Written By M.A. Perry
Trader and Founder of WRB Analysis (wide range body analysis)
Today's trades that were posted in real-time in #FuturesTrades chat room via my IRC user name wrbtrader. You can review each trade from entry to exit along with commentary and an occasional trading tip involving WRB Analysis (wide range body analysis) because its all archived @ http://www.thestrategylab.com/ftchat/forum/viewtopic.php?f=67&t=369
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Another smooth trading day along with catching a short position for big profits as it collapsed through a key WRB S/R Zone although the initial price drop actually started much earlier in the morning around 3am est. Regardless, I was able to catch a bulk of that price drop after 0930am est.(see log above about specific commentarty to the price drop levels).
FYI - You can ask me questions here at the forum or you can tweet me on twitter about anything related to today's trading or related to your own trading.
@ http://twitter.com/wrbtraderIn addition, posted below are direct links about my trade methodology or trading approach 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 analysis).
http://www.thestrategylab.com/WRBAnalysisTutorials.htm
http://www.thestrategylab.com/TradeStrategies.htm
Also, I strongly believe that profitable trading involves more than just trade signals and that's why most traders fail because they put all their efforts in trade signals while ignoring the impact on their trading results via market experience, discipline, money management, team collaboration, proper trading enviornment (home or office), market psychology, trader psychology (trading habits/routine and personal lifestyle). If you don't understand this perspective...please ask questions here at the forum for more info or you can tweet me on twitter @wrbtrader.
My Trading Performance: +54.00 Emini ES ($ES_F) points
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Stocks Drop For Second Straight Day
Major indexes decline as nervousness about the economy puts the brakes on a recent rally. The dollar firms; tech sector hurt by downgrade.
By Ben Rooney, CNNMoney.com staff reporter
Last Updated: November 19, 2009: 5:41 PM ET
NEW YORK (CNNMoney.com) -- Stocks tumbled for the second day in a row Thursday as concerns about the economic recovery resurfaced, the dollar strengthened and the outlook for the technology sector darkened.
The Dow Jones industrial average (INDU) fell 94 points, or 0.9%, to 10,332.4. The S&P 500 (SPX) sank 1.3% to end below the key 1,100 point level. The Nasdaq composite (COMP) lost 36 points, or 1.6%, to close at 2,156.82.
Tech shares led decliners after analysts at Bank of America Merrill Lynch downgraded the semiconductor industry. Chip makers Intel (INTC, Fortune 500) and AMD (AMD, Fortune 500) both fell more than 3%.
The downgrade came one day after two key software companies issued bearish profit outlooks.
After the closing bell, Dell Inc. reported third-quarter results that fell far short of analysts' expectations.
"The market is rethinking its outlook for technology growth," said Nick Kalivas, vice president of financial research at MF Global.
Meanwhile, the dollar firmed against rival currencies and prices for U.S. Treasurys rose as investors flocked to assets that are considered safe havens.
The stronger dollar weighed on the oil market, which undermined shares of energy producers Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500).
Gold prices recovered from earlier losses to close at a fresh all-time high.
"I think people are playing defense," Kalivas said. "The economic data we've seen recently doesn't encourage people to take on more risk in their portfolios."
Analysts said a move lower was not surprising after stocks surged to a 13-month high earlier in the week.
"I think a lot of people are concerned that we've come too far, too fast," said Russell Lundeberg Jr., chief investment officer at Barrett Capital Management.
Meanwhile, investors continued to focus on the the plight of the dollar, which has shown some signs of strength recently after Federal Reserve officials -- including chairman Ben Bernanke -- indicated that the central bank is monitoring the currency's decline.
"The market has definitely been trading off the dollar recently," said Ron Kiddoo, chief investment officer at Kozad Asset Management. "I think the stronger dollar is a bigger factor than the jobless claims."
A weekly government report showed the number of Americans filing first-time claims for unemployment benefits was unchanged from the preceding week.
Stocks ended lower Wednesday after government data showed a drop in new home construction.
