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 Post subject: February 4th Tuesday Trade Results - No Trades
PostPosted: Tue Feb 04, 2014 11:35 pm 
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Joined: Sat Jan 10, 2009 2:06 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)
Phone: +1 708 572-4885
Free Chat Room: http://www.thestrategylab.com/tsl/forum/viewforum.php?f=164
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Quote:
No trades today for me after missing the only trade signal I saw around 0948am est as a Long position in Emini ES futures or Emini TF futures. Also, after missing that trade signal, the volatility changed into a low volatility tight trading range for awhile...doing such after several trading days of excellent increasing volatility. In addition, I'm not comfortable in trading the first low volatility trading day after those excellent trading days of increasing volatility. Therefore, I decided not to trade for the remainder of the trading day after the missed Long signal.

Price Action Trade Performance for Today: Emini TF ($TF_F) futures @ $0.00 dollars or +0.00 points, Emini ES ($ES_F) futures @ $0.00 dollars or +0.00 points, Light Crude Oil CL ($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 @ $0.00 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=127&t=1714

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=232&t=2209

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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 Gain Back Some Lost Ground

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

NEW YORK (CNNMoney)
Stocks bounced back Tuesday, a day after suffering a steep drop Monday.

The Dow finished up more than 70 points. The S&P 500 and Nasdaq also closed higher, as did CNNMoney's Tech 30 Index.

Markets haven't had an easy go of it this year, with the Dow still down about 7% in 2014. Stocks took a beating Monday, after key manufacturing data for the United States came in way below Wall Street forecasts.

But some market strategists felt Monday's plunge may have gone too far and that stocks were poised to recoup some losses. Analysts at Capital Economics said the sell-off Monday was "overdone" and that stocks will recover over the remainder of the year. They blamed Monday's poor manufacturing numbers on unseasonably bad weather and said that further economic data could reflect a similar pattern.

The big event happens Friday, when the government releases its monthly jobs report. Investors will be looking for signs that the U.S. economy is expanding at a healthy pace, as many economists have maintained.

What's moving: Microsoft (MSFT, Fortune 500) shares closed slightly lower after initially rising when the company named Satya Nadella to be its new CEO, replacing Steve Ballmer. The news was expected, and investors are hoping that Nadella, who has led the company's rapidly growing cloud software division, will be able to help Microsoft become an even bigger presence in the cloud market.

But some traders on StockTwits were skeptical that Nadella can breathe new life into the software giant.

"$MSFT Wrong HR practice is the key MSFT issue. They promote only veterans who is not able to bring the fresh vision :-(," lamented sporitus.

"$MSFT ...they took how long to make an internal appointment?" said topgoalscorer. "$MSFT needs an overhaul not a tweak!"

Michael Kors (KORS) shares surged 17% after reporting stronger sales and profits than expected. The luxury retailer's stock hit an all-time high and was the best performer in the S&P 500.

"$KORS Well this is a slap in the face to those who said that "retail" is done!," said girlytrader.

But StockTwits trader LegacyCap felt the company's earnings were more a reflection of the high-end market, rather than an overall retail trend.

"...$KORS earnings go to show that flight to quality happens on the retail side too...those that have will spend," he said.

Shares of KFC-owner Yum! Brands (YUM, Fortune 500) jumped after it reported better-than-expected earnings, despite continued sluggishness with its KFC business in China.

J.C. Penney (JCP, Fortune 500) shares fell around 11% to new multi-decade lows even though the struggling retailer reported same-store sales growth for the holiday season. The company's management team is desperately trying to deliver on a much-hyped turnaround strategy.

"$JCP This was the holiday season, still not convinced if this is really the first sign of a sustained turnaround," said The_Realist.

Twitter (TWTR), a member of CNNMoney's Tech 30 Index, gained nearly 2%. The company will release its first earnings report as a public company Wednesday.

ARM Holdings (ARMH), another member of the Tech 30, reported fourth quarter earnings that disappointed some investors, sending shares lower.

Meanwhile, Asian markets suffered another battering Tuesday, taking their cue from Monday's sharp sell-off in U.S. stocks.

