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Gary Townsend - Founding member and Chairman, GBT Capital Management, LLC, a macro long/short fund based in Chevy Chase, Maryland. Also, 2007-2013, a founding partner, CEO and Portfolio Manager of Hill-Townsend Capital LLC, a long/short equity financial sector fund. Mr. Townsend has 35 years... More
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  • U.S. Futures Rally On Expected ECB Monetary Easing; Asia Ends Mixed While Europe Gains 0 comments
    Mar 26, 2014 9:07 AM

    This morning. Today, U.S. equity futures are moderately higher after fair value adjustment, but are off their morning highs. In Asia, equity markets closed mixed. In Europe, indexes are rallying again on optimism of further monetary stimulus to offset deflationary pressures. President Obama concludes his European trip. The dollar is mixed. Commodities are mixed. Thursday's Nikkei 225 June 2014 (NKM4) equity futures are up +0.556%.

    U.S. economic reporting focuses on February durable and capital goods. Reports were a mild disappointment. Commentary focuses on ECB signals, with the Wall Street Journal headlining "ECB Set to Mull Heavier Stimulus".

    Tuesday, for a 3rd consecutive session U.S. equity markets opened with strength, but then despite a better than expected U.S. consumer confidence report, fell back to breakeven in early afternoon. Though the major indexes improved by mid-afternoon, other more narrow indexes such as the Russell 2000 (RTY) and Nasdaq Internet (QNET) continued to show weakness, and the Nasdaq Biotech (NBI) remains in correction. The SPX, DJ Industrials (DJI), Nasdaq, and NYSE composite closed up +0.44%, +0.56%, +0.19%, and +0.53%, respectively. The DJ Transports (TRAN) rose +0.51%. NYSE volume fell -11.6% to 0.86x its 20-day moving average.

    The SPX, Nasdaq, and NYSE composite are higher on the year.

    Thursday, March 26th, Fed will release its approval/disapproval of requested bank capital plans. Only modest surprises are expected, but these may prove catalysts in individual stocks.

    On March 13th, the U.S. equity market outlook worsened to "uptrend under pressure". Starting February 7th, the prior U.S. equity market outlook was "confirmed uptrend", following a brief, but sharp "in correction" episode that commenced on January 23rd. The S&P 500 Index (SPX) rose a net +3.36% subsequently. The 4Q2013 quarter's earnings reports are complete, with U.S. materials reports particularly strong, followed by financials. The 1Q2014 earnings reports began on March 15th, though only 12 of 498 SPX companies have now reported. While the SPX, Nasdaq, and NYSE composite are higher on the year, the SPX remains in a trading range (1840-1880) and seems unlikely to move above that level before 1Q2014 earnings provide a stronger basis for the move.

    Trading desks complain of a range bound equity market, at least on the surface, with the major indexes essentially flat for the year and the SPX locked within a range. But traders also note rotations away from small cap, internet, and biotech stocks. Yesterday, the RTY and QNET closed down small, while the NBI managed a small +0.11% gain, but all are down for the year, -2.53%, -8.69%, and -12.3% from recent late February or early March highs. Flows were quiet and slow on the whole, but selling pressure in those specific groups was intense and somewhat panic laden.

    Overnight trading was mixed in Asia, while Europe is again rallying strongly on hopes of further monetary ease. In Japan, focus is on the increased consumption tax that starts on April 1st. Traders expect continued resistance to higher equity prices.

    Indexes remain near recent record levels and P/E multiples remain elevated. With SPX equities trading at a 16.9x 2013 earnings multiple, attention focuses on 2014 earnings and valuations (16.9x times survey $117.26 2014 SPX operating earnings suggests a 1986.12 SPX level next year, a +6.46% rise).

    Technicals improved, as the SPX recaptured its 5-, 10-, and 20-day moving averages. All major indexes remain above their respective 50-, 100-, and 200-day moving averages. SPX market segments closed mixed. Market breadth was positive, and up volume led down volume. Volatility fell. Treasury bond markets weakened. The U.S. Treasury 10-year bond yield rose +1.99 bps to 2.7480%, compared to 2.7281% at the prior close.

    This morning, 10-year U.S. Treasury yields are down -0.54 bps at 2.7426%, compared to the prior close. Spanish and Italian 10-year debt yields are at their lowest levels since 2005, at 3.29% and 3.36%, respectively, compared to 3.33% and 3.39% the prior day. The U.S. dollar is stronger compared to the euro and Japanese yen.

    U.S. options markets improved to neutral to bullish, compared to neutral the prior day. The CBOE SKEW fell -8.21% to 121.81, compared to 132.70 the prior day, above a neutral range (115-120), but below 130, a level that correlates well with short-term market tops.

    In pre-market futures trading, June SPX equity futures (SPM4) price near the top of a 1859-1868 trading range. After a fair value adjustment of -1.57 points, the SPM4 future prices at 1866.40, up +8.67 points. The SPX opens +0.14%, +1.78%, +2.70%, and +6.88% above its respective 20-, 50-, 100-, and 200-day moving averages. Initial resistance is 1873.01. Initial support is 1873.01, then 1857.10.

