TheStrategyLab.com Price Action Trading Support Forum

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

Trade journals are crucial in preventing us traders from becoming complacent or content with our trading plan or the markets because without having the ability to review archives of past trading days in a forever changing market...we won't know it's time to adapt when change occurs in the markets because broker statements alone doesn't help us keep that edge in comparison to a trade journal. In addition, although this journal contains advertisements involving my trade methods, it does contain useful trading tips a few times per week. Thus, if you're looking for trading tips that can improve your trading and understand that profitable trading involves more than just entry signals...consistently read this trade journal and the #FuturesTrades chat room logs where I post my trades in real-time from entry to exit (see link below) via my IRC user name wrbtrader that's the same as my user name on twitter.

Today's #FuturesTrades chat room logs is archived @ http://www.thestrategylab.com/ftchat/forum/viewtopic.php?f=70&t=434.



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, if you're interested in having free access to one of my profitable trade strategies along with earning extra income with little effort...join my referral program @ http://www.thestrategylab.com/ReferralProgram.htm

My Trading Performance: +6.60 points in the ICE Russell 2000 Emini TF ($TF_F) Futures


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Stocks Muster Gains
By Alexandra Twin, senior writer
January 25, 2010: 6:19 PM ET

NEW YORK (CNNMoney.com) -- Stocks managed slim gains Monday as investors weighed recent worries about the bank sector and the likelihood of Federal Reserve Chairman Ben Bernanke serving for a second term.

After the close, Apple (AAPL, Fortune 500) reported quarterly earnings and revenue that topped estimates, thanks to strong sales of iPhones and Macintosh computers. Quarterly revenue surged to a record $15.7 billion. Shares fell 2% after the close.

The Dow Jones industrial average (INDU) added 23 points or 0.2%. The S&P 500 index (SPX) added 5 points or 0.5%. The Nasdaq composite (COMP) gained 5 points or 0.3%.

Gains in large bank stocks, techs and big industrial firms helped give stocks a leg up, with Dow components including IBM (IBM, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), Travelers (TRV, Fortune 500), 3M (MMM, Fortune 500) and Caterpillar (CAT, Fortune 500). But a weaker-than-expected housing market report put a lid on any gains.

Stocks plunged last week after the White House proposed new limits on banks and talk swirled that Federal Reserve Chairman Ben Bernanke's term may not be renewed. In three sessions, the Dow, S&P 500 and Nasdaq all slumped 5%.

But those worries were tempered Monday at the start of a busy week for economic and earnings news. This week brings the Federal Reserve policy-setting meeting, the first reading on fourth-quarter GDP growth, the president's State of the Union address and profit reports from a slew of major companies. Apple reports after the close Monday.

The market is bound to walk a narrow path this week, especially through Wednesday, which brings the conclusion of the Fed meeting and the president's State of the Union speech, said Ted Weisberg, NYSE Floor Trader at Seaport Securities.

"Last week's flogging of the banking sector and the political theatre around Bernanke sent a negative message to the markets," Weisberg said. "But after the weekend and a moderation of the message, people realize that nothing has changed in terms of the fundamentals."

He said that investors are acknowledging Monday that the economy is still making a slow recovery, fourth-quarter earnings have been looking strong, and that Obama's bank plan may not gain approval from Congress. Additionally, the five percent selloff in three days was giving investors a chance to dip back into stocks Monday.

The Dow's weekly loss of 4.1% was the worst since the week ended March 6, 2009, when it closed at a 12-year low and the market hit bottom. Since then, the Dow has risen 56% as of Monday's close.

On Friday, the VIX (VIX), the market's fear gauge, spiked at a 6-month high as investors worried that a bigger selloff was brewing. But on Monday, the VIX was back down 7%.

"We had a series of events last week that hit the market broadside, but I think we've gotten past that sting," said Fred Dickson, chief market strategist at D.A. Davidson & Co. "The good ship Wall Street should be starting to right itself."

Quarterly results: So far 19% of the S&P 500, or 97 companies, have reported results. Earnings are on track to have risen 193% from a year ago and revenue 6%, according to the latest from earnings tracker Thomson Reuters. But a lot of that gain is due to easy comparisons to a terrible fourth quarter of 2008, the worst in Thomson's 15-year history.

Financials as a sector are fueling most of the gains. Strip out financial results and year-over-year earnings are set to rise just 9% and revenue to rise just 1%.

Dow components DuPont (DD, Fortune 500), Johnson & Johnson (JNJ, Fortune 500), Travelers (TRV, Fortune 500) and Verizon Communications (VZ, Fortune 500) are all due to report results.