Japan's Nikkei index fell 4.2%, extending its losses this year to just over 14%. The slide has put the index well into correction territory, and erased a chunk of last year's stunning 57% gain. Hong Kong's Hang Seng also pushed into a correction, dropping nearly 3%. European markets ended mixed.

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4:10 pm: [BRIEFING.COM] After enduring a broad-based selloff on Monday, the stock market rebounded, erasing roughly a third of yesterday's losses. The Nasdaq led the way, rising 0.9% while the S&P 500 gained 0.8%. For its part, the Dow Jones Industrial Average added 0.5%, but was unable to reclaim its 200-day moving average (15474).

Equities rallied steadily throughout the session in the absence of yen strength, which has been a headwind to the market since the start of the year. In fact, the yen began retreating overnight, and continued its slide into the close. Dollar/yen finished near 101.65 after starting its rally from just below the 101.00 level. Meanwhile yen futures lost 0.8%, trimming their 2014 gain to 3.6%.

Nine of ten sectors ended in the green with the discretionary space in the lead. The sector added 1.2% after Michael Kors (KORS 89.91, +13.24) and Yum! Brands (YUM 72.06, +5.06) reported above-consensus earnings. KORS surged 17.3% and YUM jumped 8.9% while also providing support to their respective industry groups. Despite today's relative strength, the discretionary sector remains the weakest performer of the year, down 7.4%.

Other influential groups like health care (+1.0%) and financials (+1.0%) also finished ahead of the broader market while technology (+0.5%) and industrials (+0.6%) lagged.

The largest S&P 500 sector, technology, struggled to keep pace with the market even with its top component, Apple (AAPL 508.79, +7.26), advancing 1.5%. Another large sector member, Microsoft (MSFT 36.35, -0.13), ended little changed after announcing Satya Nadella will replace the outgoing Chief Executive Officer Steve Ballmer.

Elsewhere, the industrial sector lagged as the underperformance of Boeing (BA 122.04, -1.04) and United Technologies (UTX 109.10, -1.06) overshadowed the broad gains among transports. The Dow Jones Transportation Average advanced 1.2% as all but one component ended in the green. Con-way (CNW 37.19, -0.66) was the lone decliner, falling 1.7%.

Treasuries ended near their lows with the 10-yr yield up four basis points at 2.62%.

Participation was above average as 820 million shares changed hands at the NYSE.

Today's economic data was limited to the December factory orders report:
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Factory orders declined 1.5% after increasing a downwardly revised 1.5% (from 1.8%) in November. The Briefing.com consensus expected factory orders to decline 1.7%. The durable goods data were revised slightly higher, but still left a lot to be desired. Orders fell 4.2%, which was slightly above the 4.3% decline reported in the advance release. A large portion of the decline was a result of a sharp drop in transportation demand (-9.7%), which was mostly the result of a 16.9% decline in defense and nondefense aircraft.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the ADP Employment Change report for January will be released at 8:15 ET. The day's data will be topped off with the 10:00 ET release of January ISM Services.

Nasdaq Composite -3.5% YTD
S&P 500 -5.0% YTD
Russell 2000 -5.1% YTD
Dow Jones Industrial Average -6.8% YTD

3:30 pm: [BRIEFING.COM]

Mar natural gas outperformed in the commodities space as it gained strength on forecasts for colder-than-average temperatures over the next 10 days. Prices came off a session low of $5.14 per MMBtu set moments after pit trade opened and advanced as high as $5.40 per MMBtu in afternoon action. With the momentum holding steady, natural gas settled with a solid 9.6% gain at $5.37 per MMBtu.
Mar crude oil traded higher ahead of tomorrow's release of inventory data. The energy component lifted from a session low of $96.78 per barrel and rose as high as $97.71 per barrel in morning action. It eventually settled with a 0.8% gain at $97.24 per barrel.
Mar silver dipped to a session low of $19.26 per ounce in morning floor trade but managed to recover back above the unchanged line. It brushed a session high of $19.48 per ounce and settled with a 0.1% gain at $19.43 per ounce.
Apr gold, on the other hand, spent the pit session in the red as a stronger dollar index pressured prices. It traded in a consolidative pattern near the $1250 per ounce level and eventually settled with a 0.6% loss at $1251.60 per ounce.

