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 Post subject: July 21st Wednesday 2010 Emini TF ($TF_F) points +24.30
PostPosted: Thu Jul 22, 2010 10:05 am 
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Stocks Slump On Bernanke Comments
By Alexandra Twin, senior writer
July 21, 2010: 6:20 PM ET

NEW YORK (CNNMoney.com) -- Stocks tumbled Wednesday after Federal Reserve Chairman Ben Bernanke told Congress that the outlook for the economy is "unusually uncertain," adding to worries about the pace of the recovery.

The Dow Jones industrial average (INDU) lost 109 points, or 1.1%, the S&P 500 (SPX) index dropped 14 points, or 1.3%, and the Nasdaq (COMP) composite tumbled 35 points, or 1.6%.

Stocks were slightly lower through the early afternoon as better-than-expected quarterly profit reports from Apple, Morgan Stanley and Wells Fargo were countered by disappointment about results from Yahoo and others.

But the selling picked up steam in the afternoon following the 2 p.m. ET release of Bernanke's prepared testimony for a Senate committee. The Fed chief told lawmakers that, despite ongoing signs of weakness in the economy, central bankers expect gradual recovery over the next few years, although the labor market healing will be slower than previously thought.

"He's basically saying the economy is getting worse, and that while it's still going to grow, it's not recovering at the pace they had hoped," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams.

Bernanke also provided more details on how the Fed plans to withdraw the trillions in stimulus it has pumped into the economy since the start of the financial crisis in 2008. But he also said that the Federal Reserve will be ready to provide additional help if the economy deteriorates.

Stocks found a little momentum Tuesday amid speculation that the Federal Reserve may take more steps to encourage bank lending. But that failed to transfer to Wednesday's trading despite a number of improved earnings.

"Right now the macro-economic environment is trumping the good earnings," Rovelli said. "The earnings have been good but people are worrying about what the next few quarters are going to look like if the recovery is losing steam."

After the close, eBay (EBAY, Fortune 500) reported higher quarterly sales and earnings that topped estimates, thanks to strength at its PayPal only payments unit. The online auctioneer also lowered the high end of its full-year 2010 profit forecast, citing the impact of the weaker euro. Shares gained 3% in after-hours trading.
The Fed's toughest foe: Deflation

Results: After the close Tuesday, Apple (AAPL, Fortune 500) posted its best quarter ever, thanks to sales of its Mac computers, iPads and iPhones. Shares gained 1% Wednesday.

But search engine operator Yahoo (YHOO, Fortune 500) reported results that disappointed investors. The Internet company reported higher earnings that beat estimates on revenue that was barely higher from a year earlier and was shy of analysts' expectations.

Citigroup downgraded the stock Wednesday, while a variety of other firms downgraded it or cut earnings estimates on the company. Shares fell 8.5%.

Dow component Coca-Cola (KO, Fortune 500) reported higher quarterly sales and earnings that topped estimates, helped by increased sales in most of its markets, with particularly strong demand overseas. Shares gained 1.6%.

Morgan Stanley (MS, Fortune 500), Wells Fargo (WFC, Fortune 500) and US Bancorp (USB, Fortune 500) all reported strong profits, but bank shares were mixed. The KBW Bank (BKX) index lost 2.4%.

Morgan Stanley reported a profit of $1.4 billion, better than expected and reversing a loss from the same quarter a year ago. The company also reported higher earnings that topped estimates.

Wells Fargo reported a higher second-quarter profit that topped expectations, thanks to smaller loan losses. Shares gained 4.7%.

US Bancorp reported higher quarterly sales and earnings that topped expectations, thanks partly to lower credit costs.

Wall Street reform: President Obama signed the Wall Street reform bill into law Wednesday, enacting the most far-reaching financial overhaul since the Great Depression.
0:00 /2:34Investing for long-term profits

World markets: European markets rose, with Britain's FTSE 100 up 1.5%, Germany's DAX up 0.4% and France's CAC 40 up 0.8%.

