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 Post subject: June 8th Monday Trade Results - Profit $212.50
PostPosted: Tue Jun 09, 2015 4:06 am 
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Joined: Sat Jan 10, 2009 2:06 pm
Posts: 4335
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)
wrbanalysis@gmail.com (24/7)
http://twitter.com/wrbtrader (24/7)

Attachment:
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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 @ $0.00 dollars or +0.00 points, Emini ES ($ES_F) futures @ $212.50 dollars or +4.25 points, Light Crude Oil CL ($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 @ $212.50 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

Trade Log: All of my trades were posted real-time in the timestamp ##TheStrategyLab free chat room. You can read today's price action trading information about my trades (e.g. time, price entry, contract size, price exit) as the trade traversed to its completion. Also, sometimes I'll post real-time trading tips in ##TheStrategyLab chat room involving WRBs, WRB Hidden GAPs, Key Market Events (KME), Tutorial Chapters 2 & 3, WRB Zones, Reaction Highs/Lows, Contracting Volatility or Expanding Volatility. Its all archived @ http://www.thestrategylab.com/ftchat/forum/viewtopic.php?f=144&t=2094

Quote:
All of my real-time posted trades involves price action concepts from the WRB Analysis free study guide, Advance WRB Analysis Tutorial Chapters 4 - 12 and the Volatility Trading Report (VTR) trade signal strategies. Analysis -----> Trade Signals

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) general volatility analysis involving WRB Analysis 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 and I do not have the time/energy/resources to manage a signal calling chat room. Access instructions for chat room @ http://www.thestrategylab.com/tsl/forum/viewforum.php?f=164

Image Price Action Analysis via Advance WRB Analysis Tutorial Chapters @ 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

Analysis -----> Trade Signals

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). All WRB Analysis Tutorial Chapters 1 - 12 are included in the purchase of the Volatility Trading Report (VTR).

Image Trading Plan Daily Routine @ http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=265&t=2781 contains brief information about trading plan, market context, brokers, trading time frames, position size management and other discussions.

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Market Context Summaries

The below summaries by Bloomberg, Briefing, 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. Further, most financial websites remove (delete) their archives after a few years to make room for new content. Therefore, I maintain my own archives of the news content so that I have it available for me when financial websites no longer archives their content.

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


4:10 pm: [BRIEFING.COM] The major averages began the new trading week on a cautious note with the S&P 500 (-0.7%) settling beneath its 100-day moving average (2,085) for the first time since late March. The benchmark index retreated into the afternoon while the Nasdaq Composite (-0.9%) underperformed throughout the day.

Broadly speaking, the Monday session was very quiet with no corporate news to account for the decline; however, the continued lack of progress between Greece and its creditors weighed on investor sentiment in Europe and the U.S.

As for Greece, Finance Minister Yanis Varoufakis met with his German counterpart, Wolfgang Schaeuble, today, describing the meeting as "very helpful." That being said, Bloomberg reported there appear to be growing differences between German Chancellor Angela Merkel and Mr. Schaeuble with regard to the handling of the crisis.

Interestingly, the S&P 500 climbed off its session low in the afternoon once the Wall Street Journal reported that Greece's creditors have offered to extend the current bailout program until March 2016. The extension would be achieved by drawing EUR11 billion from the bank bailout fund. The news helped the benchmark index make a brief return above its 100-day average before sliding to a new low ahead of the close.

Nine sectors registered losses with all six cyclical groups ending in the red. The largest sector by weight-technology (-1.2%)-lagged throughout the day, which kept a lid on the overall market. Top-weighted components like Apple (AAPL 127.80, -0.85), Microsoft (MSFT 45.73, -0.41), and Google (GOOGL 543.48, -6.05) lost between 0.7% and 1.1% while high-beta chipmakers also struggled. Shares of Intel (INTC 31.30, -0.54) settled lower by 1.7% while the broader PHLX Semiconductor Index fell 1.9%.

Similarly, another high-beta group-transport stocks-kept the market under pressure with the Dow Jones Transportation Average losing 2.1%. The bellwether complex narrowed its June advance to 0.4% as all 20 components registered losses with JetBlue's (JBLU 19.02, -1.47) 7.2% plunge leading the way. For its part, the industrial sector (-0.7%) underperformed throughout the day.

