TheStrategyLab.com Price Action Trading Support Forum

Trade Results of M.A. Perry
Trader and Founder of WRB Analysis (wide range body/bar analysis)
Price Action Trading (no technical indicators)
Phone: +1 708 572-4885
Free Chat Room: http://www.thestrategylab.com/tsl/forum/viewforum.php?f=164
Business Hours: 8am - 5pm est (Mon - Fri)
questions@thestrategylab.com (24/7)
http://twitter.com/wrbtrader (24/7)


click on the above image to view today's performance verification

Price Action Trade Performance for Today: Emini TF ($TF_F) futures @ $1,050.00 dollars or +10.50 points, Emini ES ($ES_F) futures @ $17,437.50 dollars or +348.75 points, Light Crude Oil CL ($CL_F) futures @ $180.00 dollars or +0.18 points, Gold GC ($GC_F) futures @ $0.00 dollars or +0.00 points and EuroFX 6E ($6E_F) futures @ $0.00 dollars or +0.0000 ticks. Total Profit @ $18,667.50 dollars.

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
Light Crude Oil CL (WTI) Futures: 1 tick or 0.01 = $10.00 dollars and there's more contract information @ CMEGroup
Gold GC Futures: 1 tick or 0.10 = $10.00 dollars and there's more contract information @ CMEGroup
EuroFX 6E Futures: 1 tick or 0.0001 = $12.50 dollars and there's more contract information @ CMEGroup

In addition, all of my trades were posted real-time in the chat room. You can read today's chat room logs for details about each one of my trades via price action trading from entry to exit (e.g. time, price, contract size) along with price action commentary as the trade traversed to its completion...all archived @ http://www.thestrategylab.com/ftchat/forum/viewtopic.php?f=124&t=1676

Also, posted below are direct links to information about my price action 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). I'm primarily a day trader because it suits my personal lifestyle but I do occasionally swing trade and position trade. Simply, my trade method is applicable for position trading, swing trading and day trading.

##TheStrategyLab Chat Room is free. Members and I use the chat room to post WRB Analysis commentary, real-time trades and to post anything else related to trading. The chat room helps me tremendously in my own trading because I use it to document (journal) my thought process from trade to trade so that I can easily review at a later date my thoughts as I interacted with the markets...info I can not get from my broker statements. Also, this is not a signal calling chat room where a head trader tells you when to buy or sell. If you join the chat room and then you do not ask any questions about WRB Analysis in your own trading...the chat room will not be useful to you. Chat room access instructions @ http://www.thestrategylab.com/tsl/forum/viewforum.php?f=164

Price Action Analysis via 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=119&t=718

Trade Signal Strategies via 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 price action trade strategies with support (answering your questions) prior to purchasing the Volatility Trading Report (VTR).

Trading Plan Daily Routine @ http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=226&t=2114

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Market Context Summaries

The below summaries by Bloomberg, CNNMoney, Reuters and Yahoo! Finance helps me to do a quick review of the fundamentals, FED/ECB/BOE/IMF actions or any important global economic events (e.g. Eurozone, MarketWatch.com) that had an impact on today's price action in many trading instruments I monitor during the trading day. Simply, I'm a strong believer that key market events causes key changes in supply/demand and volatility resulting in trade opportunities (swing points and strong continuation price actions) that reach profit targets. Thus, I pay attention to these key market events, intermarket analysis (e.g. Forex EurUsd, EuroFX 6E futures, Gold GC futures, Light Crude Oil (WTI) CL & Brent Oil futures, Eurex DAX futures, Euronext FTSE100 futures, Emini ES futures, Emini TF futures, Treasury ZB futures and U.S. Dollar Index futures) while using WRB Analysis from one trade to the next trade to give me the market context for price action trading before the appearance of my technical analysis trade signals. Therefore, I maintain these archives to allow me to understand what was happening on any given trading day in the past involving key market events to help better understand my trade decisions (day trading, swing trading, position trading)...something I can not get from my broker statements alone.

Thanks, Ben! Dow and S&P Hit Record Highs


click on the above image to view today's price action of key markets

NEW YORK (CNNMoney)
Wall Street stopped worrying and learned to love the taper.

The Dow Jones industrial average jumped more than 290 points after the Federal Reserve surprised some experts Wednesday by announcing a modest reduction, or tapering, in its bond buying program. The S&P 500 and the Nasdaq also moved substantially higher. The Dow and S&P both ended at new closing highs.

