TheStrategyLab.com Price Action Trading Support Forum

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=70&t=416



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/wrbtrader

In 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: +8.00 Emini ES ($ES_F) points


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Stocks Start 2010 With A Rally
By Alexandra Twin, senior writer
January 4, 2010: 4:14 PM ET

NEW YORK (CNNMoney.com) -- Wall Street surged Monday, starting off the new year on a positive note, after a report showed manufacturing activity is picking up and the weak dollar propelled commodity prices and stocks.

The Dow Jones industrial average (INDU) rallied 156 points, or 1.5%, according to early tallies. The S&P 500 index (SPX) rose 18 points, or 1.6%. The Nasdaq composite (COMP) gained 39 points, or 1.7%. All three major gauges closed at 15-month highs.

"The fact that stocks are up so much today is an encouraging sign, but we need to see a few days of follow through," said Will Hepburn, chief investment officer at Hepburn Capital Management.

He said the first few trading sessions of a new year are typically positive and that he wants to see several more days of gains on strong trading volume before he's willing to say that the rally has recharged.

Stocks fell Thursday in a thinly traded session on the last day of 2009. All financial markets were closed Friday in observance of New Year's Day.

The last month of 2009 saw stocks churning in a narrow range, managing modest gains, but not really charging ahead like in earlier months.

The market lost some momentum in November and December, Hepburn said. That slowdown coincided with the dollar beginning to firm up and investors opting to close the books early after a difficult year.

A tumultuous 2009 ended with substantial gains. The S&P 500 gained 23.4%, the Dow industrials gained 18.8% and the Nasdaq composite gained 44%.

Stocks are up even more substantially since bottoming in March at the height of the financial market crisis. After closing at a 12-year low on March 9, the Dow gained 59% and the S&P 500 gained 65% through year end. After closing at a 6-year low on the same date, the Nasdaq gained 79%.

Economy: The Institute for Supply Management's manufacturing index rose to 55.9 in December from 53.6 in November, signifying a wider expansion in the sector. Economists surveyed by Briefing.com thought it would rise to 54.3. Stronger reports were also released in Asia, adding to bets that the global manufacturing sector is recovering.

A separate report from the U.S. government showed that construction spending fell 0.6% in November versus forecasts for a drop of 0.5%. Spending fell 0.5% in October.

On the move: Gains were broad based, with 27 of 30 Dow issues rallying, led by Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500), Boeing (BA, Fortune 500), United Technologies (UTX, Fortune 500), IBM (IBM, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500).

In other news, Swiss drugmaker Novartis AG plans to take control of Alcon (ACL) by paying $38.5 billion to buy the 77% of the eye care products maker it doesn't already own. The deal involved Novartis buying out Nestle SA's 52% stake in Alcon for $28 billion in cash and then merging with Alcon to access the remaining 23% held by minority shareholders.

Alcon shares fell nearly 6%.

Bernanke defends Fed policy: The Federal Reserve chairman said Sunday that the central bank's decision to keep interest rates very low between 2002 and 2006 was appropriate and not the cause of the housing market bubble.

He said regulation would have been a better way to avert the collapse that ensued when home prices crumbled, leading to massive foreclosures, billions in losses for banks and the worst financial crisis since the Great Depression.

The Senate is currently considering Bernanke's nomination by President Obama for another term as Fed chairman. The Senate Banking Committee already gave its approval last month. His current term ends on Jan. 31.

World markets: Asian markets gained, with the exception of the Hong Kong Hang Seng. In Europe, London's FTSE 100 rose 1.2%, France's CAC 40 added 1.8% and the German DAX rallied 1.3%.
0:00 /2:28Your biggest financial worry in 2010

Commodities and the dollar: The dollar tumbled versus other major currencies.

The weaker dollar gave a lift to dollar-traded commodities.

COMEX gold for February delivery settled up $22.10 to $1,118.30 an ounce. Gold closed at an all-time high of $1,218.30 an ounce earlier this month.

