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 Post subject: August 9th Tuesday 2011 Emini TF ($TF_F) points +142.90
PostPosted: Tue Aug 09, 2011 5:24 pm 
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Trade Results of M.A. Perry
Trader and Founder of WRB Analysis (wide range body/bar analysis)
Price Action Trading (no technical indicators)

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click on the above image to view today's trading summary

Trade Performance for Today: +142.90 points or $14290.00 dollars in the Russell 2000 Emini TF ($TF_F) Futures.
Russell 2000 Emini TF Futures - 1 tick or 0.10 = $10.00 dollars and there's more contract information @ The ICE.
S&P 500 Emini ES Futures - 1 tick or 0.25 = $12.50 dollars and there's more contract information @ CMEGroup.

In addition, all trades were posted real-time in the free #FuturesTrades chat room. Today's #FuturesTrades trading chat room logs provides details about each one of my trades from entry to exit along with commentary as the trade traversed...all archived @ http://www.thestrategylab.com/ftchat/forum/viewtopic.php?f=93&t=963.

To join our free chat room...registration instructions located at a different forum @ http://www.thestrategylab.com/ftchat/forum/viewtopic.php?f=5&t=630

Also, posted below are direct links to information about my trade methodology and trading plan (there's a difference between the two) that enables me to identify key trading areas in the price action that represent changes in supply/demand and volatility along with being able to exploit these changes via WRB Analysis (wide range body/bar analysis).

Image WRB Analysis Tutorials @ http://www.thestrategylab.com/WRBAnalysisTutorials.htm and there's a free study guide of the WRB Analysis Tutorial Chapters 1, 2 and 3 @ http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=5&t=180.

Image Volatility Trading Report (VTR) @ http://www.thestrategylab.com/VolatilityTrading.htm and there's a free trade signal strategy @ http://www.thestrategylab.com/tsl/forum/viewforum.php?f=89 so that you can freely test drive one of our trade strategies with support prior to purchasing the Volatility Trading Report (VTR).

Image Trading Plan Daily Routine @ http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=142&t=1168

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Market Summaries

The below summaries by Bloomberg, CNNMoney and Yahoo! Finance helps me to do a quick review of the fundamentals, FED/ECB/IMF actions or any important global economic events that had an impact on today's price action. Simply, I'm a strong believer that many variables (key market events) causes key changes in supply/demand and volatility that results in swing points and strong continuation price actions. Thus, I pay attention to these key market events from one trade to the next trade to give me the market context for my technical analysis. Just as important, these summaries becomes my archives to allow me to understand what was happening on any given trading day in the past...something I can not get from my broker statements alone.

U.S. Stocks Rally on Fed Decision and Policy Statement

Aug. 9 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. Stocks rose, capping the biggest rally in more than two years for benchmark indexes, as the Federal Reserve said it was prepared to use a range of tools to bolster the economy following yesterday's rout in equities.

Dow Soars 400 Points In Wild Session

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By Blake Ellis August 9, 2011: 5:11 PM ET

NEW YORK (CNNMoney) -- U.S. stocks ended a gut-wrenching session with huge gains -- erasing a big chunk of the prior session's steep losses -- after the Federal Reserve said it will keep interest rates exceptionally low until 2013.

The Dow Jones industrial average (INDU) rallied 430 points, or 4%. The S&P 500 (SPX) added 53 points, or 4.7%; and the Nasdaq (COMP) gained 125 points, or 5.3%.

Immediately following the Fed's statement, the major indexes all briefly slid into the red -- with the Dow dropping more than 200 points. The Dow fluctuated by more than 600 points during Tuesday's session.

In its latest monetary policy statement, the Federal Reserve left key interest rates unchanged, saying that deterioration in the labor market and slower-than-expected economic growth will require the central bank to keep rates "exceptionally low" until the middle of 2013.

* Read the Fed statement (FOMC Announcement)

A survey of investors conducted by investment firm Nomura before the Fed's statement showed that 22% of market participants had been looking for the Fed to announce more quantitative easing to help prop up the economy.

