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 Post subject: January 27th Monday Trade Results - Profit $5,530.00
PostPosted: Tue Jan 28, 2014 1:23 am 
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Joined: Sat Jan 10, 2009 1:06 pm
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Location: Canada
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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)
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)

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

Price Action Trade Performance for Today: Emini TF ($TF_F) futures @ $1,030.00 dollars or +10.30 points, Emini ES ($ES_F) futures @ $4,500.00 dollars or +90.00 points, Light Crude Oil CL ($CL_F) futures @ $0.00 dollars or +0.00 points, Gold GC ($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 @ $5,530.00 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=126&t=1706

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.

Image ##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 or you do not document (journal) your own thoughts from trade to trade...the chat room will not be useful to you. Chat room access instructions @ http://www.thestrategylab.com/tsl/forum/viewforum.php?f=164

Image 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

Image 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).

Image Trading Plan Daily Routine @ http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=229&t=2165

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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.

Stocks Tumble As Global Jitters Persist

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

NEW YORK (CNNMoney)
Stocks ended a choppy day in the red Monday as concerns about emerging markets and corporate earnings kept investors on edge.

The Dow Jones industrial average and the S&P 500 were both dragged lower. But losses were offset by gains in Caterpillar (CAT, Fortune 500) shares. The construction equipment giant reported strong quarterly results and approved a new $10 billion stock buyback program.

The Nasdaq slid more than 1% on declines in shares of biotechnology companies such as Celgene (CELG, Fortune 500) and Alexion Pharmaceuticals (ALXN). The PowerShares QQQ Trust (QQQ), a widely-held exchange-traded fund that tracks the Nasdaq 100, is now down more than 2% for the year. And some are worried that the ETF will fall even further.

"$QQQ is teetering on the edge. We may see a sizable correction begin to unfold," said StockTwits user OptionsElite.

And CNNMoney's Tech 30 index fell on weakness in shares of social media companies Twitter (TWTR), Facebook (FB, Fortune 500) and LinkedIn (LNKD).

Weak revenue guidance from Apple (AAPL, Fortune 500) following the closing bell could weigh on the market on Tuesday as well. Shares were down 5% in extended trading even though earnings topped forecasts. The stock in regular trading Monday on hopes of strong iPhone sales.

Last week was a rough one for stocks. The Dow shed around 2% Friday to end the week down 3.5%. The Nasdaq and S&P 500 both closed more than 2% lower Friday.

The market's so-called fear gauge, the CBOE Market Volatility Index, or VIX (VIX), shot up 25% on Friday, the biggest one-day percentage jump since last year's Boston Marathon bombings. The VIX was down nearly 6% on Monday as the stress eased...closing around 17.42 after almost hitting 19.00 around 1226pm est.

But CNNMoney's Fear & Greed index, which looks at the VIX and six other gauges of sentiment, hit a level indicating "Extreme Fear" in the market Monday.

* Buckle up! 2014 will be a bumpy ride

Is a correction brewing? Many investors say stocks could be headed for a correction, typically a drop of 10% or more. Following last year's big rally, stock prices -- as measured by how they trade relative to expected earnings -- have risen to levels that are considered slightly expensive.

Jack Ablin, chief investment officer at BMO Private Bank, said stocks could slide further if corporate results fail to move the needle. "If earnings and revenue don't move at all, the market could drop 10% or more," he said. While "valuations are a bit stretched," Ablin still expects 2014 to be "incrementally positive" for stocks.

So far, corporate earnings have beaten analysts' modest expectations. Of the 123 S&P 500 companies that have reported results through Friday, 68% have had earnings above expectations, according to FactSet Research.

Investors will get results from 130 of the companies in the S&P 500 this week. The stock was also one of the top performers in CNNMoney's Tech 30 index.

In economic news, new home sales plunged 7% in December from November, according to the Commerce Department. December new home sales were up 4.5% from a year ago. New home sales data can be volatile, and some of the drop could be due to colder-than-normal temperatures last month, said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

Emerging markets in turmoil. Meanwhile, emerging markets extended their recent losses Monday amid worries about an economic slowdown and liquidity shortfalls.

Emerging markets have ridden a wave of liquidity over the past few years as central banks in the developed world, including the Federal Reserve, have pumped money into the global economy. But as the Fed begins to scale back its bond buying this year, investors have been pulling money out of emerging markets, prompting some central banks to intervene.

The Turkish lira regained some ground Monday after Turkey's Central Bank announced plans to hold an emergency meeting Tuesday. The Argentinian peso has been under heavy pressure since the nation's central bank devalued the currency Thursday in a bid to jump start growth. India's rupee has also been hit hard.

Investors have also been worried about China, the world's second largest economy, following a disappointing report on manufacturing activity last week and ongoing worries about the nation's financial sector.