The bullish response is somewhat curious, since investors were rattled when Fed chair Ben Bernanke first talked about tapering back in May. In recent months, stocks would often fall on good economic news because the market worried that it might mean the tapering was one step closer.

Some market watchers had still been holding out hope that the Fed would announce tapering after Bernanke's tenure ends in January. But the job market has been improving and Bernanke told reporters that he and other Fed officials -- including current vice chair and Bernanke successor Janet Yellen -- believe the economy will continue to create jobs.

But at the end of the day, investors have had plenty of time to get used to the idea of a slight reduction in the Fed's bond buying. And that word -- slight -- is key. The Fed said it will reduce its monthly purchases of mortgage-backed securities and U.S. Treasuries to $75 billion per month, down from $85 billion, beginning in January.

"Investors were not prepared for the Fed [tapering] statement last May," said Hank Smith, chief investment officer at Haverford Trust. "They were overly prepared for today's announcement."

The Fed has been buying bonds since 2008 and many investors say the liquidity boost has been the main driver of the bull market in stocks since 2009. The Fed's decision also can be interpreted as a sign the economy is back on its feet and no longer needs as much stimulus.

* Why tapering could be good for stocks

Bernanke said the Fed could take "further measured steps" to reduce its holdings, but he stressed that it will continue buying bonds "at a rapid pace" after the taper. He also said the Fed expects to hold interest rates at historic lows past the point when the unemployment rate falls to 6%.

The overall tone of the statement and Bernanke's remarks suggests that the Fed is still very "dovish," or willing to err on the side of caution, said Doug Roberts, market strategist at Channel Capital Research. "This may be the primary reason that the markets have rallied," he said.

The reaction in the bond market was also relatively subdued. The yield on the 10-year Treasury note ended slightly higher at 2.89%.

"This won't be a big shock for bonds, because there's still plenty of easy money in the global financial system," said Rick Rieder, chief of fixed income at BlackRock. Still, he expects interest rates to move higher over time, with the 10-year yield reaching 3.25% by the middle of 2014.

* Don't sell your winners! Ride the momentum

In other economic news, the number of new homes breaking ground soared nearly 23% in November from the month prior, the Commerce Department said. But applications for building permits, a leading indicator for new home construction, fell 3% in the month.

Ford breaks down. Ford (F, Fortune 500) shares plunged 6% after the automaker said it expects profits in North America to be lower next year as it rolls out new models in the United States. General Motors (GM, Fortune 500) and Tesla (TSLA) shares were also lower.

At least one trader was surprised to see electric car maker Tesla following its mostly gas-powered rivals lower.

"$TSLA Ironically following $F & $GM. Common sense will be back shortly with this one," said StockTwits user CJK1.

Other traders argue that the selling, which pushed Ford shares below $16 for the first time since August, was overdone.

"$F WOW talk about an overreaction," said StarPower. "Will get back to 17 no problem, just might take some time, IMO."

The retreat is a buying opportunity just in time for the holidays, according to another trader.

"$F Ford is a GIFT at this price!," said TJMeneo75

Not everyone is buying it, though. Some traders are bracing for more downside in Ford stock.

"$F get out..." said afernandez321.

What's moving. Gogo (GOGO) shares sank after the lock-up period for certain holders of the stock expired. Company insiders and underwriters were prohibited from selling shares for 180 days after the in-flight Internet provider went public on June 20.

Shares of movie theater chain AMC (AMC) rose 6% after the company raised $331 million from its initial public offering late Tuesday.

General Mills (GIS, Fortune 500) shares recovered from early losses after reporting earnings that missed forecasts, while FedEx (FDX, Fortune 500) shares rose slightly after issuing a decent outlook for the current quarter. Oracle (ORCL, Fortune 500) shares were down in extended trading even though the software giant reported better-than-expected quarterly results after the closing bell.

* Why is saving money so hard?

Shares of social media companies were under pressure. LinkedIn (LNKD) was hit particularly hard, while Twitter (TWTR) suffered more minor losses.





4:20 pm: [BRIEFING.COM] Equities settled on their highs after dovish forward guidance from the Federal Reserve offset the immediate impact of a tapering announcement. Although the Federal Open Market Committee reduced the size of its monthly asset purchases from $85 billion to $75 billion, it pledged to keep the target Fed Funds Rate near its current levels 'well past the time that the unemployment rate declines below 6.5%.'