"It's hard to know what this means and how we should react," said Stephen Leeb, president of Leeb Capital Management. "It's disappointing they didn't announce further Treasury repurchases, but they did announce that rates will stay low for two years -- which is a big deal."

Knowing that rates will stay low for at least two years adds certainty to an otherwise uncertain economic environment, said Leeb.

"It means business owners can hire employees, and people can take out mortgages without having to worry about a spike in short-term interest rates," he said.

U.S. stocks have fallen more than 10% in the last month, and Monday's beating was by far the most brutal session. Stocks posted their worst losses since the 2008 financial crisis Monday, in the aftermath of S&P's downgrade of the U.S. credit rating.

* Stocks at 'fire sale' prices after bloodbath

So given those sharp declines, it was almost inevitable that markets would ultimately end higher Tuesday, said Sal Arnuk, co-founder of Themis Trading. Since 1927, there have been 31 one-day declines like the 7% drop in the S&P 500 seen Monday, he said. And of those instances, the S&P turned positive the next day 79% of the time.

But that doesn't mean investors aren't still rattled by the struggling U.S. economy and the European debt crisis.

"I've still got my helmet on," Lee Smith, vice president of Cozad Asset Management said. "The sell-off yesterday was overdone, so I'm starting to dip one foot back in the market -- but confidence is so weak right now, I don't have both feet back in yet."

All three major indices sank between 5% and 7% Monday, pushing the Dow below 11,000 for the first time since last November. The sell-off, which amounted to a paper loss of about $1 trillion, was worse than the 512-point drop stocks experienced just three trading sessions before.

Big movers: Bank stocks were among the hardest hit during Monday's slide -- with Bank of America shares tumbling 20%, after AIG (AIG, Fortune 500) said it is suing the bank for billions of dollars over mortgage security fraud.

* Banks are bad, but it's not 2008

But Bank of America's (BAC, Fortune 500) stock recouped most of those losses Tuesday, with shares closing 17% higher. Other financial stocks such as JPMorgan Chase (JPM, Fortune 500) andAmerican Express (AXP, Fortune 500) rebounded about 7%, and Citigroup (C, Fortune 500) soared more than 14%.

Gains spilled over to the broader market, with all 30 of the Dow's components ending in the green. Boeing (BA, Fortune 500) and Alcoa (AA, Fortune 500) were among the biggest winners Tuesday -- both rising more than 6%.

Currencies and commodities: The dollar was lower against the euro and Japanese yen, but rose versus the British pound.

Oil for September delivery slid $2.01 to settle at $79.30 a barrel.

* Video - Investors hide under gold's umbrella

Gold futures for December delivery gained $29.80 to settle at $1,743 an ounce. Earlier, gold prices hit a record intraday high of $1,782.50 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose following the Fed's statement, pushing the yield down to 2.18% from 2.34% late Monday.

The U.S. Treasury Department plans to sell $72 billion in bonds this week. Its first auction was held Tuesday, during which the government sold $32 billion in 3-year notes. The bid-to-cover ratio, a measure of demand, came in roughly in line with other recent 3-year note auctions -- an indication that investors are not afraid to stash their money in Treasuries, even with the warning from S&P.

World markets: European markets finished mixed. Britain's FTSE (FTSE) 100 gained 1.9% and France's CAC (CAC) 40 jumped 1.6%, while the DAX (DAX) in Germany dipped 0.1%.

* Video - Gut-wrenching day for Japan's markets

Asian markets were also volatile, but ended in the red. Japan's Nikkei dropped 1.7%, but was well off its lows at the close. A late sell-off pushed the Hang Seng in Hong Kong down 5.7%, and the Shanghai Composite was just below breakeven.

Economy: Productivity of U.S. workers slipped 0.3% during the second quarter, after falling 0.6% the prior quarter. Labor costs rose by 2.2%.

Companies: AOL (AOL) reported a bigger-than-expected quarterly loss early Tuesday -- driving shares of the media giant 11% lower.

After the closing bell, Dow component Walt Disney (DIS, Fortune 500) will head to the earnings stage. The media giant is expected to report a profit of 73 cents a share.