Despite the flight from emerging markets, the market panic does not appear to be spreading.

"Does look though to just be $EEM contagion and not something much worse, overall paradigm doesn't seem to have changed," said LDrogen on StockTwits. Still, the iShares MSCI Emerging Markets ETF (EEM) is down nearly 10% so far this year.

European markets ended lower following heavy losses in Asia overnight.

Corporate news: Google (GOOG, Fortune 500) announced it acquired London-based artificial intelligence firm DeepMind Technologies. It's the latest in a series of start-up purchases by the tech giant as it looks to beef up its expertise in artificial intelligence and robotics.

Google shares were down 2%, adding to a steep slide over the past few days. One trader said investors were selling Google shares to buy Apple in anticipation of strong results.

"Anyone who thinks biggest $GOOG selloff in recent memory not connected to $AAPL ER is delusional. Everyone going to cash, just waiting..." said kleo.

Another trader warned that speculating in Apple shares ahead of earnings reports can be dicey. And based on how Apple was faring following its release, that trader turned out to be right.

"$AAPL Investors have got burned with 'sell the news' with Apple on many announcements and earnings. More often than not," said betachaser.

* Emerging markets rattled as anxiety rises

Sony (SNE)shares slid after the firm's debt rating was downgraded to 'junk' by Moody's, with the agency warning that profitability at the tech company would likely remain weak and volatile.

Shares of Vodafone (VOD) tumbled after AT&T (T, Fortune 500) said Monday it would not purchase the British telecom company. There had been recent speculation that a bid was imminent.

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4:15 pm: [BRIEFING.COM] The major averages followed last week's sharp losses with another shaky performance. The Dow Jones Industrial Average and S&P 500 posted respective declines of 0.3% and 0.5% while the Nasdaq (-1.1%) and Russell 2000 (-1.5%) underperformed.

Stocks displayed gains at the open but the early strength faded during the initial hour as the Nasdaq headed into the red. The other indices followed suit and the broad retreat continued until about 12:20 ET when stocks reversed and spent the afternoon in a steady climb. Moderate selling pressure returned during the final hour, knocking the indices off their afternoon highs.

Although there was no news responsible for the turn, the morning selling coincided with a strengthening yen while the session low in equities matched the high point for the Japanese currency. Once the yen began weakening again, a rally in equities ensued. Similarly, the selling observed during the last 30 minutes of action coincided with the yen gaining strength once again.

The Dow and S&P 500 held up relatively well compared to the tech-heavy Nasdaq. The index suffered after being hit with a one-two punch of selling interest as large cap tech names and biotechnology retreated. The tech sector (-1.0%) finished at the bottom of the leaderboard while the iShares Nasdaq Biotechnology ETF (IBB 238.60, -5.42) lost 2.2% and also pressured the health care sector (-0.8%).

Even though technology underperformed, its largest component, Apple (AAPL 550.50, +4.43) added 0.8% ahead of its after-hours earnings report.

Elsewhere among cyclical groups, the industrial sector (+0.2%) drew strength from Caterpillar (CAT 91.29, +5.12) after the Dow component reported above-consensus results and announced a $10 billion buyback program. Transports, however, did not take part in the rally. The bellwether complex lost 0.8% after plunging 4.1% on Friday.

On the countercyclical side, health care (-0.8%) lagged while consumer staples (-0.3%), telecom services (+0.1%), and utilities (+0.2%) outperformed.

The early selling fueled a scramble for downside protection, which sent the CBOE Volatility Index (VIX 17.51, -0.63) as high as 18.99%. However, the subsequent rebound invited many to lift their hedges. As a result, the near-term volatility measure ended lower by 3.5%.

Treasuries finished on their lows with the benchmark 10-yr yield up five basis points at 2.77%.

Participation was a bit above average as 764 million shares changed hands at the NYSE.

Today's economic data was limited to the December New Home Sales, which fell 7.0% to 414,000 from a downwardly revised 445,000 (from 464,000) while the Briefing.com consensus pegged the reading at 457,000. Total sales in 2013 increased 16.3% to 428,000 from 368,000 in 2012. That was the most new homes sold since 485,000 sales registered in 2008. Although that may seem like a lot, more than a million new homes were sold each year from 2003 to 2006.

We hypothesized that the strong sales performance in October and November was due to buyers rushing into the market to take advantage of relatively low interest rates in a rising interest rate environment. The large December decline adds evidence to this theory as the push forward in demand dried up and sales levels returned to where they were during the lackluster summer period. Another drop in January would deliver more credence to the contention that gains in October and November were not from sustainable demand growth.

Tomorrow, December Durable Orders will be released at 8:30 ET while the November Case-Shiller 20-city Index and January Consumer Confidence will cross the wires at 9:00 ET and 10:00 ET, respectively.