The dovish guidance was also the likely reason for Treasuries retracing all of their post-announcement losses. The benchmark 10-yr yield ended with a five basis point gain at 2.89%, which is essentially where it traded before the afternoon announcement.

During his press conference, Chairman Bernanke elaborated on the decision, saying the Committee plans to introduce further gradual reductions should economic data continue showing measurable improvement.

The S&P 500 surged 1.7%, wiping out its entire December loss. The index ended at a fresh record closing high as nine of ten sectors added at least 1.0%.

Heavily-weighted financials (+2.4%) and health care (+2.4%) finished in the lead. The health care sector received a considerable boost from biotechnology as the iShares Nasdaq Biotechnology ETF (IBB 219.31, +5.92) rose 2.8%.

Despite the relative strength of the two top-weighted sectors, the S&P 500 was kept from registering additional gains by the underperformance of technology (+0.8%). The sector lagged throughout the session as its top component, Apple (AAPL 550.77, -4.22), weighed. The largest tech stock fell 0.8% in the wake of Jabil Circuit's (JBL 15.67, -4.05) disappointing earnings report. Comments from China Mobile (CHL 52.61, +0.81) also weighed as the company said it is still working on an Apple iPhone deal after last week's reports implied the deal was nearing completion.

Today's broad gains overshadowed another key laggard, Ford (F 15.65, -1.05). The stock lost 6.3% after issuing fiscal-year 2014 guidance that fell short of expectations. Specifically, the company said it expects FY14 auto revenue to be about equal with FY13 (the current consensus calls for 11% growth) while adding its global auto operating margin target of 8-9% is at risk. The guidance update pressured rival General Motors (GM 41.27, -0.26) which slid 0.6%.

The removal of the uncertainty associated with today's FOMC decision caused the CBOE Volatility Index (VIX 13.80, -2.41) to slump to last week's levels.

Today's economic data focused on housing. The weekly MBA Mortgage Index fell 5.5% to follow last week's 1.0% increase.

November building permits rose to 1,007,000 from the prior month's upwardly revised rate of 1,039,000 (from 1,034,000). That was above the pace of 983,000 that had been expected among economists polled by Briefing.com.

Regarding Housing Starts, September starts came in at 873,000 while the consensus expected a reading of 915,000. For October, Housing Starts were reported at 889,000 against the 920,000 expected by the consensus. Lastly, November starts increased to 1,091,000 while a reading of 950,000 was broadly anticipated.

Tomorrow, weekly initial claims will be reported at 8:30 ET while Existing Home Sales for November will be reported at 10:00 ET. In addition, November Leading Indicators and the December Philadelphia Fed Survey will also be released at 10:00 ET.

Nasdaq +34.8% YTD
Russell 2000 +33.5% YTD
S&P 500 +27.0% YTD
DJIA +23.4% YTD

3:30 pm: [BRIEFING.COM]

Feb gold spent most of today's session chopping around near the unchanged line ahead of the FOMC policy statement. The yellow metal dipped to a pit session low of $1227.00 per ounce but gained steam in the last half hour of floor trade. It popped to a session high of $1237.50 per ounce and settled with a 0.4% gain at $1234.60 per ounce.
Mar silver pushed to a session high of $20.11 per ounce in late afternoon pit trade after trading in a consolidative fashion near the $19.95 per ounce level. It settled at $20.06 per ounce, booking a gain of 1.1%.
Gold fell as low as $1220.00 per ounce in electronic trade and silver slipped to a low of $19.42 per ounce following the 14:00 ET FOMC taper announcement. The Committee stated that beginning in January, it will taper its asset purchases by $10 bln per month. Gold is currently down 0.3% at $12226.80 and silver is up 0.2% at $19.88.
Feb crude oil traded as inventory data showed a draw of 2.941 bln barrels when a draw of 2.3-3.0 mln was anticipated. The energy component dipped to a session low of $97.46 in morning pit trade but eventually settled with a 0.6% gain at $98.08 per barrel, slightly below its session high of $98.30 per barrel.
Jan natural gas, on the other hand, trended lower today, erasing its earlier gains. Prices pulled back from a session high of $4.32 per MMBtu and slipped into the red by late morning floor action. Unable to regain momentum, natural gas settled 0.5% lower at $4.26 per MMBtu.