Asian markets ended mixed. Japan's Nikkei fell 0.2%, while Hong Kong's Hang Seng gained 1.1% and the Shanghai Composite gained 0.3%.

Currencies: The euro fell versus the dollar. The dollar fell versus the Japanese yen.

Commodities: U.S. light crude oil for September delivery fell $1.16 to $76.56 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery fell $5.90 to $1,191.80 an ounce.

Bonds: Treasury prices rose, lowering the yield on the 10-year note to 2.89% from 2.93% late Wednesday. The two-year note hit a record low. Debt prices and yields move in opposite directions.

Market breadth: Breadth was negative. On the New York Stock Exchange, losers beat winners by two to one on volume of 1.2 billion shares. On the Nasdaq, decliners beat advancers by almost three to one on volume of 2.25 billion shares.

Image

Yahoo! Finance

4:30 pm : A negative response to comments from Fed Chairman Bernanke sent the stock market to a sharp, broad-based loss after most of the session had been spent in choppy, sideways trade.

Stocks opened with solid gains as market participants initially showed a more positive response to the latest round of earnings than they had in recent sessions. Strength was broad in the early going, but some of the best gains came from financials, which were up as much as 1.5% on the back of better-than-expected results from Morgan Stanley (MS 26.80, +1.58), Wells Fargo (WFC 26.06, +0.15), and US Bancorp (USB 23.07, -0.08) ahead of the adoption of new financial regulation into law. Despite the sector's early strength, it succumbed to broader market pressure and settled with a 1.8% loss. That put it among the worst performing sectors of the session.

The broader market spent the middle of the session chopping along the neutral line, but then made a sharp pullback in response to comments from Fed Chairman Bernanke, who made his semiannual monetary policy report to the Senate Banking Committee this afternoon. Bernanke spoke of continued uncertainty in the economy and made note of the Fed's preparations to take more policy actions as needed. The comments generally reflected the downgraded economic outlook that was communicated in the FOMC Minutes, but the stock market's negative response seemed to reflect its relatively nervous state, which was further underscored by the drop in the yield of the 10-year Treasury Note below 2.90% to its lowest level since April 2009.

Industrial stocks managed to limit their losses. Specifically, the sector settled just 0.4% into the red. Textron (TXT 19.65, +1.57) and Eaton (ETN 73.14, +4.08) provided support after both companies posted better-than-expected earnings and issued upside guidance. Eaton complemented its report with a dividend increase, while shares of TXT were upgraded.

United Technologies (UTX 67.03, -0.51) became a drag on the industrial sector when the Dow component succumbed to selling as participants shrugged off the outfit's better-than-expected bottom line.

Fellow Dow component Coca Cola (KO 54.08, +0.84) also bested earnings expectations, but it shares were able to hold their gain into the close.

The Nasdaq has lagged the other headline indices for most of the session. It was undercut by losses among large-cap tech plays after Yahoo! (YHOO 13.91, -1.29) reported a rather unimpressive revenue figure that overshadowed its upside earnings surprise. Better-than-expected earnings from Apple (AAPL 254.24, +2.35) provided some support, though.

In commodities trade, oil prices opened pit trade more than 1% higher, but settled at $76.56 per barrel with a 1.3% loss. Pressure was largely underpinned by the latest weekly inventory data, which showed a surprise build of 360,000 barrels of crude oil when a draw of 1.2 million barrels had been expected.

Gold prices finished flat at $1192 per ounce after a rather lackluster session of sideways trade. Silver prices settle 0.6% higher at $17.80 per ounce. However, both precious metals were pressured in electronic trade after pit trade closed because the dollar worked its way higher in response to the comments from Bernanke.