Housing: Sales of existing homes fell to a 5.45 million unit annual rate in December from a rate of 6.54 million units in November, according to a National Association of Realtors report released in the morning. Economists surveyed by Briefing.com thought it would fall to a 5.9 million unit rate.

December was expected to show a decline following a robust November that benefited from a belief that the first-time homebuyer tax credit was about to expire. But when that credit was extended and expanded, the momentum dropped.
Bernanke quest: The scramble for 60 votes

Federal Reserve: Amid ongoing questions about whether Bernanke's term will be renewed, the central bank is meeting to discuss interest rate policy. Bankers meet Tuesday and Wednesday and are widely expected to opt to keep interest rates steady at historic lows near zero.

Although the bank isn't likely to say much, investors will still scour the statement for hints about when the Fed plans to start raising interest rates or withdrawing some of the trillions in stimulus dollars it has put into the system.

Sustained low interest rates and the increase of money in the system are seen as among the main reasons why the economy didn't crater and the stock market was able to bounce back last year.

"You may see the Fed's language change marginally later this year, but not this week," said Drew Kanaly, Chairman and CEO at Kanaly Trust.

"The housing numbers this morning were all over the place because of the stimulus," he said. "Lending has fallen off the table. The Fed can't raise rates in the near term."
0:00 /5:55Why more banks will fail in 2010

World markets: Asian markets tumbled, with the Japanese Nikkei losing 0.7%. European markets tumbled as well.

Commodities and the dollar: The dollar gained versus the euro and fell against the yen.

COMEX gold for February delivery rose $6.50 to settle at $1,095.70 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.

U.S. light crude oil for February delivery rose 72 cents to settle at $75.26 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices fell, raising the yield on the 10-year note to 3.61% from 3.69% late Thursday. Treasury prices and yields move in opposite directions.

Market breadth was mixed. On the New York Stock Exchange, winners beat losers by four to three on volume of 1.05 billion shares. On the Nasdaq, decliners narrowly topped advancers on volume of 2.18 billion shares.



Yahoo! Finance

4:30 pm : Late pressure left stocks to finish the session on a rather weak note, but the major indices were still able to settle in positive territory.

Gains were varied for the entire session as choppy trade made it difficult for stocks to put together any sort of sustainable relief rally in the wake of the stock market's three consecutive slides. Disappointing December existing home sales numbers didn't help either.

Existing home sales for December fell 16.7% month-over-month to an annualized rate of 5.45 million units, which is a slower pace than the annualized rate of 5.90 million units that had been expected.

The announcement caused a bit of a broad-based slip, but homebuilders saw the worst of it as their near 2% gain turned into a loss. The group recovered to finish with a 0.4% gain, though.

Materials stocks had been strong performers for most of the session. They were helped along by AK Steel (AKS 21.27, +1.08), which posted better-than-expected earnings for its latest quarter. However, the lack of market weight in the materials sector made it difficult to lead a broader recovery.

Telecom, which also lacks weight in the broader market, finished with the best gains of any major sector. AT&T (T 25.58, +0.19) and Verizon (VZ 30.68, +0.34) helped the sector put together a 1.1% gain. The two integrated telecom giants are due to report their latest quarterly results later this week.

Though their loss was fractional, health care was the only major sector to finish in the red. Managed care providers (-0.5%) proved to be a drag on the sector.

Volatility made a considerable pullback after it had surged in the previous week. Specifically, the Volatility Index, or VIX, fell 7.0% this session.

Trading volume was moderate as hardly 1 billion shares exchanged hands on the NYSE this session. Given the scope of last week's losses, many participants are waiting to see what stocks will do amid a larger batch of earnings releases and economic data.

Advancing Sectors: Telecom (+1.1%), Materials (+0.8%), Tech (+0.7%), Utilities (+0.6%), Energy (+0.6%), Financials (+0.5%), Industrials (+0.5%), Consumer Discretionary (+0.3%), Consumer Staples (+0.2%)
Declining Sectors: (None)
Unchanged: Health CareDJ30 +23.88 NASDAQ +5.51 NQ100 +0.4% R2K +0.2% SP400 +0.2% SP500 +5.02 NASDAQ Adv/Vol/Dec 1312/2.14 bln/1379 NYSE Adv/Vol/Dec 1755/1.05 bln/1289

3:30 pm : Oil prices were able to settle pit trade with a 0.9% gain at $75.22 per barrel after a midsession dip into negative territory. Natural gas prices failed to follow, though; contracts closed with the commodity priced 1.8% lower at $5.72 per MMBtu.