3:00 pm: [BRIEFING.COM] The S&P 500 trades higher by 0.9% as Chairman Bernanke continues addressing the media. The ongoing press conference has produced one item of note as the Chairman indicated the Committee plans to introduce further gradual reductions to the purchasing program if economic conditions continue showing improvement.

Speaking of improvement, equity indices have built on their afternoon gains, and the technology sector has climbed out of the red. As a result, all ten economic sectors now trade in positive territory with health care (+1.6%) and financials (+1.6%) in the lead.

2:30 pm: [BRIEFING.COM] The major averages hover at their best levels of the session with the Dow (+0.9%) continuing its outperformance. Equities received the news of a $10 billion taper in stride as the Federal Reserve offset the effects of the tapering announcement with dovish guidance, which included the pledge to keep the fed funds rate near its current levels 'well past the time that the unemployment rate declines below 6.5%.'

At this juncture, nine of ten sectors hold gains between 0.5% (utilities) and 1.2% (health care) while the tech sector (-0.3%) continues to hover in the red.

Elsewhere, Treasuries have retraced all of their losses. The benchmark 10-yr yield sits at 2.85% after spiking to 2.91% immediately following the announcement.

Also of note, the removal of the uncertainty associated with today's decision has caused the CBOE Volatility Index (VIX 14.07, -2.14) to return to last week's levels.

2:05 pm: [BRIEFING.COM] The major averages have tumbled to fresh lows in reaction to the just-released FOMC policy statement. However, the flush lower was followed by a spike to fresh session highs. The indecision came after the FOMC directive called for a $10 billion reduction in the size of monthly asset purchases, lowering the total size of the program to $75 billion per month.

The tapering announcement was met with a selloff in Treasuries. The benchmark 10-yr yield spiked to fresh highs, sending its yield to 2.91% from 2.88% just before the announcement. The announcement has also weighed on gold futures, sending the yellow metal down back to unchanged for the day. Gold futures hover near $1230.90 per troy ounce.

1:25 pm: [BRIEFING.COM] With approximately 30 minutes to go until the Federal Reserve tells the world whether or not it is cutting back its asset purchases, the major indices are all in negative territory. The Nasdaq leads the retreat, weighed down by the weakness in Apple (AAPL 540.52, -14.57), which is under pressure in the wake of Jabil Circuit's (JBL 15.61, -4.11) disappointing earnings report and news that China Mobile (CHL 51.94, +0.14) said it is still working on an Apple deal (reports from last week implied that was essentially a done deal).

Another key laggard today is Ford (F 15.47, -1.24), which issued FY14 guidance that fell short of expectations. Specifically, Ford said it expects FY14 auto revenue to be about equal with FY13 (the current consensus calls for 11% growth) and added that its global auto operating margin target of 8-9% is at risk. That update has pressured General Motors (GM 39.97, -1.56) which, along with Ford, has acted as a wet blanket on the consumer discretionary sector (-0.5%).

Finally, an article penned by the Wall Street Journal's Jon Hilsenrath that suggests the Fed will announce a small taper today has cooled off buying interest in front of the FOMC announcement. Mr. Hilsenrath is viewed by some as having an "inside line" to the Fed's thinking.

1:00 pm: [BRIEFING.COM] The S&P 500 has spent the first half of today's session within a seven-point range with many participants electing to stand pat ahead of the FOMC policy statement, which may call for a reduction in the size of the Fed's asset purchases. The directive will be released at 14:00 ET while Chairman Ben Bernanke's press conference will follow at 14:30 ET.

The Dow and S&P 500 notched session highs during morning trade, but they have since given in to the selling pressure that has weighed on the Nasdaq (-0.6%) since the open. The S&P 500 (-0.1%) has joined the tech-heavy index in the red while the Dow continues to outperform with a modest gain of 0.1%.

Individual sectors are essentially split down the middle as five groups display gains while the other five hover in the red. Most notably, the largest S&P 500 sector, technology (-0.9%), is the weakest performer of the day. The group is being pressured by Apple (AAPL 543.47, -11.52), which trades lower by 2.2% amid speculation that disappointing results from Jabil Circuit (JBL 15.52, -4.20) serve as a warning with regards to Apple's sales.

Despite the significant weakness among tech shares, the S&P 500 has been able to limit its losses thanks to the outperformance of consumer staples (+0.2%), energy (+0.2%), and health care (+0.4%).