3:00 pm: [BRIEFING.COM] The S&P 500 hovers just below its session high with one hour remaining in the trading day.

Following today's close, participants will be focusing on quarterly reports as there are more than 60 companies set to release their results after the bell. Dow Transports component C.H. Robinson (CHRW 58.76, +1.03) is among the names on this evening's schedule. In addition, Ameriprise Financial (AMP 103.44, +1.97), Banco Santander (BSAC 19.53, +0.19), and Gilead Sciences (GILD 81.70, +2.87) will also release their earnings later today.

Tomorrow morning, Humana (HUM 97.36, +1.00), Merck (MRK 53.40, +1.32), and Polo Ralph Lauren (RL 154.88, +1.22) will announce their results prior to the opening bell.

2:30 pm: [BRIEFING.COM] Stocks remain near their recent levels with the S&P 500 trading higher by 0.6%. Given its current level, the benchmark index has retraced roughly a third of its decline from yesterday, which leaves it down 1.6% for the week.

Although the first couple sessions of the week did not feature too much economic data, that will change somewhat during the remainder of the week. Tomorrow, participants will receive the ADP Employment Change report for January, which is expected to indicate the addition of 178,000 jobs, according to the Briefing.com consensus.

More employment data is expected on Friday with the January nonfarm payrolls report set for an 8:30 ET release. The Briefing.com consensus expects the reading to come in at 175,000.

2:05 pm: [BRIEFING.COM] Recent action saw the major averages tick down from their best levels of the session. The move was accompanied by a modest retreat in the dollar/yen pair as the strong negative correlation between the yen and equities remains.

With regard to individual sectors, consumer discretionary (+0.9%) remains in the lead while other influential sectors trade mixed with respect to the broader market. Health care (+0.7%) and financials (+0.7%) outperform while technology (+0.5%) and industrials (+0.5%) lag.

Even though the industrial sector is among the laggards, transports have shown some relative strength. The Dow Jones Transportation Average trades higher by 0.8% with 19 of its 20 components holding gains.

1:30 pm: [BRIEFING.COM] The stock market has a sturdier feel to it today than it did yesterday, yet that goes without saying simply by looking at the standing of the major indices. Each has been ensconced in positive territory thanks to a buy-the-dip trade that has been present since the opening bell.

The utilities sector (-0.6%), which was the relative strength leader yesterday because it was down the least, is the biggest laggard today. It is also the only sector trading with a loss at this time. Duke Energy (DUK 69.88, -0.58) is partly to blame after the company announced yesterday that a pipe break caused an ash release at its Dan River Stream Station.

Notwithstanding today's dip, the utilities sector remains the best-performing area year-to-date with a gain of 1.5% that stacks up reassuringly against a 5.0% decline for the S&P 500.

Elsewhere, the Treasury market, like the utilities sector, is seeing a little bit of the risk aversion trade dissipate in the face of the stock market rebound effort. The 10-yr note is down 12 ticks with its yield at 2.625%.

1:00 pm: [BRIEFING.COM] At midday, the major averages hover near their best levels of the session with the Nasdaq (+1.1%) pacing the rally. The S&P 500 holds an advance of 0.9% with nine of ten sectors showing gains.

Stocks have rallied steadily through the first half of action after yesterday's broad-based retreat sent the Dow Jones Industrial Average below its 200-day moving average (15474). This marked the Dow's first close below that level since December 2012.

The price-weighted Dow finds itself back in the vicinity of its 200-day average at this juncture while the S&P 500 has yet to retake its 100-day moving average (1770), which was violated during yesterday's selloff.

Although there was no particular news item responsible for the rebound in equities, it is worth mentioning that the steady climb, which began in the futures market last night, has coincided with a weakening yen. Dollar/yen sits near its session high at 101.67 after marking an overnight low just below the 101.00 level. Yen futures, meanwhile, trade lower by 0.8%, narrowing their 2014 gain to 3.6%.