Image

Market Update

4:30 pm : Volatility continued today, but this time stocks swung to their best single-session percentage gain in more than two years.

A near 7% drop during the prior session's trade -- the worst one-day rout since December 2008 -- was initially followed by bargain hunting today. Although the market's opening gain was challenged, stocks were able to regroup and climb sharply.

Gains were tested again later in the day, when the FOMC issued its latest Policy Statement. The FOMC announced today that it will keep the Fed Funds Rate at 0.00% to 0.25%, as had been broadly anticipated. However, the Committee changed its verbiage about keeping rates at exceptionally low levels for an extended period to a pledge to keep rates exceptionally low at least through mid-2013. That pledge is likely because the Committee now expects a somewhat slower pace of recovery over coming quarters.

Many participants had expected the Committee to comment on the market's recent volatility and any new threats to the global economic recovery, as implied by the US debt downgrade issued by analysts at S&P, but the Fed's failure to address those matters prompted many participants to exit their positions so as to take profits or hedge against further volatility.

As selling gained momentum, the S&P 500 actually fell to a loss of more than 1% after it had been up in excess of 2% around midday. Treasuries rallied amid the action, causing yields on several issues to fall to record lows. Even the yield on the benchmark 10-year Note dropped to a record low of 2.03%, which is less than the approximate 2.2% dividend yield currently offered by the S&P 500.

Just as stocks threatened to break down again, the S&P 500 was able to attract support in the 1100 zone. It then climbed aggressively into the close, resulting in a 6% swing from its session low to its closing high. The net gain of 4.7% made for the S&P 500's best single-session percentage spike since a 7% surge in March 2009.

Strong market breadth helped advancing share volume on the NYSE surpass 2 billion, which is more than double the total share volume tally that had been regularly averaged on the NYSE up until only one week ago.

The buying effort helped drop the Volatility Index, which is often euphemistically dubbed the Fear Gauge, back down to 35 for a 27% loss. In the prior session it had surged to 48 for the first time since May 2010.

While buying interest was both strong and broad, participants favored financials the most. The sector surged to a 8.2% gain after it had been slammed for a 10% loss yesterday. Consumer staples stocks, considered to be defensive in nature, made up the only sector that gained less than 3%.

Advancing Sectors: Consumer Staples +2.2%, Utilities +3.2%, Health Care +3.8%, Telecom +4.4%, Tech +4.6%, Industrials +4.6%, Energy +4.6%, Consumer Discretionary +4.8%, Materials +5.9%, Financials +8.2%
Declining Sectors: (None)DJ30 +429.92 NASDAQ +124.83 NQ100 +4.9% R2K +6.9% SP400 +6.4% SP500 +53.07 NASDAQ Adv/Vol/Dec 2214/3.80 bln/456 NYSE Adv/Vol/Dec 2899/2.41 bln/250

3:30 pm : The continued flight to safety helped Dec gold futures, which settled higher by 1.7% to $1743.00 per ounce, trade to a new all-time high in overnight trade at $1782.50. It spent most of pit trade pulling back from that high. Following the release of the FOMC decision, which took place in afterhours trade for metals, gold is attempting to trade back to its all-time highs. Sept silver shed 3.9% to close at $37.86 per ounce. Silver futures are having a hard time keeping pace with the gains in gold, which is being viewed as more of a currency in light of the tumult in global indices.

Sept crude oil settled lower by 2.5% to $79.30 per MMBtu, their lowest settling price since Sept 29 of last year. Despite trading just above the flat line for a good portion of the session, futures sold off, following equity markets lower, ahead of the release of the FOMC decision. The sell-off continued following the release as well and futures dropped back toward their overnight lows. Sept natural gas finished higher by 1.5% to $4.00 per MMBtu. DJ30 +140.01 NASDAQ +48.15 SP500 +18.42 NASDAQ Adv/Vol/Dec 1707/3.0 bln/867 NYSE Adv/Vol/Dec 2513/1.7 bln/540

3:00 pm : Stocks attempted to rebound from the slide that followed the FOMC Policy Statement, but the move has failed to attract enough support to keep the broad market in positive territory. As such, the S&P 500 is now down with a narrow loss after it had been on pace for its best single-session performance in almost one year as of midday.