Elsewhere, Treasuries slid to lows following a forgettable 5-yr auction that drew a yield of 1.600% and a disappointing bid/cover of 2.42x. Indirect (25.8%) and direct (11.8%) bids were well below the 12-auction average while primary dealers took 62.8% of the total supply.

In all likelihood, the disappointing auction was a result of participants showing caution ahead of a potential tapering announcement, which would likely translate into a spike in yields. At this juncture, the benchmark 10-yr yield is higher by four basis points at 2.88%.

Today's economic data focused on housing. The weekly MBA Mortgage Index fell 5.5% to follow last week's 1.0% increase.

November building permits rose to 1,007,000 from the prior month's upwardly revised rate of 1,039,000 (from 1,034,000). That was above the pace of 983,000 that had been expected among economists polled by Briefing.com.

Regarding Housing Starts, September starts came in at 873,000 while the consensus expected a reading of 915,000. For October, Housing Starts were reported at 889,000 against the 920,000 expected by the consensus. Lastly, November starts increased to 1,091,000 while a reading of 950,000 was broadly anticipated.

12:35 pm: [BRIEFING.COM] The major averages continue hovering near their lows. The S&P 500 (-0.1%) and Nasdaq (+0.4%) remain in the red while the price-weighted Dow sports a modest gain of 0.2%.

Also of note, Treasuries have dropped to fresh lows following a forgettable 5-yr auction that drew a yield of 1.600% and a disappointing bid/cover of 2.42x. Indirect (25.8%) and direct (11.8%) bids were well below the 12-auction average while primary dealers took 62.8% of the total supply.

Today's disappointing auction comes ahead of the 14:00 ET release of the FOMC policy statement, which may call for a reduction in monthly asset purchases. If the Fed makes a tapering announcement, Treasury yields are expected to increase. At this juncture, the benchmark 10-yr yield is higher by five basis points at 2.89%.

12:00 pm: [BRIEFING.COM] The S&P 500 (-0.1%) has notched a fresh low in a move that saw the broader market follow in the footsteps of the lagging technology sector (-0.8%). The largest S&P 500 group has trailed since the opening bell, and is largely responsible for the underperformance of the Nasdaq (-0.5%).

The recent selling also weighed on the largest sector component, Apple (AAPL 543.47, -11.52), which has dropped to a fresh low of its own. The top sector (and Nasdaq) member has been facing steady selling pressure amid speculation that disappointing results from Jabil Circuit (JBL 15.52, -4.20) serve as a warning with regards to Apple's sales.

11:30 am: [BRIEFING.COM] Equities continue trading inside narrow ranges with the Dow (+0.3%) maintaining its lead. Meanwhile, the Nasdaq (-0.2%) remains in the red while the S&P 500 splits the difference between the two. The benchmark index holds a modest gain of 0.1%.

With regard to individual sectors, most groups continue to hold their recent levels, but a divergence has been spotted in health care and financials. The health care sector (+0.6%) sits just below its session high with biotechnology contributing to the strength. The iShares Nasdaq Biotechnology ETF (IBB 215.49, +2.10) trades up 1.0%.

Elsewhere, the financial sector (+0.1%) hovers near its low as top components trade mixed. Citigroup (C 50.54, -0.15) is lower by 0.3% while Dow member Goldman Sachs (GS 170.99, +0.50) outperforms with a gain of 0.3%.

11:00 am: [BRIEFING.COM] Recent action saw the major averages slide from their early highs. The Dow and S&P 500 continue to trade just north of their respective flat lines, but the tech-heavy Nasdaq has returned into the red.

The largest Nasdaq component, Apple (AAPL 545.78, -9.21), continues to weigh, trading lower by 1.6%. Meanwhile, the broader tech sector (-0.5%) is the weakest group of the day, which is also pressuring the Nasdaq composite.

Other heavily-weighted sectors are somewhat mixed as consumer staples (+0.3%), health care (+0.5%), and financials (+0.1%) outperform while consumer discretionary (-0.1%) and industrials (unch) lag.

Elsewhere, Treasuries remain near their lows with the 10-yr yield up four basis points at 2.88%.

10:35 am: [BRIEFING.COM] Crude oil rallied this morning, pushing above $98/barrel. Crude oil consolidated ahead of the weekly EIA inventory data. However, following the data, crude oil popped higher. USO is currently +0.8%.