U.S. light crude oil for February delivery gained $2.15 to $81.51 a barrel on the New York Mercantile Exchange, the highest close since October 2008.

Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.81% from 3.84% late Thursday. Treasury prices and yields move in opposite directions.

Market breadth was positive. On the New York Stock Exchange, winners beat losers four to one on volume of 600 million shares. On the Nasdaq, advancers topped decliners three to one on volume of 1.32 billion shares.



Yahoo! Finance

4:15 pm : The new year began on a strong note as all three major indices made their way to new 52-week highs on the back of broad-based buying. Though trading volume wasn't quite back to average levels, the move was supported by a solid pick up in participation.

Stocks spent the entire session sporting strong gains. Initial support came amid handsome overseas gains and a pullback by the greenback.

News that the ISM Manufacturing Index for December exceeded expectations (consensus called for 54.3) by improving to 55.9 from 53.6 in November helped keep the bullish bias intact. Participants generally shrugged off two-month old construction spending data that showed a slightly steeper-than-expected 0.6% monthly decline for November (consensus called for a 0.5% decline). Construction spending for October was revised downward to reflect a 0.5% decrease.

After stocks ascended to new 12-month highs in late morning trade, they spent the rest of the session drifting sideways, which left the S&P 500 to remain in a range that spanned less than three points. Still, the steady grind locked in the stock market's best single-session percentage gain in eight weeks.

Energy stocks and materials stocks underpinned the gains. The two sectors both advanced 2.8% with help from both the broader market and higher commodity prices.

With the dollar down 0.4% against a basket of foreign currencies, the CRB Commodity Index advanced 2.1%. Crude oil prices climbed 2.7% to $81.51 per barrel as they broke the $80 per barrel barrier for the first time since November. Meanwhile, precious metals prices, as a group, gained 3.1%.

Though they weren't quite the leaders that energy stocks and materials stocks were, financials also had a strong session. The financial sector tacked on 2.1% with particular strength exhibited by investment banks and brokerages, which spiked 3.4% in conjunction with an upgrade of Morgan Stanley (MS 30.91, +1.31) by analysts at both UBS and Credit Suisse.

Despite broad strength this session, the defensive-oriented utilities sector was a relative laggard. It advanced a mere 0.2%.

Retailers also lagged. As a group they finished flat. The uninspired performance came after shares of retailers bested the broader market for the past month; during December retailers advanced 2.2%, while the S&P 500 advanced 1.8%.

Participation wasn't quite back to normal, but it did improve so that more than 1.0 billion shares exchanged hands on the NYSE. The past two weeks have been underscored by poor participant turnout as many trading desks went thinly staffed amid end-of-year holidays.

Advancing Sectors: Materials (+2.8%), Energy (+2.8%), Financials (+2.1%), Industrials (+1.7%), Tech (+1.6%), Telecom (+1.6%), Health Care (+1.4%), Consumer Staples (+1.0%), Consumer Discretionary (+0.6%), Utilities (+0.2%)
Declining Sectors: (None)DJ30 +155.91 NASDAQ +39.27 NQ100 +1.4% R2K +2.4% SP400 +1.6% SP500 +17.89 NASDAQ Adv/Vol/Dec 2150/1.94 bln/587 NYSE Adv/Vol/Dec 2465/+1.01 bln/601

3:30 pm : The equity markets continue to post healthy gains. The most significant leadership is coming from the energy and materials sectors. Weakness in the dollar has helped spur some of the demand. As such, those sectors are up 2.8% and 2.7%, respectively; underpinned by a 3.6% gain in energy commodities and a 3.0% gain in precious metals. The CRB Commodity Index closed up 2.1%.

February crude oil surged this session after breaking through the $80 level in the overnight trade. After hitting a session high at $81.68 per barrel, February crude oil finished 2.7% higher at $81.51 per barrel.