The surprisingly weak housing report was the latest in a string of less-than-stellar economic indicators that have put many market participants on edge. Investors are now looking for more concrete evidence of improvement in the job market, retail sales and corporate profits.
"Overall, it's not surprising that people are getting nervous," said Lundeberg. "We still have a long way to go in the recovery."
Analysts said the volume of shares trading hands recently has been low, suggesting that many big investment funds have moved to the sidelines to protect gains before publishing their year-end reports.
Economy: The Labor Department released its weekly report on initial jobless claims, showing that the number of claims was unchanged from the prior week.
The government said that jobless claims totaled 505,000 in the week ended Nov. 14. This was very close to the forecast of 504,000 claims, according to a consensus of economist opinion compiled by Briefing.com.
A report on leading economic indicators showed an increase of 0.3% in October, below the 0.4% forecast and the 1% rise in September. The Philadelphia Federal Reserve survey, a reading on regional manufacturing, rose slightly.
Companies: Dell (DELL, Fortune 500) said net income fell 54% to $337 million, or 17 cents per share, for the quarter ended Oct. 30. Results included charges of 6 cents per share for cost cutting and other one-time expenses.
Without the charges, the PC maker said it earned 23 cents per share. Analysts polled by Thomson Reuters had forecasted adjusted earnings of 28 cents per share.
Retail apparel maker Gap Inc. (GAP, Fortune 500) reported quarterly results that were in line with analysts' expectations. The company said after the closing bell that net income rose by 25% in the quarter on improved profit margins and strong sales at its discount chain Old Navy.
Sears Holdings (SHLD, Fortune 500) posted a narrower-than-expected quarterly loss of $127 million, or $1.09 a share, an improvement from the loss of $146 million, or $1.16 a share, a year earlier. Results were helped by the first increase in same-store sales at its Kmart unit in four years.
JPMorgan Chase (JPM, Fortune 500) said Thursday it was buying the half of U.K. broker Cazenove that it does not already own for about $1.67 billion.
World markets: Asian shares mostly fell. Japan's Nikkei tumbled 1.3%. Major European indexes were also closed lower, with the CAC-40 in Paris falling 1.8%.
Money, oil and gold: The dollar was up against all major currencies except the yen. The dollar index (DXY), which gauges the U.S. currency against a basket of rivals, rose 0.2% to 75.32.
The price of oil fell $2.12 to settle at $77.46 a barrel.
The price of gold recovered from earlier losses to settle at a record high of $1,141.90 per ounce, up 70 cents from the previous day's closing price.
Bonds. Treasury prices rose. The yield on the benchmark 10-year note, which moves inversely to its price, fell to 3.34% from 3.36% late Wednesday.
Yahoo! Finance
4:35 pm : Sellers were able to dog stocks for the entire session and hand the S&P 500 its worst single-session percentage loss of the month as buyers stepped to the sidelines amid a lack of positive catalysts. Buyers showed some mild interest late in the session and helped stocks make a couple of upward spurts, but the moves were quickly repressed.
Strength in the dollar kept many buyers at bay this session. The Dollar Index had been up as much as 0.7%, but settled with a gain of 0.3%. Though it settled off of session highs, its advance was enough to pressure both the equity market and commodities pits.
That blend of weakness proved troubling for energy stocks (-2.1%) and materials stocks (-1.5%). The two sectors traded with some of the worst losses of any major sector this session, but materials were able to improve their position late as gold prices rebounded to finish fractionally higher at $1141.90 per ounce.
Consumer staples stocks were able to maintain modest losses this session. The sector closed just 0.3% lower. Health care held up relatively well, too. The sector finished 0.5% lower following news that Senator Reid presented last evening a health care reform bill from the Senate.
Treasury Secretary Geithner appeared before the Joint Economic Committee on Financial Reform today. Geithner told Congress that the reform effort was essential for the health of the economy, but representatives were critical of Geithner.