Nasdaq Composite -2.2% YTD
Russell 2000 -3.1% YTD
S&P 500 -3.6% YTD
Dow Jones Industrial Average -4.5% YTD

3:35 pm: [BRIEFING.COM] Natural gas futures sold off today nicely following a huge rally, which pushed futures above $5/MMBtu late last week (over the weekend).

Today, Feb natural gas sold off $0.35/MMBtu (or -7%) to $4.68/MMbtu, following profit-taking.

Crude oil futures sold off early this morning and remained near its LoD for most of the session. Mar crude ended $0.94 lower at $95.78/barrel.

Precious metals ended the day mixed with Feb gold losing $1.5 to $1263/oz and Mar silver gaining $0.04 to $19.80/oz


3:00 pm: [BRIEFING.COM] The S&P 500 hovers just above its flat line after completing a 40-point round trip. After starting with a modest gain, the index lost roughly 23 points before finding support in the 1772 area. The benchmark average then rallied back to its flat line as most sectors took part in the recovery.

Interestingly, the one group that remains in the red-technology-paced the early retreat. The sector remains pressured by the likes of Google (GOOG 1111.88, -11.95), Microsoft (MSFT 36.32, -0.48), and Visa (V 218.09, -3.16) while the largest sector member, Apple (AAPL 554.68, +8.61), trades higher by 1.5% ahead of its after-hours earnings release.

The Capital IQ consensus expects Apple to announce earnings of $14.05 on revenue of $57.42 million.

2:35 pm: [BRIEFING.COM] The S&P 500 trades one point below its flat line as the afternoon rebound continues. Earlier today, participants received just one economic data point in the form of December New Home Sales.

Tomorrow's data will include the November Case-Shiller 20-city Index, December durable orders, and January consumer confidence while the latest FOMC policy directive will be released on Wednesday afternoon.

Also of note, Thursday morning will feature the release of the advance reading of fourth quarter GDP. The Briefing.com consensus expects the reading to indicate growth of 3.0%.

2:00 pm: [BRIEFING.COM] Equities have extended their rally off session lows and the Dow Jones Industrial Average (+0.1%) has clawed its way back into positive territory. Meanwhile, the S&P 500 remains lower by 0.2%.

The recent rebound has pulled the industrial sector (+0.3%) out of negative territory, but transports have not taken part in the recovery. The Dow Jones Transportation Average holds a loss of 0.9%. Furthermore, other sectors have also trimmed significant portions of their losses leaving energy (-0.3%), materials (-0.3%), and technology (-0.5%) as the only laggards.

Elsewhere, Treasuries have returned to their morning lows. The 10-yr yield is higher by four basis points at 2.75%.

1:30 pm: [BRIEFING.COM] At their lows for the session, which were reached a little over an hour ago, the Dow, Nasdaq, and S&P 500 were down 96, 75, and 17 points, respectively. Since then, however, they have been engaged in a rebound effort that has helped pare those losses by a notable margin.

There hasn't been a specific piece of news to account for the turnaround effort, so it was most likely spurred by a belief that the broader market is due for a bounce after dropping nearly 4.0% in just the last three sessions.

Not surprisingly, the defensive-oriented utilities (+0.3%) and telecom services (+0.2%) sectors are today's relative strength leaders.

Separately, the transports have gone from the penthouse to the outhouse. At the end of trading last Wednesday, the Dow Jones Transportation Average was up 2.0% in 2014 and outdistancing the S&P 500 by a sizable margin. At its current level, the DJTA is down 3.0% for the year versus the S&P 500, which is down 3.6%.

1:00 pm: [BRIEFING.COM] At midday, equity indices hover near their lows with small caps leading the retreat. The Russell 2000 trades lower by 1.6% while the Dow Jones Industrial Average (-0.3%) outperforms.

Even though stocks trade broadly lower once again, the market displayed strength at the open as participants positioned for a rebound after the S&P 500 lost 3.0% over the past two sessions. However, the early gains faded quickly and the broader market followed in the lead of the largest S&P 500 sector-technology.

The tech sector (-1.1%) continues to trail the remaining groups as top components weigh. For instance, Google (GOOG 1097.17, -26.66), Microsoft (MSFT 36.20, -0.60), and Visa (V 215.99, -5.26) are all down between 1.6% and 2.4%. Meanwhile, the largest sector member, Apple (AAPL 549.33, +3.26), trades higher by 0.6% ahead of its quarterly report set for an after-hours release.

The underperformance of the tech sector weighs on the Nasdaq Composite (-1.5%), which also has to contend with noteworthy losses in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 235.50, -8.52) is lower by 3.5%.