Unlike technology and industrials, the remaining cyclical groups ended near the broader market while the four countercyclical sectors settled ahead of the S&P 500. Consumer staples (-0.1%) and telecom services (+0.2%) ended near their flat lines while health care (-0.4%) and utilities (-0.6%) settled just ahead of the broader market.

Interestingly, the utilities sector received no respite from today's strength in Treasuries that pressured the benchmark 10-yr yield to 2.39% (-2 bps).

Today's participation was on the light side with fewer than 685 million shares changing hands at the NYSE floor.

Tomorrow, the Wholesale Inventories report for April (Briefing.com consensus 0.2%) and the April Job Openings and Labor Turnover Survey will both be released at 10:00 ET.
Related Stories

InPlay from Briefing.com Briefing.com
Bond Market Update from Briefing.com Briefing.com
New high for S&P 500; Nasdaq comes close USA TODAY
Wall Street drops on rate concerns, Greece Reuters
Wall St. drops on rate concerns, Greece Reuters

Nasdaq Composite +6.0% YTD
Russell 2000 +4.2% YTD
S&P 500 +1.0% YTD
Dow Jones Industrial Average -0.3% YTD

3:40 pm: [BRIEFING.COM]

The dollar index continued to slide lower today, which provide price support to select commodities, such as gold
Natural gas rallied today, but this was largely due to current weather conditions.
July nat gas futures ended today's session 4.6% higher at $2.71/MMBtu
WTI sold off today following Iraq news/post-OPEC decision, ultimately ending the day $0.97 at $58.16/barrel
Aug gold gained $5.20 today to $1173.30/oz, while July silver lost $0.04 to $15.95/oz.
July copper rose $0.01 to $2.70/lb

2:55 pm: [BRIEFING.COM] The major averages have inched up off their lows with the S&P 500 (-0.3%) climbing back above its 100-day moving average (2,085). The recent move took place after the Wall Street Journal reported that Greece's creditors have offered to extend the current bailout program until March 2016. The extension would be achieved by drawing EUR11 billion from the bank bailout fund.

However, it is worth noting that rumors of a deal being close have been commonplace in recent weeks, suggesting some skepticism may be in order until an official announcement is made.

The recent uptick in stocks has coincided with a downtick in the Treasury market, but the 10-yr note remains not far below its session high (10-yr yield -3 bps at 2.38%).

2:25 pm: [BRIEFING.COM] The major averages remain pinned to their lows with the Nasdaq Composite (-1.0%) trading behind the S&P 500 (-0.6%).

The tech-heavy Nasdaq has shown relative weakness since the early going due to large losses among technology names. The top-weighted technology sector is now down 1.2% for the session while the PHLX Semiconductor Index has extended its decline to 2.0%. Including today's loss, the index is down 4.5% so far in June, but remains higher by 2.3% so far in Q2.

Elsewhere, Treasuries have approached their best levels of the session with the 10-yr yield down four basis points at 2.37%.

1:55 pm: [BRIEFING.COM] The stock market remains near its session low.

The economic calendar stopped to take a breath after a busy week. The next high impact economic release comes on Thursday with the May retail sales report.

Retail sales were flat in April after increasing 1.1% in March. The Briefing.com Consensus expects retail sales increased 1.1% in May.

Motor vehicle manufacturers reported that sales rose from 16.5 mln SAAR in April to 17.8 mln SAAR in May. That was the most new motor vehicles sold in one month since sales surpassed 20.0 mln in July 2005.

The big gain in auto sales should drive up headline retail sales growth.

Excluding autos, retail sales increased a modest 0.1% in April after increasing 0.7% in March. The consensus expects these sales increased 0.7% in May.

The May employment report showed a solid 0.5% increase in aggregate earnings. Even if consumers opt to increase their savings rate marginally following the big gain in income, there is still room for a rebound in retail sales.

