish rate flip initiated a buy setup. The September 24th buy countdown is deferred 13 since November 27th. The rate closed +3.23 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 November up +0.05% at 1.3591, compared to 1.3584 the prior month and 1.3302 4 months prior. The July 2013 sell setup progressed to 5. 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 December 6th, the index rose +0.97% to end at 1.3496, compared to 1.33367 the prior week and 1.3687 4 weeks prior. The November 29th sell setup progressed to 4. The cross closed -1.98% 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 +0.05% higher close, the EURUSD cross ended at 1.3768, compared to 1.3761 the prior day and 1.3786 four days prior. The bearish price flip canceled the December 5th 7 sell setup and initiated a buy setup. The November 8th 4 buy countdown is unchanged since December 2nd. The cross closed +1.38% 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 November, the index closed up +1.13% at 3,086.64, compared to 3,052.14 the prior month and 2,753.97 four months prior. The July 31st sell setup progressed to 5. The May 2013 sell countdown progressed to 4.

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 December 13th, the index fell -1.69% to 2,921.92, compared to 2,979.94 the prior week and 3,054.53 at the 4 weeks' prior close. The December 6th buy setup progressed to 2. The November 11th 1 sell countdown is unchanged since November 29. The index closed +0.43% 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. Tuesday, the index fell -1.24% to 2,941.76, compared to 2,978.77 the prior day and 2,947.31 at the prior 4 days' close. The December 13th 1 buy countdown in unchanged since December 13. The index closed -3.77% 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 perfected. In September, a bullish price flip initiated a sell setup. In November, the index rose +9.31% to 15,661.87, compared to 14,327.94 the prior month and 13,688.32 four months prior. The September 30th sell setup progressed to 3.

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 December 13th, the index closed up +0.67% at 15,403.11, compared to 15,299.86 the prior week and 15,165.92 four weeks prior. The November 15th sell setup progressed to 5. The index closed +3.13% 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 13th, a bearish price flip initiated a buy setup. Wednesday, the index rose +2.02% to 15,587.80, compared to 15,278.63 the prior day and 15,341.82 four days prior. The bullish price flip canceled the December 13th 3 buy setup and initiated a sell setup. The index closed +4.37% 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 December 13th, the index closed down -2.09% to 23,245.96, compared to 23,743.10 the prior week and 23,032.15 four weeks prior. The November 22nd bullish price flip progressed to 4. The April 5th buy countdown progressed to 9. The index closed +3.98% 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 Wednesday, the index rose +0.32% to 23,143.82, compared to 23,069.23 the prior day and 23,218.12 four days prior. The December 11th buy setup progressed to 6. The index closed -3.53% 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 December 13th, the index closed the week down -1.83% to 2,196.08, compared to 2,237.11 the prior week and 2,135.83 four weeks prior. The November 22nd sell setup progressed to 4. The September 20th 6 sell countdown was unchanged.

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. Wednesday, the index fell -0.13% to 2,148.29, compared to 2,151.08 at the prior close and 2,202.80 4 days prior. The December 10th sell setup progressed to 7. The index closed -4.92% 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