Advancing Sectors: (None)
Declining Sectors: Financials (-1.8%), Consumer Discretionary (-1.8%), Health Care (-1.5%), Utilities (-1.4%), Tech (-1.4%), Energy (-1.4%), Consumer Staples (-1.0%), Industrials (-0.4%), Materials (-0.4%), Telecom (-0.2%) DJ30 -109.43 NASDAQ -35.16 NQ100 -1.3% R2K -1.9% SP400 -1.5% SP500 -13.89 NASDAQ Adv/Vol/Dec 668/2.23 bln/1959 NYSE Adv/Vol/Dec 992/1.20 bln/2018

3:30 pm : Oil prices opened pit trade more than 1% higher, but some bearish inventory data, which showed a surprise build of 360,000 barrels of crude oil, caused the commodity to give up that gain. Futures prices settled roughly $2 below their session highs at $76.56 per barrel with a 1.3% loss.

Natural gas prices also succumbed to a rather stiff selling effort. The commodity closed with a 1.7% loss fractionally below $4.50 per MMBtu. Natural gas inventory data is due tomorrow morning.

As for precious metals, gold prices finished flat at $1192 per ounce after a rather lackluster session of sideways trade. Meanwhile, silver prices managed to hold on to a solid gain and settle 0.6% higher at $17.80 per ounce. However, precious metals prices have been pressured in electronic trade as the U.S. dollar gains ground against competing currencies following comments about the economy and policy from Fed Chairman Bernanke and a selloff among stocks. DJ30 -126.61 NASDAQ -32.17 SP500 -14.85 NASDAQ Adv/Vol/Dec 708/1.84 bln/1904 NYSE Adv/Vol/Dec 977/860 mln/2018

3:00 pm : Stocks have extended their slide so that they now sit at session lows. The slide has nearly erased all of the prior session's advance.

Treasuries continue to climb in the meantime. In turn, the yield on the benchmark 10-year Note is now below 3.90% so that it trades at a new 52-week low. DJ30 -158.08 NASDAQ -37.80 SP500 -17.82 NASDAQ Adv/Vol/Dec 656/1.67 bln/1932 NYSE Adv/Vol/Dec 876/762 mln/2111

2:30 pm : Stocks have fallen under a broad-based selling effort has followed the release of comments from Fed Chairman Bernanke. According to Bernanke, accomodative policy must be changed at some time. That admission has sent stocks to session lows with all 10 major sectors in the red and more than half of them down by 1% or more.

Meanwhile, Treasuries have made their way to session highs. That has put the yield on the benchmark 10-year Note just a few basis points above 2.90%.

The Dollar Index is also at its best level of the day. It currently sports a 0.6% gain against a basket of foreign currencies. DJ30 -85.82 NASDAQ -21.38 SP500 -10.45 NASDAQ Adv/Vol/Dec 818/1.46 bln/1741 NYSE Adv/Vol/Dec 1114/648 mln/1853

2:00 pm : Stocks are still stuck near the neutral line, but action could pick up as prepared remarks from Fed Chairman Bernanke begin to be circulated. Bernanke is about to begin his semiannual testimony before the Senate Banking Committee. A summary of Bernanke's remarks will be forthcoming. DJ30 +0.16 NASDAQ -2.94 SP500 -0.54 NASDAQ Adv/Vol/Dec 1240/1.28 bln/1269 NYSE Adv/Vol/Dec 1645/551 mln/1290

1:30 pm : Utilities stocks are in the worst shape of any major sector this afternoon. As a group, they have fallen to a 0.7% loss. Most of that is due to sharp losses among electric utilities plays like American Electric (AEP 35.43, -0.49), Dominion Resources (D 41.58, -0.38), and Duke Energy (DUK 16.98, -0.16).

In contrast, industials are out in front with a 0.8% gain. The sector is still led by construction and farming machinery plays, whcih are up 2.8% as a group. DJ30 +2.73 NASDAQ -3.38 SP500 -1.00 NASDAQ Adv/Vol/Dec 1163/1.17 bln/1312 NYSE Adv/Vol/Dec 1596/505 mln/1338

1:00 pm : A strong finish to the prior session and a barrage of better-than-expected earnings reports benefited stocks in the early going, but the major averages have since lost their way.