Heavily-weighted sectors have factored into today's advance as consumer discretionary, financials, and health care display gains between 1.0% and 1.3%. Notably, the discretionary space outperforms thanks to the relative strength of apparel companies and quick-service restaurants after Michael Kors (KORS 90.65, +13.98) and Yum! Brands (YUM 71.94, +5.78) reported better-than-expected earnings.

Elsewhere, the largest S&P 500 sector, technology, trades in-line with the broader market.

With stocks on highs, Treasuries have surrendered a portion of yesterday's gains. The 10-yr yield is higher by five basis points at 2.63%.

Today's economic data was limited to the December factory orders report:

Factory orders declined 1.5% after increasing a downwardly revised 1.5% (from 1.8%) in November. The Briefing.com consensus expected factory orders to decline 1.7%. The durable goods data were revised slightly higher, but still left a lot to be desired. Orders fell 4.2%, which was slightly above the 4.3% decline reported in the advance release. A large portion of the decline was a result of a sharp drop in transportation demand (-9.7%), which was mostly the result of a 16.9% decline in defense and nondefense aircraft.

12:30 pm: [BRIEFING.COM] Solid gains across the board for the major averages as they continue retracing a portion of yesterday's sharp losses.

Similar to yesterday, the Japanese yen has been a factor in determining the general direction of equities. However, unlike yesterday, the yen has been retreating throughout the session. Currently, dollar/yen hovers near 101.55 after notching a high at 101.64 not too long ago. Meanwhile, yen futures trade lower by 0.7%, narrowing their 2014 gain to 3.6%.

Today's yen weakness has been a supportive factor for equities as they benefit from the yen-based carry trade; however, the continued presence of the strong negative correlation between yen and risk assets suggests participants should keep a close watch on the performance of the Japanese currency.

12:00 pm: [BRIEFING.COM] The S&P 500 has inched to a fresh session high with help from influential sectors like consumer discretionary (+1.3%) and financials (+1.3%).

The discretionary sector entered the session as the weakest group of the year, but it finds itself among today's leaders thanks to the relative strength of apparel companies and quick-service restaurants after Michael Kors (KORS 90.30, +13.63) and Yum! Brands (YUM 71.53, +5.37) reported better-than-expected earnings.

Elsewhere, the financial sector has drawn strength from its largest components as Bank of America (BAC 16.51, +0.16), Citigroup (C 47.23, +0.89), and JPMorgan Chase (JPM 55.20, +0.89) hold gains between 1.0% and 1.9%.

11:30 am: [BRIEFING.COM] Two hours into the trading day, the major averages find themselves at their best levels of the session. The Nasdaq leads (+0.8%) while the Dow Jones Industrial Average (+0.4%) has been a bit more hesitant in its advance.

The price-weighted Dow lags as just over a third of the index trades in the red. Despite the presence of several decliners, the weakest index member, Universal Technologies (UTX 108.86, -1.30), displays a loss of just over 1.0%.

On the upside, 3M (MMM 126.48, +2.58) DuPont (DD 61.84, +1.85) trade ahead of other index components with respective gains of 2.0% and 3.0%.

Also of note, the Dow has yet to regain its 200-day moving average (15474) after ending yesterday's session below that key level.

10:55 am: [BRIEFING.COM] Equity indices remain near their early highs with the Nasdaq (+0.5%) maintaining its leadership.

The tech-heavy index outperforms thanks in part to the relative strength of major components like Apple (AAPL 505.03, +3.50), Google (GOOG 1146.42, +12.99), and Facebook (FB 62.40, +0.92). The three display gains between 0.7% and 1.5% while other large index components trade mixed. Chipmakers lag with Intel (INTC 23.71, -0.24) trading lower by 1.0%. The broader PHLX Semiconductor Index is off 0.3%.

Even though the Nasdaq trades ahead of its peers, the S&P 500 technology sector holds a slim gain of just 0.2%.

10:35 am: [BRIEFING.COM] Natural gas futures reversed a 3-day decline by surging almost 7% higher today. Mar nat gas is currently +6.8% at $5.24/MMBtu.

Crude oil futures gained some steam in early morning trade and is now +1.2% at $97.59/barrel.