The stock market's failed rebound and subsequent retreat into the red has taken Treasuries even higher. That has dropped the yield on the benchmark 10-year Note beneath 3.30% for the first time since early 2010. DJ30 -73.37 NASDAQ +13.27 SP500 -1.84 NASDAQ Adv/Vol/Dec 1406/2.58 bln/1161 NYSE Adv/Vol/Dec 2061/1.40 bln/984

2:30 pm : The FOMC just issued its latest policy statement, which kept the Fed Funds Rate at 0.00% to 0.25%, as had been broadly anticipated. In a change from previous statements, the Fed pledged to keep rates exceptionally low at least through mid-2013. Part of the pledge to keep rates low is likely because the Committee now expects a somewhat slower pace of recovery over coming quarters.

Stocks initially made a modest move higher in response to the announcement, but they have since dropped sharply. The downturn was so fast and steep that the S&P 500 actually poked into negative territory. It has since rebounded out of the red to a modest gain, which pales in comparison with the 2.5% gain that it had sported at its session high.

Meanwhile, Treasuries have extended their climb to a new session high. The benchmark 10-year Note remains in the red, though. DJ30 +19.53 NASDAQ +34.70 SP500 +6.75 NASDAQ Adv/Vol/Dec 1977/2.10 bln/661 NYSE Adv/Vol/Dec 2648/1.15 bln/465

2:00 pm : Stocks have surrendered a substantial chunk of their gains in recent trade. The slip precedes the latest FOMC Policy Statement, which is scheduled to be released at 2:15 PM ET.

There is speculation among many market participants that the committee will comment on the market's recent volatility and renewed macro concerns. However, many skeptics posit that even if the committee makes such an address, it still lacks any new bullett to kill the turmoil so as to ensure that economic activity doesn't falter all over again. DJ30 +112.24 NASDAQ +55.16 SP500 +18.06 NASDAQ Adv/Vol/Dec 2098/1.94 bln/542 NYSE Adv/Vol/Dec 2763/1.06 bln/351

1:30 pm : Stocks are still off of the session highs that were set a little less than an hour ago. Nonetheless, overall gains remain broad and strong as a concerted buying effort drives advancing share volume to a 13-to-1 advantage over declining share volume on the NYSE.

Treasuries have started to cut their losses in recent trade. Although the move hasn't been anything major, the yield on the benchmark 10-year Note is now near 2.36% for a session low. DJ30 +166.62 NASDAQ +70.25 SP500 +24.60 NASDAQ Adv/Vol/Dec 2148/1.80 bln/481 NYSE Adv/Vol/Dec 2808/983 mln/298

1:00 pm : The major equity averages have eased off of session highs, but continue to sport big gains. Their bounce marks one of the strongest single-session moves in months.

After yesterday's 6.7% loss, which marked the worst one-day drop since December 2008, bargain hunters have been aggressively bidding stocks higher today. Part of the effort is believed to be rooted in the notion that today's FOMC policy statement (2:15 PM ET) will include comments that address concerns related to the market's recent volatility and macro uncertainty.

Buying interest today hasn't gone completely unchecked, though. In fact, the stock market's opening gain was challenged almost immediately as many traders opted to sell the move. Only after the S&P 500 and Nasdaq found support just above the neutral line did stocks bring in additional buyers.

Participants have favored financial stocks. Following their 10% drop in the prior session, the sector is currently up 3.8% as diversified banks and financial services plays lead a rebound from yesterday's beat down. Defensive-oritented stocks in the utilities sector (+0.8%) and consumer staples sector (+0.3%) have lagged for virtually the entire session.

Given the improved mood among market participants, the Volatility Index (VIX) has fallen back to 40 after it had surged yesterday to 48 for the first time since May 2010.