1:25 pm: [BRIEFING.COM] It has been a slow bleed lower for the equity market today, which hit new lows for the session in the last half hour. The retreat has been paced by the information technology sector (-1.3%), which has run into a wave of profit taking in its largest components.

Apple (AAPL 127.34, -1.32) is a notable laggard, failing to get a lift with its developer conference getting underway today. In turn, Intel (INTC 31.34, -0.50) continues to sag and is working on its sixth straight losing session. Avago Technologies (AVGO 137.74, -6.07) and eBay (EBAY 60.80, -2.43) are the worst performers of the large-cap bunch, losing 4.2% and 3.8%, respectively.

The troubles of the large-cap tech stocks are reflected more fully in the underperformance of the Nasdaq 100 (-1.0%). It is the semiconductor group, however, that is the weakest link, evidenced by a 2.0% decline in the Philadelphia Semiconductor Index.

Elsewhere, there's just not a lot of offsetting leadership. The low-weighted telecom services sector (+0.4%) is the best-performing area today.

12:55 pm: [BRIEFING.COM] The major averages hover near their lows at midday with the S&P 500 (-0.4%) trading just below its 100-day moving average (2,085) after enduring a steady retreat throughout the first half of the session.

The new trading week has gotten off to a quiet start with no surprises being reported overseas. To that point, Greece remains at odds with its creditors, which led to selling in Europe with markets in France and Germany losing close to 1.2% apiece. Meanwhile, European bonds also retreated with selling in Germany's 10-yr bund pushing its yield up to 0.88% (+3 bps).

Domestically, nine of ten sectors display midday losses with all six cyclical groups trading in the red. The top-weighted technology sector (-1.0%) is a notable decliner amid broad weakness that has also clipped high-beta chipmakers. The PHLX Semiconductor Index is lower by 1.7% with 29 of its 30 components holding losses while Altera (ALTR 51.51, +0.05) outperforms with a slim gain of 0.1%.

Similar to technology, the industrial sector (-0.5%) has struggled throughout the session with transport stocks largely responsible for the weakness. The Dow Jones Transportation Average has surrendered 1.7% with airlines pacing the slide. JetBlue (JBLU 19.23, -1.26) is the weakest performer, down 6.2% while peers United Continental (UAL 51.53, -2.56) and Delta Air Lines (DAL 40.98, -1.92) follow with respective losses of 4.7% and 4.5%. As for the broader Transportation Average, the bellwether group has erased the bulk of last week's 2.5% spike.

Things look a bit better on the countercyclical side with consumer staples and health care trading near their flat lines while the telecom services sector (+0.4%) outperforms.

Treasuries hold gains with the 10-yr yield down three basis points at 2.38%.

Investors did not receive any economic data today.

12:25 pm: [BRIEFING.COM] The S&P 500 (-0.3%) remains near its recently-established session low, which was set just above the 100-day moving average (2,084.60).

The 100-day average deserves attention, considering the area has provided support to the market through the first half of 2015. The S&P 500 has closed below that mark on six occasions, but always returned above the 100-day average the following day.

The S&P 500 remains above its 100-day average for the time being, but all six cyclical sectors continue holding losses with three groups-consumer discretionary (-0.4%), industrials (-0.5%), and technology (-0.9%)-trailing the broader market.
Related Quotes

11:55 am: [BRIEFING.COM] Recent action saw the major averages notch fresh session lows, but the overall trading dynamic has not changed much with most sectors hovering in the red, which leaves the telecom services (+0.6%) sector as the only group above its flat line.

In addition to telecom services, the health care sector (unch) also trades a bit ahead of the broader market while biotechnology follows not far behind with iShares Nasdaq Biotechnology ETF (IBB 366.48, -0.56) down 0.2%.

Elsewhere, Treasuries remain not far below their highs with the 10-yr yield down three basis points at 2.38%.

11:30 am: [BRIEFING.COM] Modest losses persist with the S&P 500 trading lower by 0.2%.

All in all, the early action has been very quiet with the benchmark index trading within a six-point range. The index tested its flat line during the initial 30 minutes of the session, but selling pressure among most cyclical sectors has forced the index to a fresh low.