Gold has been sliding lower and is now near its session low. The front-month (Apr) contract is currently -0.8% at $1250.50/oz. Mar silver is -0.1% at $19.40/oz.

10:00 am: [BRIEFING.COM] The S&P 500 has extended its early gain to 0.7% while the Nasdaq (+0.8%) continues to outperform.

The just-released factory orders report for December indicated orders decreased 1.5%, which was a bit better than the Briefing.com consensus estimate that called for a decrease of 1.7%.

9:40 am: [BRIEFING.COM] As expected, the major averages jumped out of the gate with the Nasdaq (+0.5%) setting the early pace. For its part, the S&P 500 trades higher by 0.4% with eight of ten sectors sporting early gains.

The health care sector (+0.8%) began the trading day ahead of the remaining groups with help from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 240.45, +2.02) trades up 0.7%.

Elsewhere, other influential sectors like consumer discretionary (+0.6%) and financials (+0.6%) have also displayed early strength. Meanwhile, the largest S&P 500 sector, technology, trades in-line with the broader market.

The factory orders report for December will be released at 10:00 ET.

9:13 am: [BRIEFING.COM] S&P futures vs fair value: +8.70. Nasdaq futures vs fair value: +19.00. The stock market is on track for an upbeat open after yesterday's selloff put the Dow and S&P 500 back at levels last seen in late October. The S&P 500 futures trade almost nine points above fair value after climbing steadily since last evening. There was no specific catalyst responsible for the overnight turn, but it should be noted the yen has retreated from yesterday's highs. Currently, dollar/yen hovers near its best levels of the day near 101.40 after dipping below 101.00 overnight. Yen futures, meanwhile, trade lower by 0.5%.

Quarterly earnings received since yesterday's closing bell have been mostly ahead of expectations. Notably, two discretionary components-Michael Kors (KORS 92.00, +15.33) and Yum! Brands (YUM 69.60, +3.44)-are expected to provide the sector with an early boost after both reported strong results.

Treasuries hover near their lows with the 10-yr yield up almost four basis points at 2.62%.

The factory orders report for December will be released at 10:00 ET.

8:53 am: [BRIEFING.COM] S&P futures vs fair value: +8.10. Nasdaq futures vs fair value: +15.00. The S&P 500 futures trade nine points above fair value.

It was a sea of red across Asia as all of the major averages, aside from India's Sensex (unch), ended with losses. The Reserve Bank of Australia opined overnight, opting to keep its Cash Rate unchanged at 2.50% while omitting commentary the Aussie dollar is overvalued. In other news, South Korea's inflation rate was in-line at 1.1% year-over-year.

Japan's Nikkei tumbled 4.2% to a four-month low. Exporters were hit hard on yen strength as Toyota Motor plunged 5.7% and Sharp sank 8.4%. Both companies reported following the closing bell.
Hong Kong's Hang Seng lost 2.9%, welcoming the Lunar New Year with a correction as the close marked a more than 11% drop from the December highs. PC maker Lenovo fell 16.4% as sellers emerged in response to an onslaught of downgrades. Over the past two weeks the company has announced more than $5 billion worth of deals, and is rumored to be looking into a joint venture to buy Sony's Vaio PC business outside of Japan.
China's Shanghai Composite was closed.

Major European indices trade in mixed fashion with Germany's DAX (-0.8%) trailing its peers. Participants received several economic data points. Eurozone PPI rose 0.2% month-over-month (0.1% expected, -0.1% previous) while the year-over-year reading decreased 0.8% (-0.9% forecast, -1.2% prior). Elsewhere, Great Britain's Construction PMI improved to 64.6 from 62.1 (61.5 forecast), Italy's CPI rose 0.2% month-over-month (0.2% forecast, 0.2% prior) while the annualized reading increased 0.7% (0.7% expected, 0.7% last), and Spain's unemployment increased 113,100 (-21,000 forecast, -107,600 last).

Among notable news, Bloomberg reports that European Central Bank President Mario Draghi would be open to ending the sterilization of bond purchases should the Bundesbank voice its backing for such policy course. It should be noted the ECB will release its latest policy statement on Thursday morning at 7:45 ET.