Once again, data did little for stocks. Initial jobless claims for the week ending November 14 hit 505,000, which is in-line with what had been expected. The four-week moving average now stands at 514,000, down from 520,500. Meanwhile, continuing claims came in at 5.61 million, which is in step with what had been widely forecast.
In other economic news, leading economic indicators for October increased 0.3%, which is not as strong as the 0.4% that was expected. The Philadelphia Fed Survey for November came in at 16.7, which is better than the reading of 12.2 that had been widely forecast. Third quarter mortgage delinquencies hit 9.6%, which is up from the 9.2% that was registered in the second quarter.
On a similar note, the OECD said that U.S. GDP would likely grow 2.5% in 2010, while its collective 30-member nations would expand 1.9%.
Advancing Sectors: (None)
Declining Sectors: Energy (-2.1%), Financials (-2.0%), Tech (-1.6%), Industrials (-1.5%), Materials (-1.5%), Utilities (-1.2%), Consumer Staples (-1.2%), Telecom (-0.7%), Health Care (-0.5%), Consumer Staples (-0.3%)DJ30 -93.87 NASDAQ -36.32 SP500 -14.90 NASDAQ Adv/Vol/Dec 549/2.27 bln/2127 NYSE Adv/Vol/Dec 572/1.08 bln/2480
3:30 pm : Widespread losses persist. However, the broader market is near the best levels of the afternoon. Energy is still the weakest sector this session, currently down 2.3%.
Commodities sold off with the rest of the market. Energy and soft commodities were slammed especially hard, down 1.4% and 1.5%, respectively.
Natural gas futures bucked the trend seen in the energy complex. Following a relatively in line inventory build, December natural gas futures moved into positive territory. They pulled back to the flat line before advancing once again and ended the session 2.1% higher at $4.34 per contract.
Crude oil futures sold off with the rest of the energy space. They closed down 2.6% at $77.50 per barrel.
All things considered, precious metals held up rather well this session. December gold and silver futures hit a session low at $1130.00 and $18.15 per ounce, respectively, in the mid-morning. However, both metals rose steadily for the rest of the session and managed to finish marginally higher. Gold futures closed up fractionally at $1141.90 per ounce and silver futures closed up fractionally at $18.46 per ounce.DJ30 -110.49 NASDAQ -38.38 SP500 -16.50 NASDAQ Adv/Vol/Dec 478/1.76 bln/2180 NYSE Adv/Vol/Dec 497/767 mln/2540
3:00 pm : Heading into the final hour of the session, stocks managed to pare their losses and to trade at afternoon highs. Losses remain considerable, though.
Still, a key question for many market watchers is whether buyers will step in and chase the move, squeezing it higher. If the move pops higher, then fails, many traders would regard it as a bearish signal.DJ30 -109.89 NASDAQ -38.21 SP500 -16.47 NASDAQ Adv/Vol/Dec 489/1.63 bln/2164 NYSE Adv/Vol/Dec 484/706 mln/2554
2:30 pm : A lack of positive leadership has left stocks to trade with deep, broad-based losses. As such, all 10 major sectors in the S&P 500 are in the red with losses ranging from 0.6% (consumer staples) to 2.3% (energy).
Amid this session's selling effort, expected volatility has increased quite a bit. In turn, the Volatility Index, or VIX, is up 8.9%. That's makes for its biggest single-session percentage advance this month.DJ30 -122.96 NASDAQ -41.08 SP500 -17.42 NASDAQ Adv/Vol/Dec 447/1.52 bln/2205 NYSE Adv/Vol/Dec 424/651 mln/2598
2:00 pm : The major equity averages are moving sideways deep in negative territory. They are up a few points from session lows, though.