Netting an even more impressive gain, February natural gas saw similar strength in the early morning. The February contract sold off in the afternoon, however. After bouncing off the $5.75 level, the contract returned to near session highs and closed at $5.89 per contract, up 5.6%.

February gold futures surpassed the $1100 level even before the dollar exhibited pronounced weakness. Once the dollar index did in fact sell off, gold futures really took off. After hitting a session high at $1124.60 per ounce, gold futures finished 2.0% higher at $1118.30 per ounce.

Silver futures outperformed the gains seen in gold futures. The March contract finished 3.7% higher at $17.46 per ounce. DJ30 +159.99 NASDAQ +36.37 SP500 +17.60 NASDAQ Adv/Vol/Dec 2047/1.57 bln/684 NYSE Adv/Vol/Dec 2405/698 mln/656

3:00 pm : Stocks continue to sport handsome gains as market participants head into the final hour of this session.

Participation has been much more healthy than it has in the last two weeks, which saw an uncommonly low turnout amid end-of-year holidays. Already, trading volume on the NYSE this session is nearly equal to the average trading volume for the final five sessions of 2009. DJ30 +164.52 NASDAQ +36.89 SP500 +17.41 NASDAQ Adv/Vol/Dec 2045/1.45 bln/672 NYSE Adv/Vol/Dec 2377/640 mln/675

2:30 pm : The utilities sector continues to give up ground so that it now trades with a gain of just 0.1%. Electric utilities are primarily the cause of the decline; the group is currently to stay out of negative territory.

Meanwhile, materials stocks and energy stocks continue to sport some of the best gains this session. The sectors are up 2.5% and 2.6%, respectively. Their gains remain underpinned by higher commodity prices, which have the CRB Commodity Index up 1.9%. DJ30 +158.48 NASDAQ +35.32 SP500 +16.50 NASDAQ Adv/Vol/Dec 2051/1.31 bln/668 NYSE Adv/Vol/Dec 2379/573 mln/657

2:00 pm : The stock market has slipped from its recent trading range, but continues to sport a broad-based gain, such that all 10 major sectors are in positive territory.

Retailers have come under a recent fit of pressure, however. The group is currently flat after it had spent most of the session with a modest gain. The dip by retailers has undercut the consumer discretionary sector so that it trades with a relatively modest gain of just 0.5%.

Financials have also made a bit of a pullback. The sector had recently been up more than 2.0%, but it now trades with a gain of 1.8%. Still, financials continue to be led by investment banks and brokerages, which are up 3.5% following an upgrade of Morgan Stanley (MS 31.07, +1.47) by analysts at both UBS and Credit Suisse. Goldman Sachs (GS 173.37, +4.53) has also garnered support in sympathy, even though estimates for the company were actually lowered by analysts at Credit Suisse. DJ30 +158.78 NASDAQ +35.00 SP500 +16.95 NASDAQ Adv/Vol/Dec 2044/1.22 bln/661 NYSE Adv/Vol/Dec 2392/459 mln/628

1:30 pm : The S&P 500 has spent the most part of the past two hours in a range of just two points. That narrow range has held at session highs, though.

Given that the broader market hasn't made any sort of meaningful move for the last couple of hours, several defensive-oriented stocks have been able to make up ground against it. Specifically, the consumer staples sector is up 1.2% and the health care sector is up 1.3%.

However, utilities have actually lost ground. The sector is now up just 0.4%. DJ30 +168.68 NASDAQ +37.67 SP500 +18.36 NASDAQ Adv/Vol/Dec 2061/1.15 bln/633 NYSE Adv/Vol/Dec 2446/508 mln/583

1:00 pm : Broad-based gains in the first session of 2010 has the stock market up to a new 52-week high. The buying effort has been strong since the opening bell.

Participants returned from a long, holiday weekend to learn that overseas markets made solid gains with help from some pleasing manufacturing data. Domestic manufacturing activity also proved pleasing in December, according to the latest ISM Manufacturing Index. Recent construction spending was weak, though.