Precious metals fared well. As such, prices for gold gained 0.6% to settle at $1095.70 per ounce, while silver prices settled 1.3% higher at $17.15 per ounce.

Overall strength among commodities helped drive the CRB Commodity Index 0.4% higher. It is still down more than 2% since the start of the year, however. DJ30 +55.08 NASDAQ +10.99 SP500 +8.30 NASDAQ Adv/Vol/Dec 1362/1.77 bln/1318 NYSE Adv/Vol/Dec 1817/771 mln/1218

3:00 pm : Stocks are challenging session highs as they enter this session's final hour of trade. Gains remain broad based, but the latest move has been largely led by tech and energy, which have both jumped out to a 1.3% gain. However, financials have made one of the sharpest upturns; the sector is now up 1.4%, which is second only to the telecom sector's 1.5% gain. DJ30 +73.61 NASDAQ +14.77 SP500 +10.44 NASDAQ Adv/Vol/Dec 1404/1.65 bln/1274 NYSE Adv/Vol/Dec 1856/715 mln/1171

2:30 pm : Stocks continue to trade with strong gains, but they still haven't been able to reconnect with their session highs, which were set in the first hour of action.

The gains this session contrast the action seen in overseas markets. Hong Kong's Hang Seng and Japan's Nikkei fell 0.6% and 0.7%, respectively, while Europe's bourses moved markedly lower as Germany's DAX dropped 1.1%, France's CAC fell 1.0%, and Britain's FTSE slipped 0.8%.

Strength in U.S. stocks has offset foreign weakness in the Dow Jones World Index, which is currently flat. DJ30 +65.22 NASDAQ +14.64 SP500 +9.43 NASDAQ Adv/Vol/Dec 1383/1.55 bln/1294 NYSE Adv/Vol/Dec 1785/670 mln/1250

2:00 pm : Large-cap financials and large-cap tech are among this session's most actively traded issues by volume within the S&P 500. Specifically, Citigroup (C 3.24, -0.01), Bank of America (BAC 14.95, +0.05), Intel (INTC 20.39, +0.48), Cisco (CSCO 22.98, +0.01), and Microsoft (MSFT 29.38, +0.42) make up the top five most actively traded names. Their sectors are up solidly, too; financials sport a 0.8% gain, while tech is up 0.9%.

Overall trading volume in the broader market remains average this session, though. Trading volume spiked in last week's sell-offs, however. DJ30 +51.17 NASDAQ +9.07 SP500 +7.73 NASDAQ Adv/Vol/Dec 1351/1.41 bln/1312 NYSE Adv/Vol/Dec 1734/628 mln/1278

1:30 pm : The stock market has made its way to a fresh afternoon high, but it has yet to make its way back to its session high, which was reached this morning.

Amid the stock market's recent push, telecom stocks have replaced materials stocks as the best performers of this session. Materials stocks have eased back to trade with a 1.2% gain, but telecom has extended its advance to a fresh session high, where it sports a 1.4% gain.

Energy stocks also hit a fresh session high in recent action. They are currently up 1.1%, with help from oil prices, which are at a fresh session high of their own -- oil prices are up 0.9% to $75.20 per barrel. DJ30 +61.67 NASDAQ +10.24 SP500 +8.35 NASDAQ Adv/Vol/Dec 1346/1.35 bln/1292 NYSE Adv/Vol/Dec 1756/586 mln/1245

1:00 pm : Stocks slid sharply in each of the three previous sessions, but they have garnered enough support to make a modest bounce in the latest showing. However, a lack of any truly positive catalyst has left the market without any real leader and made for rather choppy action.

All three major indices started the session firmly higher, but suffered a setback with the release of December existing home sales, which fell a sharper-than-expected 16.7% month-over-month. The announcement undercut shares of homebuilders, which had been up nearly 2% ahead of the announcement, but are now down with a modest loss of 0.2%.

Financials also surrendered a strong, early gain, but they have since bounced back from a slight loss to sport a 0.8% gain. Consumer finance stocks (-0.9%) remain weak, though.

Materials stocks have steadily outperformed this session. The sector is currently up 1.5% as better-than-expected earnings from AK Steel (AKS 21.53, +1.34) help steel stocks ascend to a 1.6% gain. Despite the materials sector' strength, it hasn't been much of a leader this session. That is due largely to its lack of weight in the broader market. Specifically, materials stocks collectively carry 3.5% of the S&P 500's market weight. Telecom is the only sector with less weight; it represents 3%.