Despite the extent of this session's slide, Treasuries aren't garnering that much support. Specifically, the benchmark 10-year Note is up just five ticks, which has put its yield at 3.35%.DJ30 -128.40 NASDAQ -40.11 SP500 -17.46 NASDAQ Adv/Vol/Dec 454/1.41 bln/2184 NYSE Adv/Vol/Dec 440/602 mln/2561
1:30 pm : The S&P 500 has slipped back to the 1090 line after failing to extend a gradual climb that began more than one hour ago. Losses remain deep and broad based as a result.
Energy and materials are faring the worst in this session's slide. The sectors are down 2.4% and 2.3%, respectively. Their losses come in conjuction with broader market weakness and pressure against commodities. As such, oil prices are down 2.6% to $77.55 per barrel, while the CRB Commodity Index down 1.4%. DJ30 -134.75 NASDAQ -42.96 SP500 -18.40 NASDAQ Adv/Vol/Dec 428/1.32/2194 NYSE Adv/Vol/Dec 414/564 mln/2586
1:00 pm : Stocks have been mired in weakness for the entire session, but they recently made a modest move off of their lows as the U.S. dollar pared some of its gains.
The Dollar Index is currently up 0.3%, which is less than half the gain that it had sported at its session high. Still, weakness remains widespread as 95% of the stocks in the S&P 500 trade in the red and 28 of the 30 Dow components contend with losses. Meanwhile, 90% of small-cap stocks are in the red and more than 98% of mid-caps in the S&P 400 are down.
The degree of losses among small-caps and mid-caps has been quite considerable, as well. The Russell 2000 is currently down 2.5%, while the S&P 400 has shed 2.4%.
Large-cap tech has also struggled as pressure against semiconductor stocks picks up after analysts at Bank of America's Merrill Lynch downgraded the industry. That has left the Philadelphia Semiconductor Index to lose 3.8%.
Defensive-oriented sectors like consumer staples and health care have managed to limit their losses, however. Consumer staples are down 0.7% as a group, while health care is down 0.6%. The Senate presented last evening a bill for health care reform.
Economic data did little for stocks, once again. Leading indicators for October were up modestly, as expected, but the Philadelphia Fed Survey for November came in above expectations. Weekly jobless claims were in-line with the consensus. DJ30 -133.54 NASDAQ -42.35 SP500 -18.26 NASDAQ Adv/Vol/Dec 424/1.22 bln/2189 NYSE Adv/Vol/Dec 420/520 mln/2569
12:30 pm : Stocks continue to gradually crawl off of their lows. Losses remain considerable, though.
The move off of session lows comes as the U.S. dollar surrenders part of its gains. The Dollar Index is now up 0.3%, which is less than half the gain that it had traded with while at session highs.
The dollar's pullback has also eased pressure against commodities, such that the CRB Commodity Index is now down 1.0% after being down as much as 1.7%.DJ30 -125.33 NASDAQ -38.97 SP500 -16.36 NASDAQ Adv/Vol/Dec 419/1.13 bln/2168 NYSE Adv/Vol/Dec 412/485 mln/2566
12:00 pm : The S&P 500 spent the past hour trading near session lows along the 1090 line, but it has since lifted up a few points. Weakness remains widespread, however.
Meanwhile, the U.S. dollar continues to sport a healthy gain of 0.5%. Its upturn has only made for a fractional improvement from its 52-week low, which was reached earlier this week.DJ30 -139.06 NASDAQ -43.81 SP500 -17.77 NASDAQ Adv/Vol/Dec 387/1.00 bln/2191 NYSE Adv/Vol/Dec 375/437 mln/2591
11:30 am : Stocks continue to trade with considerable losses. Their decline has been especially steep among small-caps and mid-caps; the Russell 2000 Small-Cap Index is down 2.7% and the S&P 400 Mid-Cap Index is off by 2.4%.
Within the Russell 2000, only 4% of the components are making gains. Of those showing strength, New York & Co. (NWY ) is a primary leader, even though it posted a steeper-than-expected loss.