At this juncture, all six cyclical sectors hold losses, but only two-industrials (-0.3%) and technology (-0.5%)-trade behind the broader market. The top-weighted technology sector is the weakest-performing group amid broad weakness. Large cap components like Google (GOOGL 547.18, -2.35), Facebook (FB 81.43, -0.71), and Intel (INTC 31.53, -0.31) are down between 0.5% and 1.0% while chipmakers also lag with the PHLX Semiconductor Index down 1.1%.

10:55 am: [BRIEFING.COM] Not much change in the market with the key indices holding modest losses. The S&P 500 is lower by 0.3% with eight sectors trading in the red.

Heavily-weighted technology (-0.5%) and industrials (-0.5%) trade behind the remaining eight sectors with the industrial sector pressured by transport stocks. The Dow Jones Transportation Average has surrendered 1.4% with airlines pacing the broad slide. JetBlue (JBLU 19.43, -1.06) is the weakest performer, down 5.3% while peers United Continental (UAL 51.75, -2.34) and Alaska Air (ALK 63.30, -2.36) follow with respective losses of 4.4% and 3.5%. As for the broader Transportation Average, the bellwether group has erased its Friday spike.

10:35 am: [BRIEFING.COM]

The dollar index is trading down so far this session, following last week's US econ data and reported commentary by US officials, recognizing problems associated with a strong dollar.
The dollar's weakness has given support to several commodities, most notably oil, gold and copper.
In most recent trade, the index has seen a small bounce from its extended losses and is now -0.6% to 95.78
Natural gas has been trading positive all morning, as forecasts for nationally warmer weather have created bullish sentiment for cooling demand
The July contract has continued its run and has seen a recent rally to +3.2% at $2.67/MMBtu
Despite support from the dollar, Crude oil has traded in the red all session and is currently holding those losses.
Several catalysts are driving price action in oil, including news out of Iraq, that national forces have regained control of the refinery town Baiji from ISIS.
In combination with last week's OPEC decision, July WTI is now -1% to $58.53/barrel
Precious metals are mixed on the session so far, with gold trading modestly higher on dollar strength, and silver holding steady near the unchanged mark.
August gold is +0.3% to $1171.20/oz while July silver is -0.1% to $15.97/oz
July copper is holding moderate gains, and is +0.3% to $2.78/lb

10:00 am: [BRIEFING.COM] Equity indices have slipped to new session lows with the Nasdaq Composite widening its decline to 0.3% while the S&P 500 (-0.2%) trades a bit ahead.

Seven sectors remain in negative territory with heavily-weighted technology (-0.4%), consumer discretionary (-0.4%), and industrials (-0.4%) outweighing slim gains among energy (+0.1%), materials (+0.1%), and telecom services (+0.3%).

Notably, the industrial sector has struggled in the early going amid weakness in transport stocks. The Dow Jones Transportation Average trades lower by 1.0% after gaining 2.5% last week.

9:40 am: [BRIEFING.COM] As expected, the major averages began the day with slim losses. The S&P 500 trades lower by 0.1% with six sectors showing opening losses.

Energy (-0.3%) and utilities (-0.3%) started the session behind other groups with the energy sector pressured by a 1.1% decline in crude oil, which trades at $58.46/bbl. Meanwhile, the utilities sector lags despite a decline in Treasury yields (-3 bps at 2.38%).

On the upside, health care (+0.1%), telecom services (+0.4%), and financials (+0.2%) outperform while other sectors trade closer to their flat lines.

9:10 am: [BRIEFING.COM] S&P futures vs fair value: -2.40. Nasdaq futures vs fair value: -3.10. The stock market is on track for a modestly lower open as futures on the S&P 500 trade two points below fair value.

The new trading week has started on a quiet note with little progress between Greece and its creditors. Accordingly, European markets have spent the first half of their session in the red. Meanwhile, Germany's 10-yr bund has retreated, sending its yield higher by two basis points to 0.87%.

Domestically, investors have not received any economic data while corporate news has been scarce. Of note, Dow component McDonald's (MCD 96.08, +0.54) has reported a 0.3% decline in global comparable sales in May with U.S. sales falling 2.2%. Despite the news, shares of MCD trade higher by 0.6% in pre-market.