Similar to technology, most other cyclical groups are struggling to keep pace with the S&P 500. Industrials, however, outperform with a loss of 0.2% thanks to the relative strength of Caterpillar (CAT 89.76, +3.59). The Dow component trades higher by 4.2% after reporting above-consensus results and announcing a $10 billion buyback program. Even though Caterpillar's strength has boosted the broader sector, transports are showing noteworthy losses with the Dow Jones Transportation Average down 1.3%.

It should be noted that the retreat from highs occurred as the Japanese yen climbed off its session low. The Japanese currency sold off during the overnight session as the carry trade provided support to the futures market; however, the pre-market high in futures coincided with the session high in dollar/yen. At this juncture, the pair trades below 102.50 after notching a session high at 102.94.

With the market near lows, investors are showing demand for volatility protection as the CBOE Volatility Index (VIX 18.53, +0.39) looks for its fourth consecutive gain. The near-term volatility gauge is higher by 49.0% since the start of last week.

Treasuries hover near the middle of their range with the 10-yr yield up three basis points at 2.75%.

Today's economic data was limited to the December New Home Sales, which fell 7.0% to 414,000 from a downwardly revised 445,000 (from 464,000) while the Briefing.com consensus pegged the reading at 457,000. Total sales in 2013 increased 16.3% to 428,000 from 368,000 in 2012. That was the most new homes sold since 485,000 sales registered in 2008. Although that may seem like a lot, more than a million new homes were sold each year from 2003 to 2006.

We hypothesized that the strong sales performance in October and November was due to buyers rushing into the market to take advantage of relatively low interest rates in a rising interest rate environment. The large December decline adds evidence to this theory as the push forward in demand dried up and sales levels returned to where they were during the lackluster summer period. Another drop in January would deliver more credence to the contention that gains in October and November were not from sustainable demand growth.

12:30 pm: [BRIEFING.COM] Not much letup for the key indices as they remain in a downtrend. The small-cap Russell 2000 has widened its loss to 1.9%, the tech-heavy Nasdaq is lower by 1.7%, and the Dow continues to outperform (-0.5%).

Even though the price-weighted index remains ahead of its peers, there are only nine members that continue to trade higher. Notably, Caterpillar (CAT 89.71, +3.55) trades up 4.1% after its earnings beat; Merck (MRK 53.44, +1.46) is higher by 2.8% following a Morgan Stanley upgrade to 'Overweight' from 'Equal-Weight'; and United Technologies (UTX 113.40, +1.60) sports an advance of 1.4% amid reports the company could spin off one of its units.

With the market still searching for a floor, investors are showing demand for volatility protection as the CBOE Volatility Index (VIX 18.84, +0.70) sits at its highest level since early October. The near-term volatility gauge is higher by 51.5% since the start of last week.

12:00 pm: [BRIEFING.COM] Sellers remain in control with equity indices on fresh lows. At this juncture, only two sectors-telecom services (+0.4%) and utilities (+0.2%)-remain in positive territory and they both fall under the countercyclical umbrella. The other two defensive sectors-consumer staples (-0.2%) and health care (-0.7%)-have yet to climb back into positive territory.

Meanwhile, on the cyclical side, industrials (-0.2%) trade just ahead of the broader market thanks to the outperformance of Caterpillar (CAT 89.93, +3.76). However, the remainder of the sector lags with the Dow Jones Transportation Average holding a 1.2% loss. Similar to transports, other growth-sensitive sectors trail the broader market.

The recent slide to lows coincided with Treasuries regaining almost all of their losses. The benchmark 10-yr yield is now unchanged at 2.72%.

11:30 am: [BRIEFING.COM] The major averages continue to trade mixed with the Dow Jones Industrial Average (+0.1%) outperforming. Although the price-weighted index trades ahead of its peers today, it is the weakest performer so far this month. The Dow is lower by 4.2% in January versus a 3.4% decline for the S&P 500.

Today, however, the Dow displays relative strength as 16 of its 30 components register gains. Of the 16, four trade higher by 1.0% or more with Caterpillar (CAT 91.13, +4.96) displaying the largest advance. The machinery manufacturer trades up 5.7% after reporting strong results and announcing a $10 billion buyback program.

Elsewhere, Treasuries hover near the middle of their range with the benchmark 10-yr yield up two basis points at 2.74%.

10:55 am: [BRIEFING.COM] Recent action saw the major averages slide to lows with the Nasdaq (-0.8%) leading the retreat. The S&P 500 holds a more modest loss of 0.2% while the Dow Jones Industrial Average remains just above its flat line.

The underperformance of the tech-heavy Nasdaq is due in part to the relative weakness of the technology sector (-0.5%) as most major components trade lower. Apple (AAPL 552.23, +6.16) is an exception as it trades higher by 1.2% ahead of this evening's quarterly report. In addition, biotechnology trades broadly lower with the iShares Nasdaq Biotechnology ETF (IBB 236.68, -7.34) down 3.0%. In turn, this weighs on the health care sector, which holds a loss of 0.6%.