Natural gas futures are trading higher this morning, but showing modest gains along with most other commodities. UNG is currently +0.1%

Precious metals are trading higher this morning, but gold is only showing a slight gain. GLD is currently +0.1% and SLV is +0.5%.

10:00 am: [BRIEFING.COM] Equity indices have retreated from their early highs with the Nasdaq (-0.2%) facing the heaviest selling pressure. As a result of the retreat, the tech-heavy index now trades lower by 0.2% while the Dow (+0.3%) and S&P 500 (+0.1%) remain in positive territory.

The Nasdaq has followed in the footsteps of its largest component, Apple (AAPL 544.95, -10.04), which has widened its loss to 1.8%. Chipmakers also weigh on the tech-heavy index as the PHLX Semiconductor Index trades lower by 0.6%.

9:45 am: [BRIEFING.COM] As expected, equity indices began the session right above their respective flat lines. The Dow Jones Industrial Average (+0.3%) is pacing the early advance while the broader S&P 500 sports a slimmer gain of 0.2%.

Eight of ten sectors trade with early gains while telecom services (-0.1%) and yesterday's outperformer, technology (-0.2%), lags. The largest tech component, Apple (AAPL 548.62, -6.37), trades lower by 1.1% amid speculation yesterday's below-consensus report from Jabil Circuit (JBL 15.82, -3.90) is foreshadowing disappointing sales for Apple.

On the upside, energy (+0.4%) and financials (+0.5%) outperform.

9:14 am: [BRIEFING.COM] S&P futures vs fair value: +2.30. Nasdaq futures vs fair value: +5.20. Today's session is expected to begin on a quiet note with equity indices starting near yesterday's closing levels. The S&P 500 futures trade two points above fair value after spending the entire overnight session in positive territory.

The first half of today's session is not expected to generate too much excitement with participants awaiting the afternoon release of the latest policy directive from the Federal Reserve. The FOMC policy statement will be released at 14:00 ET while Chairman Bernanke's press conference will follow at 14:30 ET.

Treasuries hover near their lows with the benchmark 10-yr yield up three basis points at 2.87%. The jump in yields took place during the past 45 minutes, after investors received a better-than-expected November Building Permits and Housing Starts reports.

8:58 am: [BRIEFING.COM] S&P futures vs fair value: +1.50. Nasdaq futures vs fair value: +2.20. The S&P 500 futures continue trading right above fair value.

Markets across Asia ended mixed as traders erred on the side of caution ahead of today's FOMC rate decision. In Japan, the Nikkei jumped 2.0% after a survey revealed that nearly all investors are expecting additional easing from the Bank of Japan. Elsewhere, the People's Bank of China has third-party payment processors from clearing bitcoin payments. The ban caused the digital currency to tumble from $717 to below $550.

Investors received several economic data points. China's House Prices rose 9.9% year-over-year (9.6% previous) while foreign direct investment increased 5.5% (5.77% prior). Japan's trade deficit widened to JPY1.29 trillion from JPY1.09 trillion (JPY1.32 trillion expected). On an adjusted basis, the trade deficit widened to JPY1.35 trillion from JPY1.09 trillion (JPY1.19 trillion forecast) as exports increased 18.4% year-over-year (17.9% expected, 18.6% prior) while imports rose 21.1% (21.4% consensus, 26.1% prior). Australia's MI Leading Index ticked down 0.1% month-over-month (0.1% prior). New Zealand's current account deficit widened to NZD4.78 billion from NZD1.34 billion (-NZD4.30 billion expected). Also of note, the Reserve Bank of India held its key interest rate steady at 7.75% (8.00% expected).

Japan's Nikkei (+2.0%) led the region higher after the latest trade data showed a record November trade deficit. Exporters gained as the yen weakened with Honda Motor climbing 3.1% and Toyota Motor adding 1.6%. Real estate names were also strong as Sumitomo Realty & Development surged 4.2% to lead the sector higher.
Hong Kong's Hang Seng (+0.3%) eked out a gain amid a sloppy trade. Insurance stocks led as Ping An added 2.5% and China Life rallied 1.4%.
China's Shanghai Composite (-0.1%) extended its losing streak to seven as a late bid fell just short of the breakeven line. Defense stocks saw profit-taking after their recent gains as Shaanxi Aerospace Power Hi-Tech shed 5.0% and Jiangxi Hongdu Aviation Industry shed 3.7%.