Treasuries hold gains with the 10-yr yield down three basis points at 2.39%.

8:53 am: [BRIEFING.COM] S&P futures vs fair value: -2.20. Nasdaq futures vs fair value: -1.40. The S&P 500 futures trade two points below fair value.

Most markets in the Asia-Pacific region began the new week on a lower note, but not the Shanghai Composite. It jumped another 2.2% on the heels of last week's 8.9% gain. That move followed some generally disappointing trade data for May that featured a 2.5% decline in exports and a 17.6% decline in imports. The soft export figure acted as a drag on sentiment for regional markets.

In economic data:
China's May Trade Balance $59.49 bln (expected $44.95 bln; prior $34.13 bln) as Exports -2.5% (expected -5.0%; prior -6.4%) and Imports -17.6% (expected -10.7%; -16.2%)
Japan's April Adjusted Current Account Balance JPY 1.27 tln (expected JPY 1.45 tln; prior JPY 2.07 tln), May Bank Lending +2.6% year-over-year (expected +2.6%; prior +2.6%), and Q1 GDP Revised +1.0% quarter-over-quarter (expected +0.7%; prior +0.6%); +3.9% year-over-year (expected +2.7%; prior +2.4%)

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Japan's Nikkei posted a fractional loss for the session following an upward revision to Q1 GDP growth. Gains in the technology (+0.8%) and consumer non-cyclical +0.5%) sectors were offset by losses in the communications (-0.7%) and industrial (-0.6%) sectors. Individual standouts included Mitsui Mining & Smelting (+4.5%), Shiseido (+3.4%), and MEIJI Holdings (+3.2%). Pacing the laggards were Dentsu (-3.7%), Kansai Electric Power (-3.1%), and Tokyo Electric Power (-2.8%). Out of the 225 index members, 103 ended higher, 115 finished lower, and 7 were unchanged.
Hong Kong's Hang Seng increased 0.2%, bolstered by gains in the energy sector (+0.4%) and leading financial issues. Bank of Communications (+8.0%), Bank of China (+3.7%), and Ping An Insurance (+3.1%) sat atop the list of winners while China Mengniu Dairy (-5.4%) and Want Want China Holdings (-3.9%) led the losers. Out of the 50 index members, 19 ended higher, 29 finished lower, and 2 were unchanged.
China's Shanghai Composite jumped 2.2% on the back of an 8.9% gain last week. The advance followed some disappointing trade data for May that showed a decline in both exports and imports, bolstering speculation that further policy stimulus will be seen. The Composite also benefited from speculation that 'A' shares will be included in the MSCI Emerging Markets Index. That decision will be made June 9. The Shanghai Composite is up 11.3% month-to-date and 58.6% year-to-date.

Major European indices trade mostly lower amid continued lack of progress between Greece and its creditors. Germany's Tagesspiegel has recently quoted Greek Finance Minister Yanis Varoufakis as saying creditors are "not interested in a deal." Furthermore, Mr. Varoufakis has accused Greece's creditors of sabotaging the debt talks.

Economic data was limited:
Eurozone June Sentix Investor Confidence fell to 17.1 from 19.6 (expected 18.7)
Germany's Industrial Production +0.9% month-over-month (expected 0.5%; prior -0.4%) while April Trade surplus expanded to EUR22.30 billion from EUR19.40 billion (expected EUR19.40 billion) as imports -1.3% (expected 0.5%; prior 2.4%) and exports +1.9% (consensus 0.1%; last 1.3%)

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UK's FTSE trades just above its flat line with miners on the defensive. Anglo American, BHP Billiton, and Rio Tinto are all down near 1.3% apiece. Consumer names outperform with Diageo trading higher by 6.6% amid takeover chatter.
France's CAC is down 0.6% with all but three names trading in the red. Total is the weakest performer, down 3.0%. Meanwhile, financials trade a bit ahead of the broader market with BNP Paribas and Societe Generale down 0.4% and 0.1%, respectively.
Germany's DAX has given up 0.7% with exporters Daimler and Continental losing 1.2% and 2.0%, respectively. On the upside, Deutsche Bank has jumped 5.3% after co-chief executives Juergen Fitschen and Anshu Jain resigned.