Meanwhile, fewer than 2% of the companies listed in the S&P 400 are trading higher. Donaldson (DCI 44.47, +3.01) is one of the few advancers; it posted a positive earnings surprise for the latest quarter and issued an upside forecast. Analysts at Credit Suisse recently raised their target price on the stock, too.DJ30 -153.27 NASDAQ -46.89 SP500 -19.40 NASDAQ Adv/Vol/Dec 351/900 mln/2190 NYSE Adv/Vol/Dec 351/395 mln/2607
11:00 am : The major indices are near session lows as broad-based losses weigh on trade. Pressure remains considerable as eight of the 10 major sectors trade with losses of at least 1% -- half of the sectors are down by 2% or more.
Only consumer staples and health care have managed to limit their losses to less than 1%. The consumer staples sector is currently down 0.8%, though Colgate-Palmolive (CL 83.96, -1.91) is trading considerably lower following news that there are no discussions of a deal between Colgate-Palmolive and Reckitt Benckiser. Shares of CL were given a sharp lift late in the previous session as rumors of a potential deal began to circulate.
Meanwhile, health care stocks have limited their losses amid relative strength in shares of health care facilities. The group is up 1.1% at the moment. Market participants continue to assess what may follow a Senate health care reform bill that was presented last evening. DJ30 -160.75 NASDAQ -49.20 SP500 -20.20 NASDAQ Adv/Vol/Dec 331/740 mln/2154 NYSE Adv/Vol/Dec 348/336 mln/2584
10:30 am : Commodities are contending with broad-based weakness. That has the CRB Commodity Index down 0.9%.
Precious metals are under pressure as gold prices fall 0.4% to $1136.30 per ounce. Silver was last quoted at $18.33 per ounce, down 0.4%, too.
Oil prices are down a steep 2.0% to $78.00 per barrel. Meanwhile, natural gas prices have surrendered recent gains to trade fractionally lower near $4.23 per contract following news that weekly inventories had a build of 20 bcf. The consensus had called for build of 19 bcf. The collective weakness in energy prices, along with general weakness in the broader equity market, has taken the energy sector to a 2.2% loss.DJ30 -137.55 NASDAQ -41.77 SP500 -16.78 NASDAQ Adv/Vol/Dec 323/561 mln/2099 NYSE Adv/Vol/Dec 335/256 mln/2546
10:00 am : Another batch of economic data has just hit news wires. Stocks have shown little reaction.
Leading economic indicators for October increased 0.3%, which is not as strong as the 0.4% that was already expected. Economic indicators for September had increased 1.0%.
The Philadelphia Fed Survey for November came in at 16.7, which is better than the reading of 12.2 that had been widely forecast and is also better than the October reading of 11.2.
Third quarter mortgage delinquencies hit 9.6%, which is up from the 9.2% that was registered in the second quarter.DJ30 -137.17 NASDAQ -41.22 SP500 -17.91 NASDAQ Adv/Vol/Dec 339/325 mln/1980 NYSE Adv/Vol/Dec 302/156 mln/2477
09:40 am : Sellers are making their presence known in the early going. Their efforts have led to broad-based losses that have put each of the three major indices well into negative territory.
Pressure against the Nasdaq is slighly more intense than it is against the Dow or the S&P 500, however. That stems largely from weakness in semiconductor stocks. Semiconductors are down 3.3%, as measured by the Philadelphia Semiconductor Index, after analysts at Bank of America's Merrill Lynch downgraded the industry.DJ30 -106.56 NASDAQ -32.66 SP500 -14.48 NASDAQ Adv/Vol/Dec 340/153 mln/1845 NYSE Adv/Vol/Dec 339/85 mln/2371
09:20 am : S&P futures vs fair value: -4.00. Nasdaq futures vs fair value: -10.80. Losses in overseas trade, a stronger dollar, and an in-line jobless claims tally have left stock futures to continue trailing fair value, such that a markedly lower start looks to be in order for the major indices. The downward move comes on the heels of the previous session's fractional losses, which were diminished as financials showed late leadership. Health care also showed relative strength. The sector will likely be back in focus this session since Senator Reid introduced last night a Senate version of a health care reform bill. Other governmental news items include word that President Obama is looking to extend the life of the $700 billion financial bailout, while the OECD sees U.S. GDP growth at 2.5% in 2010 and 1.9% for its collective 30-member nations. Still to come this morning are leading economic indicators for October, the Philadelphia Fed Index, and third quarter mortgage delinquencies (10:00 AM ET).