The stock market opened trade with a solid gain that was led by materials stocks, industrial plays, and financial stocks. Financials were actually up as much as 1.5% as market participants responded positively to upside surprises from Morgan Stanley (MS 27.48, +2.26), Wells Fargo (WFC 26.73, +0.82), and US Bancorp (USB 23.34, +0.19). Their strength couldn't keep the sector from pulling back to a fractional loss in the minutes that preceded the adoption of financial reform into law. Financials now trade with a slight gain.

Industrial stocks have managed to hold on to an impressive gain. The sector is up 0.8% amid leadership from Textron (TXT 19.53, +1.45) and Eaton (ETN 73.68, +4.62), both of which posted better-than-expected earnings and issued upside guidance. Eaton complemented its report with a dividend increase, while shares of TXT were further benefited by an upgrade.

Dow component United Technologies (UTX 68.00, +0.46) has been a steady source of support to the industrial sector, too. The company posted this morning a better-than-expected bottom line and issued an in-line forecast.

Fellow Dow component Coca Cola (KO 54.18, +0.94) also bested earnings expectations. The stock has been a leader among blue chips this session.

Caterpillar (CAT 67.80, +1.37) is atop the list of leading issues in the Dow, though. The stock has climbed in response to strong results from the much smaller construction and agricultural machinery play CNH Global (CNH 29.98, +1.78).

The Nasdaq has been hampered by weakness among large-cap tech plays after Yahoo! (YHOO 14.00, -1.20) was downgraded following a lackluster revenue figure that overshadowed its upside earnings surprise. Better-than-expected earnings from Apple (AAPL 258.49, +6.60) have provided some support.

Though earnings season has heated up, many investors generally remain uninspired and sitting on the sidelines. In turn, trading volume has been rather underwhelming.

The stock market has spent the past hour chopping along the neutral line, but market participants could get some trading cues from Fed Chairman Bernanke, who is scheduled to speak at 2:00 PM ET. DJ30 +4.09 NASDAQ -2.97 SP500 -0.67 NASDAQ Adv/Vol/Dec 1167/1.10 bln/1330 NYSE Adv/Vol/Dec 1601/473 mln/1320

12:30 pm : The stock market is mired at the neutral line. Despite what had looked like a positive start on the back of a barrage of better-than-expected earnings, stocks have struggled to find their direction and are now stuck near the neutral line.

Trading volume has been rather underwhelming, so far. Though earnings season has heated up, many investors appear to be sitting on the sidelines. DJ30 +5.53 NASDAQ -5.02 SP500 -0.38 NASDAQ Adv/Vol/Dec 1116/992 mln/1346 NYSE Adv/Vol/Dec 1575/431 mln/1319

12:00 pm : The financial sector continues to trade with a fractional loss in the minutes that have followed President Obama's signing of the Dodd-Frank financial regulation Bill into law.

Meanwhile, the broader market has begun to work its way up from its session lows. All three major indices are still in the red, though.

Treasuries have had a relatively quiet session. For instance, the benchmark 10-year Note is only up a few ticks so that its yield remains above 2.9%. DJ30 -5.67 NASDAQ -9.31 SP500 -1.88 NASDAQ Adv/Vol/Dec 976/890 mln/1476 NYSE Adv/Vol/Dec 1395/387 mln/1476

11:30 am : After an attempt to stabilize, selling pressure has picked back up to send the major indices to fresh session lows. Though overall losses are still relatively modest, the move has erased all of the financial sector's gain, such that the sector now trades with a fractional loss after it had been up as much as 1.5% in the early going. However, diversified banks (+2.5%) and investment banks and brokerages (+2.3%) continue to sport impressive gains. DJ30 -19.90 NASDAQ -15.54 SP500 -4.05 NASDAQ Adv/Vol/Dec 895/779 mln/1528 NYSE Adv/Vol/Dec 1216/338 mln/1631

11:00 am : Stocks are chopping along the neutral line after steadying their opening slide. Financials (+0.6%) and materials stocks (+0.8%) continue to provide support. Industrial plays (+0.8%) have begun to play a supportive role, too.