8:25 am: [BRIEFING.COM] S&P futures vs fair value: -0.30. Nasdaq futures vs fair value: +2.90. U.S. equity futures remain near their flat lines following a range-bound night. As mentioned earlier, there has been no change with regard to Greece and Germany's Tagesspiegel has recently quoted Greek Finance Minister Yanis Varoufakis as saying creditors are "not interested in a deal." Furthermore, Mr. Varoufakis has accused Greece's creditors of sabotaging the debt talks.

The recent comments have not caused much movement in the market with key European indices remaining in the red. Also of note, selling in Germany's 10-yr bund has pushed up its yield nearly three basis points to 0.88%.

7:58 am: [BRIEFING.COM] S&P futures vs fair value: -1.10. Nasdaq futures vs fair value: +0.40. U.S. equity futures trade little changed amid cautious action overseas. The S&P 500 futures hover one point below fair value after trading within a five-point range throughout the night.

The new trading week has started on a quiet note with markets in Asia enduring a mixed session while European indices trade in the red as another day goes by without any real progress on Greece.

Domestically, Treasuries hold slim gains with the 10-yr yield down two basis points at 2.39%.

In U.S. corporate news of note:

Delta Air Lines (DAL 42.55, -0.35): -0.8% after Raymond James downgraded the stock to 'Outperform' from 'Strong Buy.'
Sears Holdings (SHLD 41.90, +1.16): +2.9% after beating bottom-line estimates.
Wal-Mart (WMT 73.62, +0.56): +0.8% after Raymond James upgraded the stock to 'Strong Buy' from 'Outperform.'

Reviewing overnight developments:

Asian markets ended mixed. China's Shanghai Composite +2.2%, Hong Kong's Hang Seng +0.2%, and Japan's Nikkei ended flat.
In economic data:
China's May Trade Balance $59.49 bln (expected $44.95 bln; prior $34.13 bln) as Exports -2.5% (expected -5.0%; prior -6.4%) and Imports -17.6% (expected -10.7%; -16.2%)
Japan's April Adjusted Current Account Balance JPY 1.27 tln (expected JPY 1.45 tln; prior JPY 2.07 tln), May Bank Lending +2.6% year-over-year (expected +2.6%; prior +2.6%), and Q1 GDP Revised +1.0% quarter-over-quarter (expected +0.7%; prior +0.6%); +3.9% year-over-year (expected +2.7%; prior +2.4%)
In news:
China's Shanghai Composite climbed to a new seven-year high despite the tightening of rules for margin trading and short selling on Friday

Major European indices trade lower across the board. France's CAC -0.8%, Germany's DAX -0.5%, and UK's FTSE -0.2%. Elsewhere, Italy's MIB -0.3% and Spain's IBEX -0.8%
Economic data was limited:
Eurozone June Sentix Investor Confidence fell to 17.1 from 19.6 (expected 18.7)
Germany's Industrial Production +0.9% month-over-month (expected 0.5%; prior -0.4%) while April Trade surplus expanded to EUR22.30 billion from EUR19.40 billion (expected EUR19.40 billion) as imports -1.3% (expected 0.5%; prior 2.4%) and exports +1.9% (consensus 0.1%; last 1.3%)
Among news of note:
The weekend did not feature any new developments with regard to Greece as the country's debt agreement with its creditors remains elusive

5:48 am: [BRIEFING.COM] S&P futures vs fair value: +1.00. Nasdaq futures vs fair value: +3.20.

5:48 am: [BRIEFING.COM] Nikkei...20457.19...-3.70...0.00%. Hang Seng...27316.28...+56.10...+0.20%.

5:48 am: [BRIEFING.COM] FTSE...6804.37...-0.80...0.00%. DAX...11154.71...-42.40...-0.40%.

U.S. Stocks on Wrong Side of History With Rate Rise in Sight

Never before has a rally in the U.S. stock market gone on this long without a Federal Reserve interest-rate increase. Expecting valuations to keep rising once one comes is asking too much, if history is any guide.