Despite the drop in volatility and the strength of stocks this session, gold has continued to garner buying interest. The precious metal surged more than 4% to set a new record high above $1750 per ounce earlier today. It was last quoted at $1743 per ounce. DJ30 +173.58 NASDAQ +73.68 SP500 +25.62 NASDAQ Adv/Vol/Dec 2178/1.69 bln/463 NYSE Adv/Vol/Dec 2826/920 mln/284

12:30 pm : Stocks continue to hover near session highs in early afternoon trade as participants provide stocks with a strong, broad-based bid. Of the 10 major sectors, only utilities (+0.9%) and consumer staples (+0.6%) have gained less than 1%. Financials, now up 4.5%, remain out in front of the other sectors.DJ30 +211.08 NASDAQ +85.11 SP500 +30.16 NASDAQ Adv/Vol/Dec 2153/1.56 bln/465 NYSE Adv/Vol/Dec 2810/859 mln/293

12:00 pm : The major equity averages have stretched ahead to new session highs. Of the three major indices, the Nasdaq Composite currently boasts the biggest move by percent.

The Nasdaq's surge to a 3.5% gain comes as large-cap tech plays like Apple (AAPL 368.85, +15.64) and Google (GOOG 567.24, +21.22) surge after enduring a sharp drop in the prior session. Semiconductor-related plays are up, but lagging on a relative basis, however. In turn, the Semiconductor HOLDRs ETF (SMH 28.80, +0.52) is up less than 2%. DJ30 +220.77 NASDAQ +81.22 SP500 +30.67 NASDAQ Adv/Vol/Dec 2079/1.36 bln/466 NYSE Adv/Vol/Dec 2766/753 mln/288

11:30 am : Share volume is robust again this session, suggesting that there is a strong sense of conviction among traders. After months of anemic trading volume on the NYSE, share count on the big board has been bountiful for several consecutive sessions. The surge in participation comes as many retail investors react to the market's volatility.DJ30 +197.99 NASDAQ +74.23 SP500 +27.27 NASDAQ Adv/Vol/Dec 2013/1.20 bln/560 NYSE Adv/Vol/Dec 2666/665 mln/403

11:00 am : The major equity averages are sporting big gains, just shy of their session highs. As things currently stand, the stock market is on pace for its best single-session performance since a 3% surge in September 2010. Of course, this session's surge follows yesterday's 6.7% loss, which marked the worst one-day drop since December 2008.

The drastically improved mood among market participants has caused the Volatility Index (VIX) to drop more than 16% to about 40.0. The VIX, often euphemistically dubbed the Fear Gauge, surged yesterday to 48 for the first time since May 2010.DJ30 +180.52 NASDAQ +67.18 SP500 +25.22 NASDAQ Adv/Vol/Dec 2075/920 mln/479 NYSE Adv/Vol/Dec 2075/515 mln/334

10:35 am : The dollar index has been in negative territory all morning, which has helped provide price support to the commodity complex. The index has recovered modestly off of session lows and is around the 75.51 area. Overall, commodities are showing modest gains.

Crude oil futures have been in a general uptrend since early morning activity and recently moved back into positive territory. Crude hit session highs of $83.05/barrel about 20 minutes before floor trading began, and after its recent move, the energy component is back near that high. Currently, crude is up 1.7% at $82.71/barrel. Natural gas has been in a general uptrend this morning as well and is currently showing gains of 1.3% at $3.99/MMBtu.

Gold futures hit new all-time highs of $1782.40/oz in early morning trade. The precious metal has been in positive territory all session, but has been steadily pulling back since hitting that high. Silver, on the other hand, is showing sharp losses this morning and is by far the worst performing commodity so far today. Silver has been in the red all session and fell as low as $37.62/oz. In current activity, gold is up 1.1% at $1731.90/oz., while silver is down 4.0% at $37.78/oz.DJ30 +227.58 NASDAQ +74.82 SP500 +29.19 NASDAQ Adv/Vol/Dec 2075/846 mln/469 NYSE Adv/Vol/Dec 2673/483 mln/349

10:00 am : Stocks are surging to fresh morning highs. The effort comes after the stock market had its opening advance challenged, but managed to find support just above the neutral line.