In France, the CAC trades higher by 0.1% with help from financials. BNP Paribas and Societe Generale are up 1.0% and 1.6%, respectively. Exporter Renault lags, trading lower by 1.4%.
Great Britain's FTSE sports a loss of 0.2%. ARM Holdings is the weakest performer, down 5.1% after the chipmaker saw a slowdown in revenue from royalties. Insurer Prudential outperforms with a gain of 3.2%.
Germany's DAX holds a loss of 0.8% as several producers of basic materials lag. BASF, Linde, and ThyssenKrupp are down between 1.0% and 1.8%. On the upside, Adidas trades higher by 2.2%.

8:31 am: [BRIEFING.COM] S&P futures vs fair value: +8.10. Nasdaq futures vs fair value: +15.00. U.S. equity futures hover near their highs, suggesting the major indices will look to stage a rebound after the Dow ended yesterday below its 200-day moving average (15470) while the S&P 500 closed below its 100-day moving average (1770).

After yesterday's broad decline, the S&P 500 finds itself down 5.8% for the year. Similarly, nine of ten sectors are down so far in 2014 while the utilities space outperforms with a gain of 2.1%.

On the downside, the consumer discretionary sector is lower by 8.5% so far this year, which represents the weakest-performing group of 2014. Today, however, the discretionary sector is expected to receive a measure of support from Michael Kors (KORS 91.70, +15.03) and Yum! Brands (YUM 69.00, +2.84) after both reported above-consensus results.

7:59 am: [BRIEFING.COM] S&P futures vs fair value: +3.80. Nasdaq futures vs fair value: +9.00. U.S. equity futures display modest gains amid cautious overseas action. The S&P 500 futures trade four points above fair value.

Reviewing overnight developments:

Asian markets ended lower. Japan's Nikkei -4.2%, Hong Kong's Hang Seng -2.9%, and China's Shanghai Composite remained closed for Lunar New Year.
In economic data:
Japan's monetary base rose 51.9% year-over-year (47.2% expected, 46.6% prior).
The Reserve Bank of Australia held its key interest rate at 2.50%, as expected.

New Zealand's ANZ Commodity Price Index rose 1.2% month-over-month (1.0% last).
South Korea's CPI rose 0.5% month-over-month while the annualized reading indicated an increase of 1.1%. Both figures met expectations.
Hong Kong's retail sales rose 5.7% year-over-year (7.0% forecast, 8.5% prior).
Among news of note:
After trying to talk the Australian dollar down in prior policy statements, the Reserve Bank of Australia shifted away from that tone, saying monetary policy is 'appropriately configured.'
Major European indices hover in the red. France's CAC -0.1%, Great Britain's FTSE -0.5%, and Germany's DAX -1.1%. Elsewhere, Italy's MIB -0.4% and Spain's IBEX -0.2%.
Participants received several economic data points:
Eurozone PPI rose 0.2% month-over-month (0.1% expected, -0.1% previous) while the year-over-year reading decreased 0.8% (-0.9% forecast, -1.2% prior).
Great Britain's Construction PMI improved to 64.6 from 62.1 (61.5 forecast).
Italy's CPI rose 0.2% month-over-month (0.2% forecast, 0.2% prior) while the annualized reading increased 0.7% (0.7% expected, 0.7% last).
Spain's unemployment increased 113,100 (-21,000 forecast, -107,600 last).
In news:
Bloomberg reports that European Central Bank President Mario Draghi would be open to ending the sterilization of bond purchases should the Bundesbank voice its backing for such policy course. It should be noted the ECB will release its latest policy statement on Thursday morning at 7:45 ET.

In U.S. corporate news

BP (BP 45.45, -0.66): -1.4% after reporting in-line revenue.
Boston Scientific (BSX 13.18, +0.17) +1.3% following its eight-cent beat on in-line revenue. The company guided first quarter earnings above consensus.
Michael Kors (KORS 92.09, +15.42): +20.6% after beating the Capital IQ bottom-line estimate by $0.25 on better-than-expected revenue.
UBS (UBS 20.32, +1.10): +5.7% after beating earnings estimates by CHF0.01.
Yum! Brands (YUM 69.00, +2.84): +4.3% after beating bottom-line estimates on below-consensus revenue. The company guided its fiscal-year 2014 earnings in-line with analyst expectations.