It should be noted that the retreat from highs occurred as the Japanese yen climbed off its session low. The Japanese currency sold off during the overnight session as the carry trade provided support to the futures market; however, the pre-market high in futures coincided with the session high in dollar/yen.

10:30 am: [BRIEFING.COM]

Commodities are mixed overall this morning
Crude oil and copper futures sold off minutes ago, while the dollar index sits at the flat line
Natural gas extended gains overnight from Friday, but there has been a reversal during morning trade here and nat gas is at its LoD
In current trade, Mar crude oil is -0.3% at $96.35/barrel , while Feb natural gas is -3% at $4.85/MMBtu
Precious metals are mixed with gold modestly higher and silver modestly lower
Feb gold is currently -0.3% at $1260.40/oz, Mar silver is +0.2% at $19.80/oz

10:00 am: [BRIEFING.COM] The S&P 500 trades higher by 0.1%.

December new home sales hit an annualized rate of 414,000, which was down from the revised November rate of 445,000 (from 464,000), and worse than the rate of 457,000 that had been broadly expected by the Briefing.com consensus.

9:45 am: [BRIEFING.COM] The major averages began the session in positive territory with the Dow Jones Industrial Average (+0.3%) providing early leadership.

The price-weighted index has received support from Caterpillar (CAT 91.84, +5.63), which trades higher by 6.4% after beating on earnings and revenue. In turn, this has given a boost to the industrial sector (+0.7%), which trades ahead of the remaining nine groups.

Most other cyclical sectors also trade ahead of the broader market. Consumer discretionary (+0.3%), financials (+0.5%), and materials (+0.4%) outperform while technology (+0.1%) lags.

Treasuries remain near their lows with the 10-yr yield up four basis points at 2.76%.

9:15 am: [BRIEFING.COM] S&P futures vs fair value: +2.50. Nasdaq futures vs fair value: +3.00. Equities are on track to begin today's session on an upbeat note as the S&P 500 futures trade almost three points above fair value. Given the early disposition, the benchmark index will look to rebound after losing just under 3.0% over the past two sessions.

With no pre-market data, investors focused on a handful of quarterly reports. Most notably, Caterpillar (CAT 91.97, +5.83) holds a pre-market gain of 6.8% after reporting above-consensus results and announcing a $10 billion share buyback. In other corporate news of note, AT&T (T 33.60, +0.18) said it does not plan to make an offer for Vodafone (VOD 38.04, 0.00).

Treasuries are on the defensive with the 10-yr yield up three basis points at 2.75%.

The New Home Sales report for December will be released at 10:00 ET.

8:58 am: [BRIEFING.COM] S&P futures vs fair value: +3.50. Nasdaq futures vs fair value: +3.00. The S&P 500 futures trade roughly four points above fair value.

Markets across Asia ended broadly lower as Friday's concerns surrounding emerging markets carried over into the Asian session. The concerns were highlighted by action in the foreign exchange market as the Malaysian ringgit (MYR), Philippines peso (PHP), and Taiwan dollar (TWD) all moved to multi-year lows against the U.S. dollar. Markets across the region will be closed for parts of the next week in observance of the Lunar New Year.

In economic data, Japan's trade deficit widened to JPY1.30 trillion from JPY1.29 trillion (deficit of JPY1.22 trillion expected) as exports rose 15.3% (17.8% forecast, 18.4% prior) and imports expanded 24.7% (26.1% consensus, 21.1% last). In addition, the adjusted trade deficit narrowed to JPY1.15 trillion from JPY1.29 trillion (JPY1.33 trillion forecast). Elsewhere, Hong Kong's trade deficit widened to HKD54.40 billion from HKD44.60 billion (HKD46.00 billion forecast).

Japan's Nikkei tumbled 2.5% to a two-month low. Exporters were hit hard as the yen strengthened. Sony lost 3.1% and Nissan Motor gave up 2.2%.
Hong Kong's Hang Seng lost 2.1%, sinking to its lowest level in five-months. Energy stocks lagged as CNOOC fell 3.5% and China Shenhua Energy lost 3.3%.
China's Shanghai Composite fell 1.0%, seeing some selling ahead of the Lunar New Year. Insurance names were weak with China Life and Ping An sliding 4.1% and 3.8%, respectively.

Most major European indices trade little changed while Great Britain's FTSE (-1.1%) lags. Economic data was limited to Germany's Ifo Business Climate Index, which ticked up to 110.6 from 109.5 (110.0 forecast) as Business Expectations improved to 108.9 from 107.4 (108.0 expected) and Current Assessment rose to 112.4 from 111.6, as expected.