Financials continue to lead this morning's climb. The sector is now up 3.7%, which makes it the top performing sector. Utilities are at the opposite end of things; the defensive-oriented sector is up just 0.2%.

Treasuries have actually trimmed some of their losses in the face of the stock market's rally. That has taken the yield on the 10-year Note to 2.37%. DJ30 +200.67 NASDAQ +60.05 SP500 +24.22 NASDAQ Adv/Vol/Dec 1865/250 mln/558 NYSE Adv/Vol/Dec 2328/175 mln/601

09:50 am : Stocks opened today's trade with impressive gains, but the move was quickly challenged by traders looking to sell the bounce. Pressure actually pushed the Dow to a fractional loss in negative territory before it was able to rebound alongside its counterparts.

Financials, which plummeted 10% in the prior session, have actually provided some support to the broad market this morning. The sector's 2.0% bounce comes as bargain hunters offer a bid for banks and diversified financial services plays after their beat down yesterday. DJ30 +93.92 NASDAQ +24.83 SP500 +10.07 NASDAQ Adv/Dec 1479/903 NYSE Adv/Dec 1855/1054

09:15 am : S&P futures vs fair value: +12.80. Nasdaq futures vs fair value: +13.70. Stock futures continue to suggest that the cash market will open with a gain in excess of 1%. Although that may sound strong, it is only modest when compared to the 6.7% drop suffered by the S&P 500 during the prior session's rout. Given that stocks have dropped so sharply in so little time -- almost 17% in 11 sessions -- many bargain hunters are showing a willingness to step in with a bid this morning. Some may even be encouraged by the notion that the FOMC may address the market's recent volatility and rekindled macro concerns when it issues its latest policy statement at 2:15 PM ET. No matter what the committee may say, though, many pundits continue to posit that the Fed is still without any new bullet to aim at the turmoil.

09:05 am : S&P futures vs fair value: +9.80. Nasdaq futures vs fair value: +8.70. Oil prices recently poked into positive territory, but were quick to slip back to a slight loss at $81.05 per barrel in the first few minutes of pit trade. The energy component had actually dropped well below $80 per barrel in overnight trade. Natural gas prices are up a solid 0.5% to $3.955 per MMBtu. Gold prices extended their climb by pushing to a new record high past $1750 per ounce, but the yellow metal has since eased back to $1747 per ounce, where it trades with a 2.0% gain. Silver has been slapped with some aggressive selling, however. The precious metal was last quoted with a 3.6% loss at $37.98 per ounce.

08:35 am : S&P futures vs fair value: +12.20. Nasdaq futures vs fair value: +12.20. Stock futures continue to sport a strong lead over fair value. Second quarter cost and productivity data, which were just posted, haven't really done anything to influence traders, though. Second quarter unit labor costs increased by 2.2%, as had been expected by many economists polled by Briefing.com. Productivity for the second quarter fell 0.3%, which isn't quite as steep as the 0.6% decline that had been anticipated, on average, among economists surveyed by Briefing.com.

08:05 am : S&P futures vs fair value: +12.00. Nasdaq futures vs fair value: +11.20. Stock futures are finally finding some relief following another extremely aggressive sell-off yesterday. The bid precedes the latest FOMC policy statement at 2:15 PM ET. Given recent market volatility and rekindled concerns about the macro environment, some participants anticipate that the committee will have something to say on the matter. Productivity and cost data for the second quarter are also on today's calendar; they are due at the bottom of the hour. Despite the improved tone to premarket trade, gold prices continue to climb. The yellow metal was last quoted with a gain of more than 2% at a new record above $1750 per ounce. Oil prices actually extended their downturn by falling below $80 per barrel overnight, but the energy component has since pared its loss to trade with only a fractional loss at $81.20 per barrel ahead of pit trade. Treasuries spiked higher in the prior session, but they have run into selling this morning. Early pressure has sent the yield on the benchmark 10-year Note up to 2.38%. The dollar is down, too. Renewed strength in the euro, and continued strength in the yen, has the Dollar Index down 0.5%.