A sharp drop of 0.5% by the Dollar Index has also helped buoy stocks, especially natural resource plays. As such, energy stocks and materials stocks have been the best performers this session. The two sectors are up 2.5% and 2.6% as the broader market and higher commodity prices provide support.

Gold prices are off of their session high, but continue to sport a 2.0% gain to trade at $1118.00 per ounce. That has helped to lift gold stocks 2.3% and diversified metals and miners 3.9%.

Oil prices are back above $80 per barrel for the first time in more than one month. Crude contracts recently priced oil at $81.35 per barrel, up 2.5%. That has helped oil and gas drilling stocks climb 4.3%.

Broad support for stocks has 90% of the names in the S&P 500 trading higher and almost 300 of the 3100 stocks in the NYSE have put in fresh 52-week highs this session. While that is impressive, the stock market has so far managed to gain only half of what it did in its first session of 2009. DJ30 +163.65 NASDAQ +39.19 SP500 +17.96 NASDAQ Adv/Vol/Dec 2069/1.07 bln/602 NYSE Adv/Vol/Dec 2453/465 mln/568

12:30 pm : All three major indices are in a sideways drift near their session highs. The steady movement has lasted for approximately one hour.

There aren't any upcoming announcements that will act as catalysts to either extend the gains or cause a pullback, so any moves in the near future will likely arise from the stock market's own volition.

As things currently stand, though, the stock market is up a healthy 1.6%. Still, that's only half as good as the gain that the stock market booked on its first trading session of 2009, when it spiked 3.2%. DJ30 +159.69 NASDAQ +40.32 SP500 +17.81 NASDAQ Adv/Vol/Dec 2070/980 mln/585 NYSE Adv/Vol/Dec 2457/430 mln/550

12:00 pm : Broad-based buying has 90% of the names in the S&P 500 trading higher, but airlines have been distinctly out of favor this session. In turn, US Airways (LCC 4.70, -0.14), Southwest Airlines (LUV 11.14, -0.29), and Delta Air Lines (DAL 10.96, -0.42) are down considerably. Their weakness has taken the Amex Airline Index (XAL 33.70, -0.09) to a 0.3% loss. DJ30 +158.55 NASDAQ +40.42 SP500 +17.79 NASDAQ Adv/Vol/Dec 2078/893 mln/564 NYSE Adv/Vol/Dec 2449/394 mln/532

11:30 am : A 2.4% hike in the price of gold to $1123.00 per ounce has gold stocks up 2.9% and the SPDR Gold Trust (GLD 109.89, +2.58) up nicely. However, steel stocks have spiked to an even more impressive gain of 4.5% as raw materials prices are pushed higher by this session's drop in the dollar, which is currently down 0.5% against a basket of foreign currencies. Strength among raw and basic materials stocks has the materials sector up 2.8% to a fresh session high.

Accordingly, metal mining giant Alcoa (AA 16.73, +0.61) is providing leadership to the Dow, which is at a new 52-week high. Of the Dow's 30 components, only Walt Disney (DIS 31.91, -0.34) and Home Depot (HD 28.84, -0.09) are currently in negative territory. DJ30 +152.20 NASDAQ +40.31 SP500 +17.06 NASDAQ Adv/Vol/Dec 2086/767 mln/535 NYSE Adv/Vol/Dec 2450/338 mln/525

11:00 am : The stock market continues to sport broad-based gains. Such strength has sent the S&P 500 to a fresh 52-week high.

Gains remain strongest among materials stocks, which are now up 2.5% in their best single-session percentage advance in nearly two months. The spike comes amid a 2.1% jump in the CRB Commodity Index, which is on its way toward its best single-session percentage gain in more than one month.