Today's data will be limited to the December factory orders report, which will be released at 10:00 ET.

6:30 am: [BRIEFING.COM] S&P futures vs fair value: +3.00. Nasdaq futures vs fair value: +4.50.

6:30 am: [BRIEFING.COM] Nikkei...14008.47...-610.70...-4.20%. Hang Seng...21397.77...-637.70...-2.90%.

6:30 am: [BRIEFING.COM] FTSE...6441.58...-24.10...-0.40%. DAX...9104.03...-93.40...-0.90%.

Market’s 19th Breakdown Leaves Bulls Unmoved as $3 Trillion Lost

By Whitney Kisling and Nikolaj Gammeltoft Feb 4, 2014 7:28 PM ET

Eighteen times Michael Shaoul has watched the U.S. stock market lose 5 percent or more since 2009. Eighteen times he’s been rewarded for holding on.

The bulls are being tested anew by a retreat that started in emerging markets and has since spread to developed countries, erasing $2.9 trillion from global equity values. Again, Shaoul’s Marketfield Asset Management LLC isn’t selling.

“This is a real bull market,” Shaoul, whose assets under management have risen to $21 billion from $400 million in 2008, said in a phone interview. “What happens in real bull markets is they do fine, and then they are occasionally interrupted by an exogenous shock.”

It’s never easy, Shaoul says -- the threat posed by emerging markets is the greatest he’s seen since 1998, and declines may worsen. Still, while U.S. stocks are being dragged down, the things that have kept market dips shallow in developed countries are intact. Corporate profits rose the fastest in two years last quarter, economists boosted projections for U.S. gross domestic product the first time in four months, and money-market indicators show no signs of strain.

“This episode will have a distinct beginning, middle and end,” said Shaoul, chairman and chief executive officer of New York-based Marketfield, whose MainStay Marketfield Fund has beaten 99 percent of its peers the last three years, Bloomberg data show. “The end of it will be a significant buying opportunity in the U.S.”

Michael Shaoul, chairman and chief executive officer of Marketfield Asset Management.

Global Retreat

Stocks around the world are plunging after Argentina unexpectedly devalued the peso, Turkey’s decision to double interest rates backfired and China’s manufacturing growth slowed. A report this week showed U.S. factory output expanded in January at the weakest pace in eight months and China’s official Purchasing Managers Index fell to a six-month low.

At the same time, the Federal Reserve is lowering stimulus that helped propel global equity gains of 123 percent the last five years. At its peak in January, the S&P 500 had rallied 173 percent from its 2009 bottom, a bull market that was almost a year older than the average since World War II.

Developed nations are falling with emerging counterparts this year, including a 13 percent loss in Japan’s Topix Index and a 4.4 percent decline in Germany’s DAX Index. The MSCI Emerging Markets Index lost 8.5 percent. The S&P 500’s 5.8 percent retreat from Jan. 15 to Feb. 3 is the biggest drop since June. The MSCI All-Country World Index dropped to the lowest level in almost four months on Feb. 3.

“Every time it goes down you always wonder, ‘What the heck? Is it going to stop?’” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $359 billion. “I like buying on this fear of a crisis in the emerging world.”

Emerging Outlook

The selloff in developing countries reflects a worsening outlook for economies and earnings. The International Monetary Fund predicts that the growth advantage of emerging markets over advanced economies will shrink this year to the smallest since 2001. Profits will increase 18 percent in 2014, compared with 25 percent for the MSCI World Index, according to analyst estimates compiled by Bloomberg.

“There is a real possibility that this vicious cycle of rate adjustments in EM coupled with currency weakness will further postpone EM growth recovery,” Masha Gordon, who oversees more than $2.5 billion in assets as London-based head of emerging-market equities at Pacific Investment Co., said by e-mail yesterday.