Among news of note, when asked about the possibility of launching a quantitative easing program, European Central Bank President Mario Draghi said the ECB may buy securitized bank loans packaged as asset-backed securities. Elsewhere, Moody's affirmed the sovereign debt rating of France at 'Aa1' while maintaining a 'negative' outlook.

Great Britain's FTSE is lower by 1.1% as BG Group and Vodafone weigh. BG Group has tumbled 14.5% after issuing a profit warning while Vodafone displays a loss of 5.5% after AT&T ruled out a bid for the company.
Germany's DAX trades flat. Drug maker Merck is lower by 10.5% after its Chief Financial Officer left the company to join Lanxess, which is the top performer with a gain of 8.2%.
In France, the CAC is higher by 0.1% as financials display strength. BNP Paribas and Societe Generale sport respective gains of 1.5% and 1.3%. On the downside, Electricite de France is lower by 1.6%.

8:28 am: [BRIEFING.COM] S&P futures vs fair value: +5.00. Nasdaq futures vs fair value: +5.00. Following two days of sharp losses, U.S. equity futures are in the midst of a rebound that has the S&P 500 futures trading five points above fair value. Interestingly, the rebound in U.S. futures is taking place even as most European indices trade little changed.

Elsewhere, the Dollar Index is showing some modest strength (+0.1% at 80.54) while Treasuries hover near their lows with the 10-yr yield up almost four basis points at 2.76%.

Although the fourth quarter earnings season will kick into high gear this week, only a handful of companies reported their results this morning. Most notably, Caterpillar (CAT 91.80, +5.63) holds a pre-market gain of 6.5% after beating on earnings and revenue. In addition, the company authorized a $10 billion share repurchase program.

8:01 am: [BRIEFING.COM] S&P futures vs fair value: +3.90. Nasdaq futures vs fair value: +2.70. U.S. equity futures display modest gains despite cautious overseas action. The S&P 500 futures trade four points above fair value.

Reviewing overnight developments:

Asian markets ended lower across the board. China's Shanghai Composite -1.0%, Hong Kong's Hang Seng -2.1%, and Japan's Nikkei -2.5%.
Economic data was limited:
Japan's trade deficit widened to JPY1.30 trillion from JPY1.29 trillion (deficit of JPY1.22 trillion expected) as exports rose 15.3% (17.8% forecast, 18.4% prior) and imports expanded 24.7% (26.1% consensus, 21.1% last). In addition, the adjusted trade deficit narrowed to JPY1.15 trillion from JPY1.29 trillion (JPY1.33 trillion forecast).
Hong Kong's trade deficit widened to HKD54.40 billion from HKD44.60 billion (HKD46.00 billion forecast).
South Korea's Consumer Confidence rose to 109 from 107 (107 expected).
New Zealand's Performance of Services Index ticked up to 57.5 from 55.8.
Among news of note:
According to Chinese press, the Shanghai branch of the People's Bank of China will strengthen its liquidity management.

Major European indices trade mixed. France's CAC +0.1%, Germany's DAX -0.2%, and Great Britain's FTSE -1.3%. Elsewhere, Spain's IBEX -0.4% and Italy's MIB -0.3%.
In economic data:
Germany's Ifo Business Climate Index ticked up to 110.6 from 109.5 (110.0 forecast) as Business Expectations improved to 108.9 from 107.4 (108.0 expected) and Current Assessment rose to 112.4 from 111.6, as expected.
In news:
Moody's affirmed the sovereign debt rating of France at 'Aa1' while maintaining a 'negative' outlook.
When asked about the possibility of launching a quantitative easing program, European Central Bank President Mario Draghi said the ECB may buy securitized bank loans packaged as asset-backed securities.

In U.S. corporate news:

Caterpillar (CAT 90.77, +4.60): +5.3% after beating earnings estimates on above-consensus revenue.
Cisco Systems (CSCO 21.63, -0.57): -2.6% following a JPMorgan downgrade to 'Underweight' from 'Neutral.'
Merck (MRK 52.76, +0.78): +1.5% after Morgan Stanley upgraded the stock to 'Overweight' from 'Equal-Weight.'

The New Home Sales report for December will be released at 10:00 ET.

6:29 am: [BRIEFING.COM] S&P futures vs fair value: +2.00. Nasdaq futures vs fair value: +2.00.

6:29 am: [BRIEFING.COM] Nikkei...15005.73...-385.80...-2.50%. Hang Seng...21976.10...-473.20...-2.10%.

6:29 am: [BRIEFING.COM] FTSE...6568.81...-94.90...-1.40%. DAX...9346.96...-43.30...-0.50%.

Natural Gas Plunges 7 Percent As Cold Front Ends (NG Futures)

Natural Gas NG Futures fall 7 percent as cold weather dissipates; Prices still at 3-year highs

NEW YORK (AP) -- Natural gas prices fell sharply Monday as the bitter cold that hit most of the country last week started to dissipate.