09:00 am : S&P futures vs fair value: -7.50. Nasdaq futures vs fair value: -12.80. Europe's major equity averages are in the red as Britain's FTSE contends with a 0.6% loss. Commodity and banking stocks have offset gains made by defensive stocks. As such, BHP Billiton (BHP), Rio Tinto (RTP), and Xstrata are down markedly, along with HSBC (HBC) and Barclays (BCS). SABMiller was able to advance, though. The company reported that it expects a second-half boost from currency movements and a fall in the cost of inputs. In economic news, retail sales climbed 0.4% in October, but that was slightly below forecasts of 0.5%. In Germany, the DAX is currently down 0.7%. Infineon Technologies signaled it expects low revenue levels, but returned to profit after 10 consecutive quarters of losses. Its shares are still under pressure, though. As an aside, the Organization for Economic Cooperation and Development said the country may face a slow recovery. In France, the CAC is off by 0.8%. Air France-KLM is contending with a considerable loss of its own after it posted a net loss in its fiscal second quarter. Groupe Danone has slid after it unexpectedly cut its sales-growth target. Meanwhile, Japan's Nikkei fell 1.3% as Mitsubishi UFJ Financial (MTU) slid after it announced in the previous evening a massive fundraising to meet stricter capital rules. Mizuho Financial (MFG) Sumitomo Mitsui Financial fell amid related weakness. Toyota Motor (TM) and Canon (CAJ) showed weakness as well. Sony (SNE) reported after the close that it aims to turn its LCD TV operations profitable next year as it aims to earn a 5% operating profit margin in three years. In Hong Kong, the Hang Seng lost 0.9%. However, China Mobile (CHL) outperformed after it said its business had rebounded to precrisis levels. China Resources jumped after it posted a 55% rise in quarterly profits. In mainland China, the Shanghai Composite was able to advance 0.5%, but the MSCI Asia Pacific Index dropped 0.9%.
08:35 am : S&P futures vs fair value: -7.50. Nasdaq futures vs fair value: -12.80. Stock futures have held near morning lows in the wake of word that initial jobless claims for the week ending November 14 hit 505,000, which is in-line with the consensus estimate of 504,000 initial claims. It is also even with the 505,000 initial claims that were posted for the previous week. The four-week moving average now stands at 514,000, down from 520,500. Continuing claims came in at 5.61 million, which is in step with the 5.60 million continuing claims that many had come to expect. The latest continuing claims tally was down from the previous week's tally of 5.65 million continuing claims.
08:00 am : S&P futures vs fair value: -7.60. Nasdaq futures vs fair value: -13.00. During the previous session stocks were unable to make gains amid a weaker dollar, but the greenback's gains this morning have conspired with losses in overseas markets to take U.S. stock futures lower. There aren't many major news items this morning, but Washington Post reported that the Obama administration is ready to extend the life of its $700 billion financial bailout. There are a few items to note on this morning's economic calendar. The latest weekly jobless claims tally is due at the bottom of the hour. Third quarter mortgage delinquencies, the Philadelphia Fed Index for November, and leading economic indicators for October are due at 10:00 AM ET.
06:19 am : S&P futures vs fair value: -6.00. Nasdaq futures vs fair value: -9.00.
06:19 am : Nikkei...9549.47...-127.30...-1.30%. Hang Seng...22643.16...-197.20...-0.90%.
06:19 am : FTSE...5336.18...-6.00...-0.10%. DAX...5769.38...-18.40...-0.30%.
M.A. Perry
Trader and Founder of WRB Analysis (wide range body analysis)
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