Currency Weakness

A custom Bloomberg index of the 20 most-traded emerging-market currencies has fallen about 2.8 percent this year. Argentina’s peso started sliding as the central bank pared dollar sales to preserve international reserves that have fallen to a seven-year low. The central banks of India, Turkey and South Africa all raised interest rates to defend their currencies as they tumbled.

“We have now had a meaningful pullback, but not sure it is enough given the turmoil in emerging markets,” said Howard Ward, the chief investment officer for growth equity at Rye, New York-based Gamco Investors Inc., which oversees about $40 billion. “We may need to go a bit lower.”

While developed equities have tumbled, it’s happening as earnings and economic growth pick up speed. Companies from Bank of America Corp. to PulteGroup Inc. posted profits that beat analyst forecasts. The U.S., Japan and the euro area will all expand next year for the first time since 2010, according to economists surveyed by Bloomberg. With three of the four biggest economies, those regions account for about 50 percent of the world’s GDP.

Economic Growth

“The U.S. is still a leadership market and for years to come,” Bob Decker, senior portfolio manager at Aurion Capital Management Inc. who helps manage about C$6 billion ($5.4 billion), said in a phone interview from Toronto. “The economy is still moving in the right direction, monetary accommodation by central authorities is still relatively benign and plentiful liquidity exists. And that’s an environment where stocks typically do well.”

Economists are more bullish than they were when the S&P 500 was on the brink of a bear market in 2011. The IMF raised its global growth projection to 3.7 percent from an October estimate of 3.6 percent on accelerations in the U.S. and U.K. The average projection for 2014 U.S. GDP growth is 2.8 percent, up from 2.6 percent at the start of the year. In 2011, forecasts had tumbled to 1.6 percent from more than 3 percent as stocks retreated on concerns about Europe’s debt crisis and the U.S. losing its AAA rating from S&P.

Better Earnings

Profits expanded 8.3 percent last quarter, the most since the three months ending September 2011, according to analyst estimates compiled by Bloomberg. Analysts project profits will expand even faster in 2015, at an annual pace of 11 percent, Bloomberg data show.

“I believe in investing in the future of the U.S.,” said Rick Caruso, chief executive officer and founder of Los Angeles-based Caruso Affiliated Holdings, one of the largest privately held U.S. real estate companies. “Sure, we have to keep an eye on what’s going on around the world. But companies that are based in the U.S., that have great products you understand in markets you know, I think those stocks will continue to do well.”

The dollar Libor-OIS spread, a gauge of banks’ reluctance to lend, averaged 15.1 basis points so far this year, nearly matching its average for all of 2013. This gap between the three-month London interbank offered rate and the overnight index swap rate surged to a record 364 basis points in October 2008, following the collapse a month earlier of Lehman Brothers Holdings Inc.

Stress Signs

The difference between the U.S. two-year interest rate swap rate and the comparable-maturity Treasury note yield, known as the swap spread, is at 13.6 basis points. The spread, viewed as an indicator of investors’ perception of U.S. banking sector credit risk, reached a record 167.3 basis points in October 2008.

“There are no signs of stress in U.S. money markets,” Brian Smedley, an interest-rate strategist at Bank of America in New York, said in a telephone interview. “In fact there is so much cash in the system that the biggest problem in the short-term markets remains low rates. There is little evidence thus far that concerns about emerging markets have filtered into dollar funding markets broadly.”

Average Retreat

The S&P 500 lost as much as 5.8 percent since reaching a record 1,848.38 on Jan. 15, the first decline of more than 5 percent since June 2013. Should they follow the pattern from the 18 times that’s happened since 2009, the S&P 500 would fall to about 1,697 in the next week, then rebound to a new high by mid-April, data compiled by Bloomberg and Bespoke Investment Group show.

The equity index sank 19.4 percent between April and October 2011, the biggest retreat of the bull market, before rebounding. It fell 5.8 percent from May through June last year, when the Fed began hinting it would phase out stimulus.

“As short-term traders have seen prices break to the downside and support levels violated, money has moved out of risk assets to risk-off assets,” Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama, wrote yesterday in an e-mail. “For investors with a longer time frame, it’s a wait-and-see situation and certainly not time to pull the plug on risk assets.”

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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