Natural gas futures plunged 32 cents, or 7 percent, to $4.67 per thousand cubic feet. The drop comes after natural gas prices hit their highest level since September 2011 on Friday.

Natural gas is the nation's most popular form of heating, used by roughly half the country. Electricity is the second most popular heating source, and electric power generators are heavy users of natural gas to generate power.

The cold front last week caused some parts of the country to report shortages for propane and other natural gas products due to increased demand.

Forecasters expect temperatures to remain cold for most of the country this week, but the cold is not expected to be as extreme as it was last week.

Heating oil, which is used primarily in the Northeast, dropped nearly 2 percent Monday.

Other energy futures also fell. Crude oil was down 92 cents, or 1 percent, to $95.72 a barrel. Wholesale gasoline futures fell four cents, or 1.4 percent, to $2.63 a gallon.

Metal commodities mostly fell.

Gold lost 90 cents, or 0.1 percent, to $1,263.40 an ounce. High-grade copper fell a penny, or 0.4 percent, to $3.26 a pound. March platinum fell $7.50, or 0.5 percent, to $1,421.10 an ounce and palladium was down $12.25, or 2 percent, to $722.55 an ounce. Only silver rose, gaining 3 cents to $19.79 an ounce.

Crop prices mostly rose.

Corn for March delivery rose two cents, or 0.5 percent, to $4.32 a bushel and soybeans were up three cents, or 0.2 percent, to $12.88 a bushel. March wheat fell two cents, or 0.3 percent, to $5.64 a bushel.

U.S. Stocks Retreat Following Worst Week Since 2012

By Whitney Kisling and Lu Wang Jan 27, 2014 4:36 PM ET

U.S. stocks fell, following the worst week since 2012 for benchmark indexes, as concern over Federal Reserve plans to cut stimulus and an economic slowdown in China tempered gains in industrial shares.

Visa Inc., Microsoft Corp. and Goldman Sachs Group Inc. slumped more than 1.7 percent, leading declines among large companies. Google Inc. and Facebook Inc. paced losses in technology stocks. Caterpillar Inc. (CAT) jumped 5.9 percent after announcing a stock buyback and forecasting earnings above analysts’ estimates amid demand for construction equipment.

The Standard & Poor’s 500 Index slipped 0.5 percent to 1,781.56 at 4 p.m. in New York after tumbling 2.6 percent last week. The Dow Jones Industrial Average lost 41.23 points, or 0.3 percent, to 15,837.88. Both gauges closed at the lowest levels since mid-December. About 8 billion shares changed hands on U.S. exchanges, 30 percent more than the three-month average.

“I don’t think the emerging market story has played out yet,” Wayne Lin, a portfolio manager at Baltimore-based Legg Mason Inc., which oversees $680 billion, said in a phone interview. “The big question is, is it the beginning of another macro event, or is it just people worried about losing their profits and selling off? People are evaluating whether or not markets are as safe and steady as they have been.”

The S&P 500 (SPX) sank the most since June 2012 last week as a sell-off in developing-nation currencies spurred concern global markets will become more volatile. The decline pushed the index below its average price in the past 50 days for the first time since October. The threshold is currently about 1,813. The S&P 500 today extended its 2014 retreat to 3.6 percent. The Dow is down 4.5 percent for the year.

Stimulus Cuts

Emerging-market stocks are off to the worst start to a year since 2009 and currencies from Turkey to South Korea have tumbled amid signs growth is slowing in China and as the Fed prepares to review further stimulus cuts this week.

The central bank, which starts a two-day meeting tomorrow, decided at its December gathering to begin cutting its monthly bond purchases by $10 billion to $75 billion.

The meeting is the last for Chairman Ben S. Bernanke, as Janet Yellen takes over starting Feb. 1. The Fed stimulus has helped fuel a five-year bull market that has pushed the S&P 500 higher by 165 percent.

Fed officials have been scrutinizing economic data to determine the timing and pace of any reductions to their stimulus. A Commerce Department report today showed that sales of new homes in the U.S. fell more than forecast in December, ending the industry’s best year since 2008 on a sour note.

Earnings Season

Eight companies in the S&P 500 were scheduled to report their financial results today. Of the 125 companies in the benchmark that posted earnings so far this season, 74 percent have beaten analysts’ estimates for profit and 68 percent have exceeded projections for sales, according to data compiled by Bloomberg.

Companies in the S&P 500 probably increased their earnings per share by 6.6 percent in the fourth quarter of 2013 and their revenue by 2.6 percent, analysts’ estimates compiled by Bloomberg show.

The Chicago Board Options Exchange Volatility Index slid 4 percent to 17.42 today, retreating from the highest level since October. The gauge of S&P 500 options known as the VIX surged 46 percent last week, its biggest gain since May 2010.