The industrial sector is led by Textron (TXT 19.35, +1.27), which was upgraded amid news that it not only beat the consensus earnings estimate for the latest quarter, but that it also issued upside guidance. Eaton (ETN 73.00, +3.94) has also been a leader following better-than-expected earnings and upside guidance of its own. Eaton also hiked its quarterly dividend by 16% to $0.58 per share.

Though its gain hasn't been quite as impressive as that of ETN and TXT, industrial giant and Dow component United Technologies (UTX 68.09, +0.55) has provided a steady source of support, too. The company posted this morning a better-than-expected bottom line and issued an in-line forecast. DJ30 +2.39 NASDAQ -8.90 SP500 -1.06 NASDAQ Adv/Vol/Dec 1049/645 mln/1320 NYSE Adv/Vol/Dec 1432/280 mln/1374

10:30 am : Oil prices have fallen to $77.35 per barrel, where they trade with a 0.4% loss, following news that oil inventories for the week ended July 16 had a build of 360,000 barrels, which contrasts with the draw of 1.2 million barrels that had been widely expected. The pullback in oil prices actually began before the data was released. Oil prices had been above $78.55 per barrel at their morning highs.

Natural gas prices are also under pressure. The commodity was last quoted with a 0.9% loss at $4.55 per MMBtu.

Metals are mixed as silver prices sport a 0.7% gain at $17.82 per barrel and gold prices trade just below the neutral line at $1191.40 per ounce. DJ30 +9.84 NASDAQ -6.97 SP500 +0.13 NASDAQ Adv/Vol/Dec 1087/509 mln/1223 NYSE Adv/Vol/Dec 1473/223 mln/1291

10:00 am : Better-than-expected earnings from Apple (AAPL 259.29, +7.40) have been unable to keep the Nasdaq from falling to a marked loss. The tech-rich index's weakness stems largely from losses by Yahoo! (YHOO 13.85, -1.35), which was downgraded by analysts at Citigroup despite the company's upside earnings surprise, and selling against Microsoft (MSFT 25.17, -0.31) and Intel (INTC 21.32, -0.33).

Advancing Sectors: Financials (+0.8%), Materials (+0.8%), Industrials (+0.4%), Telecom (+0.1%), Energy (+0.1%)
Declining Sectors: Consumer Discretionary (-0.8%), Health Care (-0.7%), Tech (-0.7%), Consumer Staples (-0.1%), Utilities (-0.1%) DJ30 -5.07 NASDAQ -12.28 SP500 -1.67 NASDAQ Adv/Vol/Dec 937/320 mln/1299 NYSE Adv/Vol/Dec 1273/150 mln/1415

09:45 am : The major equity averages have surrendered opening gains to trade mixed in the first few minutes of the session.

However, in similar fashion to the prior session, materials stocks are showing leadership. The sector is up 1.0% as steel stocks and diversified metals and miners build on their heady gains from Tuesday.

Financials are also a key source of support in the early going. The sector is up 1.0% after Morgan Stanley (MS 27.31, +2.09), Wells Fargo (WFC 27.10, +1.19), and US Bancorp (USB 23.68, +0.53) each reported better-than-expected earnings. DJ30 -3.33 NASDAQ -6.37 SP500 +0.10 NASDAQ Adv/Vol/Dec 1089/198 mln/1045 NYSE Adv/Vol/Dec 1336/101 mln/1294

09:15 am : S&P futures vs fair value: +6.50. Nasdaq futures vs fair value: +18.00. Stocks look like they will build on the prior session's advance as market participants show a more positive response to the latest round of earnings announcements than they had in recent sessions. Whether that means investor sentiment has taken a positive turn will only be seen in time, but for now, Apple (AAPL), up almost 5% in premarket trade, Morgan Stanley (MS), up almost 6% ahead of the open, and Wells Fargo (WFC), up nearly 6% in premarket action, are among the more widely-held names that have won considerable support following their reports. Despite an upside earnings surprise of its own, Yahoo! (YHOO) is among those that have fallen under renewed pressure as investors continue to look for strong service demand in the form of higher revenue. Shares of YHOO were also hit with a downgrade. Strength among stock futures comes in the face of a 0.5% decline by the euro against the greenback. That decline hasn't stopped Europe's major bourses from staging strong gains of their own. There isn't any data due today, but Fed Chairman Bernanke will hold a conference at 2:00 PM ET.