News flow has been light this session, but that is expected to change after the closing bell, which will bring a bevy earnings announcements that will extend through the week. Data will also pick up in coming sessions. DJ30 +63.56 NASDAQ +9.15 SP500 +8.47 NASDAQ Adv/Vol/Dec 1314/1.25 bln/1308 NYSE Adv/Vol/Dec 1725/545 mln/1254

12:30 pm : Stocks continue to trade with varied gains, but all 10 major sectors are in positive ground. Gains are still the strongest in the materials sector, which is up 1.4% after it was dropped for a 5% loss last week.

However, telecom stocks also look strong this session. The sector is up 1.3% at the moment, thanks to leadership from AT&T (T 25.72, +0.33) and Verizon (VZ 30.76, +0.42). Both outfits are due to report their latest quarterly results later this week. DJ30 +53.43 NASDAQ +4.84 SP500 +6.98 NASDAQ Adv/Vol/Dec 1253/1.17 bln/1330 NYSE Adv/Vol/Dec 1622/511 mln/1357

12:00 pm : Stocks have picked up a bit of support so that all three major indices remain in positive territory. Action remains choppy, though.

Oil prices have pulled back a bit in recent action. Crude contracts currently price oil at $74.60 per barrel, unchanged for the session, but energy stocks continue to sport a strong 0.8% gain. Several oil and gas equipment companies are showing strength, but Halliburton (HAL 30.69, -0.46) is under pressure despite better-than-expected quarterly earnings. DJ30 +43.31 NASDAQ +2.28 SP500 +6.10 NASDAQ Adv/Vol/Dec 1166/1.07 bln/1420 NYSE Adv/Vol/Dec 1516/465 mln/1443

11:30 am : Shares of airline carriers had been up more than 2% in the early going, but the group has since retreated to a 0.3% loss, as measured by the Amex Airline Index. The downturn has been led by Delta Air Lines (DAL 13.09, -0.20) and UAL Corp (UAUA 12.84, -0.37).

The Dow Jones Transportation Index has also surrendered an early gain. It was up 0.8% at its morning high, but it now trades with a fractional loss as FedEx (FDX 79.67, -0.62) reverses course.

As for the more widely followed indices, the Dow recently came in contact with the neutral line, but has bounced back to a modest gain. The S&P 500 is also up modestly, but the Nasdaq Composite has retreated to the unchanged mark. DJ30 +19.20 NASDAQ +0.69 SP500 +4.52 NASDAQ Adv/Vol/Dec 1100/920 mln/1451 NYSE Adv/Vol/Dec 1516/395 mln/1440

11:00 am : Action has become a bit choppy, but the major equity averages remain firmly higher. Materials stocks continue to outperform; they are currently up 1.6%.

Financial stocks have made a sharp pullback, however. Financials had been up roughly 1.5% in the early going, but the sector now trades with a modest 0.4% gain. The downturn comes amid pressure against regional banks, which are down 1.3%, and consumer finance stocks, which are down 1.7%.

Meanwhile, utilities stocks have snapped back from a midmorning loss. The sector had started the session with a gain, then retreated into the red, but has since rebounded to a 0.6% gain. DJ30 +51.24 NASDAQ +11.96 SP500 +6.56 NASDAQ Adv/Vol/Dec 1389/738 mln/1099 NYSE Adv/Vol/Dec 1754/325 mln/1173

10:30 am : The US Dollar Index has recovered the vast majority of this morning's losses and is back near the 78.278 closing level on Friday, which has weakened most of the commodity complex.

Crude pushed into positive territory off lows of $74.06 per barrel after pit trade opened and moved to fresh session highs of $75.04 per barrel. Crude held most of those gains and remains in positive territory at $74.81 per barrel, up 0.4%.

February natural gas steadily trended lower all session hitting session lows of $5.671 per MMBtu minutes after the open of pit trading. Since then, the energy component has recovered the majority of its losses and is only modestly lower at $5.788, 0.5% lower.

Precious metals have been in positive territory all session, but February gold and March silver are moving back near session lows of $1092.20 per ounce and $16.99 per ounce in recent activity. Gold is currently 0.5% higher at $1097.10 per ounce and silver is 1.1% higher at $17.11 per ounce.DJ30 +71.27 NASDAQ +16.51 SP500 +8.31 NASDAQ Adv/Vol/Dec 1470/545.1 mln/970 NYSE Adv/Vol/Dec 1905/245.6 mln/960

10:00 am : The S&P 500 had been flirting with a 1% gain, but stocks have since pulled back a bit in the wake of the latest existing home sales numbers. Existing home sales for December fell 16.7% month-over-month to an annualized rate of 5.45 million units, which is slower than the rate of 5.90 million units that had been expected.