Despite favor for stocks, Treasuries have managed to tick higher. The benchmark 10-year Note was last quoted with a gain of six ticks. That has sent its yield back toward 3.8%. DJ30 +147.44 NASDAQ +40.10 SP500 +16.82 NASDAQ Adv/Vol/Dec 2074/533 mln/519 NYSE Adv/Vol/Dec 2443/281 mln/499

10:35 am : After opening sharply higher, the stock market made fresh highs again in recent trade following the December ISM Manufacturing data, which was higher than expected (55.9 vs. 54.3 consensus). Meanwhile, the US Dollar Index remains near today's lows, which is also providing price support in both the stock and commodities markets.

Crude oil has traded in positive territory all session and put in fresh session highs of $81.68 per barrel at the open of pit trading on the strength of the market and the weak dollar. Currently, crude is under those highs at $81.16 per barrel, up 2.3%.

Natural gas pushed to morning highs along with crude, hitting $5.894 per MMBtu right at the open of pit trading. However, in recent activity, the energy component pulled back, but is well in the black at $5.78 per MMBtu, 3.7% higher.

In the precious metals group, February gold and March silver have also traded in positive territory all session. Gold touched highs today of $1124.60 per ounce and is currently 2.4% higher at $1122.50 per ounce, while silver hit fresh session highs minutes ago of $17.49 per ounce and is currently 3.8% higher at $17.485 per ounce.

Separately, in the shipping sector, the Baltic Dry Index posted sizable gains, which is notable given its prior performance in its last 25 sessions. The index gained 4.5% overnight to 3,140. The overnight session was its first day of trading since the index stopped trading on Dec. 24. It had traded lower in 22 out of 25 of its prior sessions before it closed for the year.DJ30 +138.37 NASDAQ +33.48 SP500 +14.12 NASDAQ Adv/Vol/Dec 1985/464.6 mln/534 NYSE Adv/Vol/Dec 2322/212.1 mln/543

10:00 am : The major indices continue to sport strong gains in the wake of the latest batch of economic data.

The ISM Manufacturing Index for December came in at 55.9, which is above the 54.3 that had been expected. The December reading is also above the 53.6 for November.

Meanwhile, construction spending for November decreased 0.6% month-over-month, but that was weaker than the 0.5% decrease that had been widely forecast. Construction spending for October was revised downward to reflect a decrease of 0.5%.

Early movers: Trading up -- BFRM +60.3%, KNDI +12.5%, NIV +11.2%, IRE +10.7%, RAME +8.8%, SMI +8.6%, AIB +7.7%, ANV +7.6%, CMFO +6.8%; Trading down -- FIZZ -7.9%, ZSL -6.7%, EDZ -5.8%, TZA -5.4%, ICXT -5.3%, GLL -5.2%, ERY -4.9%, WCG -4.8%

Advancing Sectors: Materials (+2.4%), Energy (+2.2%), Tech (+1.5%), Industrials (+1.3%), Financials (+1.1%), Telecom (+1.0%), Health Care (+0.9%), Consumer Discretionary (+0.8%), Consumer Staples (+0.7%), Utilities (+0.7%)
Declining Sectors: (None)DJ30 +129.61 NASDAQ +34.13 SP500 +13.84 NASDAQ Adv/Vol/Dec 1971/302 mln/464 NYSE Adv/Vol/Dec 2310/145 mln/462

09:45 am : Thanks to broader market support and higher commodities and raw materials prices, energy stocks and materials stocks are leading early gains. Both sectors are up 2.0%.

Meanwhile, defensive-oriented sectors are lagging on a relative basis. As such, consumer staples are up just 0.4%, while utilities are up 0.5%. DJ30 +101.95 NASDAQ +31.18 SP500 +11.97 NASDAQ Adv/Vol/Dec 1975/179 mln/405 NYSE Adv/Vol/Dec 2301/101 mln/399