Major European indices hover near their best levels of the session as they rebound from yesterday's losses. Among news of note, the Bank of England released the minutes from its latest policy meeting, revealing a unanimous vote to maintain the key interest rate and asset program unchanged at their respective 0.5% and GBP375 billion. Elsewhere, Italian Prime Minister Enrico Letta commented on the euro, saying the Eurozone should aim to lower the exchange rate. Mr. Letta also reiterated his country's intent to maintain budget discipline.

Economic data was limited. Germany's Ifo Business Climate Index climbed to 109.5 from 109.3, as expected. The Current Assessment fell to 111.6 from 112.2 (112.5 expected). Great Britain's claimant count declined by 36,700 (-35,000 expected, -42,800 prior) while the unemployment rate fell to 7.4% from 7.6% (7.6% expected). Separately, the Average Earnings Index + Bonus increased 0.9% (0.8% expected, 0.8% prior). Also of note, the CBI Distributive Trades Survey surged to 34 from 1 (10 expected). Swiss ZEW Expectations improved to 39.4 from 31.6 (36.0 expected).

Great Britain's FTSE trades higher by 0.3% with ARM Holdings in the lead. The chipmaker trades higher by 1.8%. On the downside, consumer names lag for the second day in a row. J Sainsbury and Tesco are down near 2.0% each.
In France, the CAC trades up 0.9% as financials contribute to the advance. AXA, Credit Agricole, and Societe Generale all hold gains close to 1.6%. Technip weighs, trading lower by 7.0% after peer CGG issued a profit warning.
Germany's DAX is higher by 1.1% as 27 of 30 components register gains. Countercyclical names outperform with Beiersdorf and Henkel up 1.5% and 1.8%, respectively. Deutsche Bank is the weakest index component, trading lower by 0.4%.

8:32 am: [BRIEFING.COM] S&P futures vs fair value: +0.80. Nasdaq futures vs fair value: +0.70. The S&P 500 futures continue to hover just above fair value.

November building permits rose to 1,007,000 from the prior month's upwardly revised rate of 1,039,000 (from 1,034,000). That was above the pace of 983,000 that had been expected among economists polled by Briefing.com.

Regarding Housing Starts, September starts came in at 873,000 while the consensus expected a reading of 915,000. For October, Housing Starts were reported at 889,000 against the 920,000 expected by the consensus. Lastly, November starts increased to 1,091,000 while a reading of 950,000 was broadly anticipated.

7:59 am: [BRIEFING.COM] S&P futures vs fair value: +1.40. Nasdaq futures vs fair value: +1.50. U.S. equity futures hold modest gains with the S&P 500 futures trading less than two points above fair value.

Reviewing overnight developments:

Asian markets ended mixed. Japan's Nikkei +2.0%, Hong Kong's Hang Seng +0.3%, and China's Shanghai Composite -0.1%.
Investors received several economic data points:
China's House Prices rose 9.9% year-over-year (9.6% previous) while foreign direct investment increased 5.5% (5.77% prior).
Japan's trade deficit widened to JPY1.29 trillion from JPY1.09 trillion (JPY1.32 trillion expected). On an adjusted basis, the trade deficit widened to JPY1.35 trillion from JPY1.09 trillion (JPY1.19 trillion forecast) as exports increased 18.4% year-over-year (17.9% expected, 18.6% prior) while imports rose 21.1% (21.4% consensus, 26.1% prior).

Australia's MI Leading Index ticked down 0.1% month-over-month (0.1% prior).
New Zealand's current account deficit widened to NZD4.78 billion from NZD1.34 billion (-NZD4.30 billion expected).
The Reserve Bank of India held its key interest rate steady at 7.75% (8.00% expected).
Among news of note:
The People's Bank of China has third-party payment processors from clearing bitcoin payments. The ban caused the digital currency to tumble from $717 to below $550.
In Japan, a survey conducted by Nikkei showed that nearly all investors are expecting additional easing from the Bank of Japan.