“The market is volatile and it just feels like a lot of scared buyers are out there,” Sandy Villere III, a New Orleans-based fund manager at Villere & Co., said in a phone interview. His firm oversees $3.2 billion. “We don’t see a major pullback. Earnings are largely pretty good and the U.S. is generally healthy.”

Villere said his firm is considering buying some technology, industry and retailer shares after raising cash to a maximum 15 percent at some of the funds at the end of last year.

Industry Movers

Seven out of 10 S&P 500 industry groups declined today as technology and health-care companies fell the most, sliding at least 0.8 percent as a group. A gauge of industrial shares added 0.2 percent for the best performance.

Visa, the world’s biggest bank-card network, declined 2.3 percent to $216.22. Microsoft, the largest software developer, slipped 2.1 percent to $36.03. Goldman Sachs lost 1.8 percent to $164.69.

Liberty Global (LMCA) Plc slipped 2.2 percent to $81.42 after the company controlled by billionaire John Malone agreed to take over Dutch broadband provider Ziggo NV for 4.9 billion euros ($6.7 billion). Liberty will combine Ziggo’s 2.7 million customers with its UPC cable unit as it competes with Dutch carrier Royal KPN NV.

Technology Shares

The Nasdaq-100 Index declined 0.9 percent, trimming a loss of 1.7 percent earlier. Google slipped 2 percent to $1,101.23 while Facebook, the world’s largest social network, dropped 1.7 percent to $53.55. Both companies are scheduled to report results later this week.

Xerox Corp. dropped 5.6 percent to $10.61. The photocopier pioneer was cut to market perform from outperform at BMO Capital Markets by equity analyst Keith Bachman, who said the stock’s valuation already reflected the company’s improved services and technology mix.

Apple Inc. (AAPL), the most-valuable company in the world, climbed 0.8 percent to $550.50 in regular trading before the company reported fiscal first-quarter results. The shares sank 6.3 percent in extended trading at 4:35 p.m. in New York after the company’s second-quarter revenue forecast of $42 billion to $44 billion trailed the average analyst estimate of $46.10 billion.

Caterpillar rallied 5.9 percent to $91.29 after saying it will spend $10 billion buying back shares. The company also reported earnings of $1.54 a share, exceeding the average analyst estimate of $1.27, data compiled by Bloomberg show.

Construction equipment demand is helping Caterpillar to limit the damage from the slump in orders from mining companies that followed a decline in commodity prices.

Merck & Co. advanced 1.1 percent to $52.53. The second-largest U.S. pharmaceuticals company was raised to overweight, an equivalent of buy, from underweight by Morgan Stanley on expectations that cancer drugs will help Merck boost sales.

Trader Sells $18 Million VIX Calls in Day’s Biggest Options Bet

By Nikolaj Gammeltoft Jan 27, 2014 5:17 PM ET

An investor sold about $18 million in calls on the Chicago Board Options Exchange Volatility Index, a strategy that will be profitable as long as the VIX doesn’t keep extending last week’s surge.

The trade included the sale of 250,000 February 22 calls for about 70 cents each, according to data compiled by Bloomberg and Trade Alert LLC. It happened after the VIX reached an intraday high of 18.99 around 12:20 p.m. New York time. The investor will keep the proceeds if the VIX stays below 22 and the calls expire worthless.

“It’s impressive in size and it’s impressive in timing,” Henry Schwartz, president of Trade Alert, a New York-based provider of options-market data, said in a phone interview. “Whether it’s an outright bet against the VIX rising or hedge against existing positions is hard to say. It’s a large account for sure.”

Stock-market volatility soared last week after data signaling a possible contraction in China’s factory output and a devaluation of Argentina’s peso shook investor confidence. Emerging-market equities have tumbled since the Federal Reserve signaled in May that it could start scaling back bond purchases that boosted demand for higher-yielding assets.

The VIX jumped 46 percent to 18.14 last week, the biggest increase since May 2010. The measure, which tracks the cost of options on the Standard & Poor’s 500 Index, slipped 4 percent to 17.42 today.
Huge Trade

The bearish volatility bet was the biggest single block of options to change hands on U.S. exchanges, according to data compiled by Bloomberg. Before today, the open interest in the February 22 call contract was about 181,000.

“The trade was huge,” Mark Caffray, who brokers contracts on the VIX for clients at Chicago-based PTR Inc., said in an interview. “To say the least, this trade caught dealers off guard.”

There were a record 8.4 million calls outstanding on the VIX before expiration last week, more than twice the level in June, according to data compiled by Bloomberg. Calls on the VIX, a gauge used by investors as insurance against losses because it climbs when equities fall, outnumber puts by the most since 2010 with a ratio of more than 3-to-1.

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

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

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