09:05 am : S&P futures vs fair value: +6.80. Nasdaq futures vs fair value: +17.80. Oil prices are up 1.1% to $78.45 per barrel in the first few minutes of pit trade. The advance comes ahead of the commodity's latest weekly inventory count, which is scheduled for release at 10:30 AM ET. The consensus estimate calls for a draw of 1.2 million barrels. In other action, gold prices are trading along just above the neutral line at $1194 per ounce and silver prices are up a sharp 0.9% to $17.85 per ounce.

08:35 am : S&P futures vs fair value: +6.60. Nasdaq futures vs fair value: +16.50. Domestic stock futures continue to lead fair value and Europe's major bourses, already half way through their session, are up sharply. Specifically, Germany's DAX is up 1.3% amid broad-based buying. Despite such broad strength, the health care sector is down 0.4%. In France, the CAC has climbed to a 1.9% gain. Financials are out in front with a 3.2% gain. Meanwhile, Britain's FTSE is up 1.7%. Basic materials stocks are the best performers, having advanced 3.0%. Health care stocks are lagging with a 0.3% loss. The strong gains come in the face of a weaker euro, which is currently down 0.5% against the U.S. dollar. Reports point to a weak debt auction in Portugal and a stopped auction in Germany, though this is the fourth consecutive time that the German government halted an auction of 30-year issues when it did not achieve the desired interest rate.

In Asia, Japan's Nikkei shed 0.2% amid relatively widespread weakness. With a 0.8% loss, financials were in the worst shape. Oil and gas plays provided an element of support by staging a 1.0% gain. In China, the Shanghai Composite closed 0.3% higher, even though the number of its advancers and declining issues were almost in perfect balance. SAIC Motor was a primary leader, but financial plays were weak. Hong Kong's Hang Seng made its way 1.1% higher. It was led by basic materials, which moved 2.7% higher, collectively. Consumer goods fell 1.8%, though.

08:05 am : S&P futures vs fair value: +5.30. Nasdaq futures vs fair value: +15.00. Momentum from the prior session's advance has helped give a lift to stock futures. A deluge of better-than-expected earnings reports appear to have helped the move. Among those that have beaten expectations are Apple (AAPL), United Technologies (UTX), Coca Cola (KO), US Bancorp (USB), Wells Fargo (WFC), and Yahoo! (YHOO). Despite its upside surprise on the bottom line, shares of YHOO were actually downgraded by analysts at Citigroup. The euro is under pressure at the moment - down 0.5% against the greenback. Meanwhile, Europe's major bourses are up with strong gains, though off of their highs. In Asia, Hong Kong's Hang Seng climbed more than 1%, but the Shanghai Composite and the Nikkei were more mixed. There aren't any major economic releases slated for today, but Fed Chairman Bernanke is scheduled to speak at 2:00 PM ET.

07:16 am : S&P futures vs fair value: +3.20. Nasdaq futures vs fair value: +10.00.

07:16 am : Nikkei...9278.83...-21.60...-0.20%. Hang Seng...20487.23...+222.60...+1.10%.

07:16 am : FTSE...5226.08...+87.00...+1.70%. DAX...6027.40...+60.90...+1.00%.

Special thanks to Bloomberg, CNNMoney and Yahoo! Finance for their market summaries. gm

Best Regards,
M.A. Perry
Trader and Founder of WRB Analysis (wide range body analysis)
Image@ http://twitter.com/wrbtrader and http://stocktwits.com/wrbtrader

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