Major European indices hover near their best levels of the session. Great Britain's FTSE +0.3%, France's CAC +0.8%, and Germany's DAX +1.0%. Elsewhere, Spain's IBEX +0.9% and Italy's MIB +1.1%.
Economic data was limited:
Germany's Ifo Business Climate Index climbed to 109.5 from 109.3, as expected. The Current Assessment fell to 111.6 from 112.2 (112.5 expected).
Great Britain's claimant count declined by 36,700 (-35,000 expected, -42,800 prior) while the unemployment rate fell to 7.4% from 7.6% (7.6% expected). Separately, the Average Earnings Index + Bonus increased 0.9% (0.8% expected, 0.8% prior). Also of note, the CBI Distributive Trades Survey surged to 34 from 1 (10 expected).
Swiss ZEW Expectations improved to 39.4 from 31.6 (36.0 expected).
In news:
The Bank of England released the minutes from its latest policy meeting, revealing a unanimous vote to maintain the key interest rate and asset program unchanged at their respective 0.5% and GBP375 billion.
Italian Prime Minister Enrico Letta commented on the euro, saying the Eurozone should aim to lower the exchange rate.

In U.S. corporate news:

FedEx (FDX 136.60, -2.49): -1.8% after missing earnings estimates.
General Mills (GIS 48.58, -1.00): -2.0% after missing on earnings and revenue.
Jabil Circuit (JBL 15.99, -3.73): -18.9% after reporting a bottom-line miss on above-consensus revenue. The company guided second quarter earnings and revenue below consensus.
Lennar (LEN 36.25, +1.05): +3.0% following its earnings beat on above-consensus revenue.

The weekly MBA Mortgage Index fell 5.5% to follow last week's 1.0% increase.

November Building Permits and Housing Starts for September, October, and November will be released at 8:30 ET while the FOMC policy directive and staff projections will cross the wires at 14:00 ET. Chairman Bernanke's press conference will follow at 14:30 ET.

6:25 am: [BRIEFING.COM] S&P futures vs fair value: +3.50. Nasdaq futures vs fair value: +6.50.

6:25 am: [BRIEFING.COM] Nikkei...15587.80...+309.20...+2.00%. Hang Seng...23143.82...+74.60...+0.30%.

6:25 am: [BRIEFING.COM] FTSE...6505.18...+18.80...+0.30%. DAX...4094.34...+86.50...+0.90%.


Stocks popped on news that the Federal Reserve will begin to shrink their monthly bond purchases by $10 billion, citing moderate economic expansion. Stocks responded well to the news with the Dow Jones Industrial Average (DJI) closing up 293 points for a new record closing high of 16,167. The S&P 500 (GSPC) followed suit closing up nearly 30 points on the news out of Washington.

In a statement released by the Fed earlier today, the panel wrote, “In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases.” In other words, some key indicators have recently shown that the economy has recovered enough to begin backing off of the tactics used to prop it up over the past five years.

To be sure, the era of unprecedented market intervention by the Fed known as quantitative easing, or Q-E, has been filled with controversy since it was first deployed in the throes of the financial crisis in 2008, then renewed in 2010 and rejiggered again in September 2012. While time and historians will gauge whether or not the program will be deemed a success, there’s no question that it was a boon for stocks, which outperformed all other asset classes during that period of time and more than doubled.

As Greg McBride, senior financial analyst at Bankrate.com, and I discuss in the attached video, regardless of what the market and economists were expecting, a huge, long-standing variable has been removed from the markets.

"There's no sense delaying the inevitable," McBride says, adding that "you can't go much smaller than tapering off $5 billion on each the Treasury and the mortgage backed securities."

While stocks appeared to like the move in the short-term, McBride says tomorrow could bring a totally different reaction.

“How many times have we seen this where, after the Fed meeting, the market does one thing and then once everyone s on it and wakes up the next day, the market does the exact opposite.”

As is often the case, today’s move does not come without caveats, most noticeably the uptick in the importance of monitoring inflation over unemployment.

“The Committee now anticipates…that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee's two percent longer-run goal,” the FOMC statement said.

The moves come despite long-standing assertions that no such action would be taken until two economic targets were met; unemployment at 6.5% and inflation above 2%. However, a string of stronger than expected economic data lately has made it increasingly difficult for the central bank to justify the need for continued intervention, as GDP has reached 3.6% in the third quarter, 203,000 jobs were created in November, and most recently, housing starts hit a five year high.

As far as the future is concerned, the focus of attention will now shift to incoming chairman Janet Yellen, who could be confirmed by the full Senate as early as this week and would take the reins February 1st. Officially, Ben Bernanke’s final meeting will be January 28-29th, after which the bearded, battle-tested, two-term, central bank chief will once again be a private citizen.

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

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

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