06:51 am : [BRIEFING.COM] S&P futures vs fair value: +7.50. Nasdaq futures vs fair value: +2.00.

06:51 am : Nikkei...8944.48...-153.10...-1.70%. Hang Seng...19330.70...-1159.90...-5.70%.

06:51 am : FTSE...4962.24...-106.70...-2.10%. DAX...5708.72...-214.60...-3.60%.

Markets end wild day with rally

North American stocks see-sawed Tuesday before ending with a blistering rally after the U.S. Federal Reserve acknowledged slowing economic growth and promised to keep interest rates low until 2013, but did not promise to inject more cash into the American economy.

In Toronto, the S&P/TSX composite index closed up 437.1 points at its high of 12,106.1, on a day when its gain shrank to as little as six points. The main Toronto index had fallen almost 14 per cent from July 22 to Monday, reflecting a lack of confidence that political leaders and central bankers can manage Europe's debt crisis and mounting expectations of the U.S. going back into recession.

* Video - Debt repayment impossible?

In New York, the Dow Jones industrial average finished with a gain of 429.92 points, or 3.98 per cent, at 11,239.77, also at its high of the day.

The Nasdaq rose 124.83 points, or 5.29 per cent, to 2,482.52 and the broader S&P 500 was up 53.07 points, or 4.74 per cent, to 1,172.53.

What does the U.S. credit downgrade mean for Canada?

Jim Armour of Summa Strategies, NDP activist Rebecca Blaikie and Rob Silver of Crestview Strategy are in The War Room. Listen to the Power & Politics podcast.

Prime Minister Stephen Harper, on a trade mission in Brazil Tuesday, dismissed the gyrations in the markets. The CBC's Terry Milewski, who is travelling with the prime minister, reported Harper told a business roundtable in Sao Paulo that "we put too much emphasis on this stuff." Instead, he said, governments should concentrate on growing trade.

The Canadian dollar was up 1.24 cents at 102.16 cents US, after briefly trading below parity with the greenback — dipping as low as 99.95 cents US — earlier in the day.

The currency has lost about five cents in the past two weeks as traders have sought safety in U.S. treasury bonds.

December gold closed up $29.80 US an ounce at $1,743 US.

September oil finished down $2.01 to $79.30 US a barrel. In overseas trading earlier Tuesday, it had fallen as low as $75.71, its lowest since September 2010.

In Europe, the FTSE 100 index of leading British shares closed up 1.8 per cent while France's CAC-40 rose 1.6 per cent and Germany's DAX finished 0.1 per cent lower.

Asian markets retreated overnight, led by Hong Kong's Hang Seng, which tumbled 5.7 per cent. Other markets fell too, including Japan's Nikkei 225 stock average, which ended 1.7 per cent lower while China's main market in Shanghai fared moderately better, closing flat.

Traders also assessed some disappointing economic data from China overnight. Industrial production rose 14 per cent year-over-year in July, retail sales climbed 17.2 per cent and fixed asset investment was up 25.4 per cent in the first seven months of the year.

These figures were below expectations and represented a slowing from the prior month but "despite the relatively soft data, these figures are still consistent with solid growth in China, and suggest a soft landing scenario remains intact," said BMO Capital Markets senior economist Benjamin Reitzes.

The recovery in stocks has come after many markets officially entered bear market territory — meaning they have fallen by over 20 per cent since their peak — as investors looked for relatively safer assets to park their cash, such as gold and the Swiss franc.

The other major worry in the markets remains Europe's debt crisis and here again there are signs that the recent stresses may be easing, albeit as a result of an intervention by the European Central Bank.

The ECB stepped in Monday and bought billions of euros worth of bonds. The move helped to lower yields on Spanish and Italian bonds.

Those yields fell a bit more Tuesday. The yield on Spain's 10-year bonds has dropped 0.19 percentage points to 4.96 per cent while the Italian equivalent declined 0.17 percentage points to 5.06 per cent.

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/bar analysis)
Price Action Trading (no technical indicators)
Image@ http://twitter.com/wrbtrader and http://stocktwits.com/wrbtrader

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