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While Standard & Poor’s 500 Index price-earnings ratios are far from records, they’ve shown no ability to expand after the U.S. central bank starts raising rates, according to data compiled by Goldman Sachs Group Inc. and Bloomberg. In the quarter after the last 12 tightening cycles began, P/Es contracted by an average of 7.2 percent.

It’s something else to worry about as the Fed prepares to lift rates in an economy that is still far from booming. Should policy makers move before January, they would be doing so in a year when U.S. profits are forecast by analysts to increase 1.4 percent. That represents the weakest growth at the start of a tightening cycle since 1980.

“You can’t count on multiple expansion,” Mark Spellman, a fund manager who helps oversee $4.2 billion at Alpine Funds in Purchase, New York, said by phone. “It doesn’t necessarily mean some death knell or a bear market is coming. But it does put a lid on equity gains.”

Uncharted Waters

Since P/Es reached their bull market bottom of 11.9 in October 2011, multiples for S&P 500 stocks jumped to 18.3 in December, rising in each calendar year to help push the index up 87 percent. At 18.4 today, the index’s valuation is more than 2 points above the 10-year average and expanding at the slowest rate in 3 1/2 years.

The S&P 500 fell for a third session, slipping 0.7 percent at 4 p.m. in New York to the lowest level since April.

As for profits, analysts are cutting projections at the fastest pace in six years after earnings rose at an average rate of 15 percent annually since 2009.

The confluence shows the risk to equity investors amid a bull market that has restored $17 trillion to American share prices since 2009. While stocks have usually come out of past tightenings with gains, investors are in uncharted waters after the advance recently became the second-longest in six decades.

“The market is overdue for a healthy correction and the Fed tightening is likely to be the catalyst,” said David Lafferty, who helps oversee $900 billion as chief market strategist at Natixis Global Asset Management in Boston. “It’s more the sentiment. It’s the idea that the central bank is explicitly doing something to tighten monetary policy.”

Past Cycles

Friday’s employment report offered evidence the economy is picking up speed, with payrolls climbing 280,000 in May, the most in five months, as hourly earnings rose. Still, with gross domestic product increasing at an average rate of 0.9 percent a quarter since 2009, the recovery since the last recession is the weakest since World War II.

Higher rates haven’t always snuffed out bull markets. The S&P 500 rose an average 2.9 percent in the 12 months following the first increase in 12 tightenings since 1946, according to a Ned Davis Research study on market returns and monetary policy.

Equities performed better when increases were spread out rather than at back-to-back Fed policy meetings. Gains averaged 11 percent, the data show.

The consequences of Fed actions are more complicated than what shows up in valuations and investors who make decisions based on the direction of rates are making a mistake, according to Aswath Damodaran, professor of finance at New York University’s Stern School of Business. The contractions in multiples following past tightenings aren’t out of line with normal volatility in P/Es, data compiled by Bloomberg show.

‘Wrong Paths’

“Rate movement is almost never going to happen in a vacuum,” Damodaran said by phone. “If rates go up because the economy is going stronger and you ask me what the effect on stocks will be -- it depends. It depends on how much the economy getting stronger pushes up earnings.”

“This whole notion of freezing everything else and just looking at the effect of interest rates is misguided. It’s going to lead you down all kinds of wrong paths,” he said.

The S&P 500’s multiple has climbed 62 percent since September 2011, the third-fastest since 1982 and compared with an average increase of 48 percent in the previous nine trough-to-peak cycles, data compiled by Goldman show.

While higher interest rates signal a strengthening economy, stocks that have tripled in value since 2009 are vulnerable should investors become reluctant to pay a higher multiple and earnings fail to make up for the gap, said Bob Doll, the chief equity strategist at Chicago-based Nuveen Asset Management.

“The easy money in the bull market is made in the first half when interest rates are falling and earnings are rising,” said Doll, who helps oversee $130 billion. “The second half of the bull market, stocks tend to go up in a much bumpier and slower pace because rates are slowly moving up and P/Es begin to be challenged.”

Special thanks to Bloomberg, Briefing, 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)
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