Despite the slow down in existing home sales, which bogs down inventory and stalls new home sales and new home construction, shares of homebuilders are up a handsome 1.8%.

Early movers: Trading up -- PEIX +12.4%, GTN +12%, KERX +11.7%, PVTB +10.9%, MED +8.8%, PLX +8.3%, TRE +7.7%, COLB +7.4%; Trading down -- PARD -14.9%, CRESY -7%, SOMX -6.7%, FSII -4.7%, WCRX -4.6%

Advancing Sectors: Materials (+1.4%), Financials (+1.3%), Industrials (+1.1%), Tech (+1.0%), Energy (+0.9%), Telecom (+0.5%), Health Care (+0.4%), Consumer Discretionary (+0.3%), Consumer Staples (+0.1%)
Declining Sectors: (None)
Unchanged: UtilitiesDJ30 +69.30 NASDAQ +11.89 SP500 +7.87 NASDAQ Adv/Vol/Dec 1398/330 mln/964 NYSE Adv/Vol/Dec 1880/160 mln/898

09:45 am : Stocks are up in broad-based fashion during the first few minutes of action. Gains are especially strong among materials stocks and financial stocks, which are up 1.8% and 1.5%, respectively.

The bounce by materials stocks comes with help from steel stocks, which are up 2.8% in the wake of better-than-expected earnings from AK Steel (AKS 21.56, +1.36).

Meanwhile, financials are being helped by strength among investment banks and brokerages, which are up 1.9%, collectively. DJ30 +74.82 NASDAQ +13.01 SP500 +9.39 NASDAQ Adv/Vol/Dec 1515/180 mln/770 NYSE Adv/Vol/Dec 2021/108 mln/694

09:15 am : S&P futures vs fair value: +11.80. Nasdaq futures vs fair value: +15.30. There haven't been any major news items in the wake of last week's weak finish and December existing home sales numbers make up the only item on today's economic calendar (10:00 AM ET), but the flow of data picks up later this week. Earnings announcements will also pick up as this week progresses. For now, though, stock futures have managed to garner support. As a result, a solid start for the session looks to be in order.

09:00 am : S&P futures vs fair value: +9.70. Nasdaq futures vs fair value: +11.80. Stock futures continue to drift downward. A positive start still looks to be in order, though. In the meantime, the dollar has managed to undo a modest loss so that it now trades flat against a basket of foreign currencies. Commodity prices are presently mixed, which has the CRB Commodity Index unchanged.

08:30 am : S&P futures vs fair value: +10.70. Nasdaq futures vs fair value: +13.50. U.S. stock futures have drifted off of their premarket highs, but they continue to point to a solid start for the session. Meanwhile, regular trading is already well under way in Europe. The action has taken Germany's DAX down to a 0.5% loss. The slide comes as declining issues take 4-to-1 advantage over advancers, which are presently led by Deutsche Bank (DB). Financial issues Societe Generale and Credit Agricole are leaders in France, where the CAC trades with a 0.2% loss at the moment. Energy giant Total (TOT) is a primary laggard in the bunch, though. Banks HSBC (HBC), Barclays (BCS), and Standard Chartered have caught a bid in Britain, but the FTSE is still down 0.2%. In Asia, the Shanghai Composite shed 1.1% and the Hang Seng slipped 0.6% as banks traded with weakness. As such, China Construction Bank and Bank of China were laggards. Their decline came in conjunction with news that Bank of China plans to raise new capital through new share sales and a bonds issue. Meanwhile, Japan's Nikkei closed 0.7% lower. Its declining issues outnumbered advancers by 3-to-1; TDK Corp was a primary leader in the bunch, but Fast Retailing was especially weak.

08:00 am : S&P futures vs fair value: +10.20. Nasdaq futures vs fair value: +11.00. Participants have returned from the weekend to offer a modest bid for stocks after the stock market concluded last week with three straight losses that resulted in a weekly decline of nearly 4%. The bid comes despite renewed weakness overseas and a handful of earnings announcements, none of which have been market movers. However, a catalyst for trade could come in the December existing home sales numbers, which are due at 10:00 AM ET.

06:25 am : S&P futures vs fair value: +13.70. Nasdaq futures vs fair value: +16.30.

06:25 am : Nikkei...10512.69...-77.90...-0.70%. Hang Seng...20598.55...-127.60...-0.60%.

06:25 am : FTSE...5330.10...+27.10...+0.50%. DAX...5691.03...-4.30...-0.10%.

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