09:15 am : S&P futures vs fair value: +8.40. Nasdaq futures vs fair value: +23.30. Stock futures recently pushed to fresh morning highs in the few minutes that remain ahead of the opening bell. Oil prices also added to their already-strong morning gains, but have since eased back a bit. Still, they remain 2.5% higher at $81.35 per barrel. The recent run up in both stock futures and oil prices came as the dollar extended its early slide to a 0.7% loss against competing currencies. Strong, broad-based gains in overseas stock markets had already helped put into place this morning a rather bullish bias; Europe's major bourses continue to sport handsome gains and Japan's Nikkei already closed firmly higher. The Hang Seng and Shanghai Composite both logged losses in the face of a strong manufacturing index, though. The latest U.S. ISM Manufacturing Index is due at 10:00 AM ET and will quite possibly act as a trading catalyst for market participants. Construction spending figures are also due at 10:00 AM ET.

09:00 am : S&P futures vs fair value: +7.80. Nasdaq futures vs fair value: +23.30. Commodities are up solidly this morning. That has the CRB Commodity Index up 1.4%. Oil is a primary source of support for the CRB; crude oil futures prices are up 2.4% to $81.25 per barrel in the first few minutes of pit trade. Gold has garnered considerable support of its own; the yellow metal was last priced at $1118.0 per ounce, up 2.0%. The gains come as the Dollar Index descends to a 0.5% loss and in the presence of a report from Financial Times that states the International Monetary Fund has forecast an increase in commodities prices as the global economy expands faster this year. The article indicated that such a hike would build on the 2009 price climb, which brought the biggest annual price increase for raw materials in nearly four decades.

08:30 am : S&P futures vs fair value: +6.10. Nasdaq futures vs fair value: +17.50. U.S. stock futures continue to point toward a higher start for 2010's first session. Europe's major bourses have already strung together some solid gains amid news that manufacturing activity in the United Kingdom grew at its fastest pace in more than two years during December, according to a purchasing managers' index that climbed to 54.1 from 51.8 for the previous month. Britain's FTSE has responded with a 0.7% gain. That puts it at a fresh 52-week high. Natural resource plays BP PLC (BP), Xstrata, and Royal Dutch Shell (RDS.A) are primary leaders at the moment. Though buying has been generally broad based on Germany's DAX, Siemens (SI) is a primary leader once again. During the final 10 sessions of 2009 shares of SI advanced 4.7% on the DAX, while the bourse itself climbed a more modest 2.7% during that time. This session, shares of SI are up 1.3%, while the DAX is up 0.6%. In France the CAC is up 1.1% to a new 52-week high. Total (TOT) is its primary leader. In Asia, China's factories reportedly increased production in December, according to a manufacturing survey from HSBC that climbed to 56.1 from 55.7 a month earlier. Still, the Shanghai Composite Index ended down 1.0%, while Hong Kong's Hang Seng shed 0.2%. China Construction Bank and Industrial & Commercial Bank were primary laggards. However, Japan's Nikkei put together a 1.0% gain. The move was broad-based, but Kyocera (KYO) was a primary leader. Honda Motor (HMC) also provided support.

08:00 am : S&P futures vs fair value: +6.80. Nasdaq futures vs fair value: +19.50. Despite a downward finish to 2009, stock futures suggest a strong start to the new year. Weakness in the dollar and overseas buying amid encouraging manufacturing data in both Europe and China have been boons for the broader market ahead of the opening bell. News that analysts at both UBS and Credit Suisse upgraded shares of Morgan Stanley (MS) has been particularly supportive of financial issues -- shares of MS are up nearly 3.5% to $30.60 each in premarket action. Overall news flow continues to be slow, but the ISM Manufacturing Index for December is due at 10:00 AM ET, along with construction spending data for November.

06:35 am : S&P futures vs fair value: +7.00. Nasdaq futures vs fair value: +19.50.

06:35 am : Nikkei...10654.79...+108.40...+1.00%. Hang Seng...21823.28...-49.20...-0.20%.

06:35 am : FTSE...5445.73...+33.90...+0.60%. DAX...6002.06...+44.60...+0.80%.

M.A. Perry
Trader and Founder of WRB Analysis (wide range body analysis)
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