    In Asia, equity markets closed mixed. Commentary focused on yesterday's stronger than expected U.S. consumer confidence report. Rumors remain rife that Chinese monetary authorities will ease monetary conditions, though credit market conditions suggest tightening conditions. The Nikkei 225 (NYSEARCA:NKY) rose +0.37%. The Hang Sang index (HSI) rose +0.72%. The SHCOMP fell -0.18%. Only the NKY is presently in a bear market, down -11.1% from its recent year-end high. Today's volumes are unavailable.

    Economic reporting was slight. In China, short-term interbank lending rates remain volatile, with 7-day Shibo rates at 3.87%, compared to 3.63% the prior day, up from a 2.26% low on March 11th, but down from the February 7th 5.41% recent high.

    Regional relative strength indexes (RSI) show Tokyo, Hong Kong, and Shanghai, in neutral ranges. The NKY RSI rose to 45.05, compared to 43.75 the prior day, up from an oversold 27.92 on February 4th. The HSI RSI fell to 47.63, compared to 44.35 the prior day. The SHCOMP's RSI closed at 53.92, compared to 54.81 the prior session. On June 27, 2013, the index's RSI fell to a low of 15.27, which was also last year's low index close.

    This week, the NKY, HSI, and SHCOMP are up +1.78%, +2.10%, and +0.78%, respectively. Last week, the NKY closed down -0.72%, the HSI lost -0.48%, and the SHCOMP gained +2.16%. In March, the NKY and HSI are down -2.45% and -4.16%, respectively, while the SHCOMP is up +0.36%. In February, the NKY closed down -0.49%, while the HSI and the SHCOMP gained +3.64% and +1.14%, respectively.

    In 2014, the NKY, HSI, and SHCOMP are down -11.1%, -6.09%, and -2.47%, respectively. In 2013, the NKY rose +56.7%. The HSI closed up +2.87%. The SHCOMP closed down -6.75%.

    In Japan, the NKY closed at 14,477.16, compared to 14,423.19 the prior day, -11.1% below its recent year-end 16,291.31 high and -62.8% below its late-1989 38,915.87 high close. The index rallied to an early 14,569.90 intraday high, but dropped back to a breakeven by mid-morning. The index traded around 14,450 through the close with a late afternoon 14,401.42 intraday low. The index closed -1.87%, -2.87%, -3.92%, and -0.22% below its respective 20-, 50-, 100-, and 200-day moving averages. Most market segments closed higher. Leaders were oil and gas, health care, and consumer goods, which rose at least +0.82%. Financials rose +0.79%. Laggards were basic materials, utilities, and telecommunications, which fell at least -0.12%.

    In China, the HSI closed at 21,887.75, compared to 21,732.32 at the prior close. The index opened above 21,880 and rose to a late morning 22,006.64 intraday high. The index eased through the afternoon to a late 21,865.33 intraday low. Most market segments closed higher. Leaders were basic materials, utilities, and financials, which rose at least +1.17%. Laggards were telecommunications, technology, and consumer services, which fell at least -0.03%. The index closed -8.46% below its recent December 3rd 23,910.47 high, but +20.4% above its 18,185.59 June 4, 2012 low.

    In Shanghai, the SHCOMP closed at 2,063.67, compared to 2,067.31 at the prior close, +5.83% above the 1,950.01 June 27th close, last year's low. The index opened higher and set an early 2,074.26 intraday high, but then eased back to breakeven in early trading and reversed lower by mid-session to the late afternoon 2057.74 intraday low. Most market segments closed lower. Leaders were health care, which rose +1.08%, and basic materials and financials, which lost at least -0.03%. Laggards were oil and gas, consumer goods, and utilities, which fell at least -0.56%.

    In Europe, major equity indexes are rallying again on optimism that the ECB will increase monetary stimulus after yesterday's dovish remarks from the German Bundesbank President Jens Weidmann. Indexes opened modestly higher, but have trended higher through early afternoon and are at or near their intraday highs. The Euro Stoxx50, FTSE 100 CAC 40, and DAX are up +1.21%, +0.46%, +1.10%, and +1.40%, respectively. The Spanish IBEX 35 is up +1.66%, and the Italian FTSE MIB is up +1.01. Economic reporting is light. Commentary focuses on the prospects for European monetary easing to weaken the euro and improved European competitiveness. Ukrainian concerns are off the table, at least for the day.

    European bourses have recently outperformed U.S. equity indexes. Intraday Euro Stoxx50 relative strength (RSI) is 57.22, compared to 52.05 at the prior close, in a neutral (30-70) range, but better than its recent February 5th 33.57 low, which coincided with its 2014 low. The indexes lowest recent RSI level was 25.77 on June 24th, which marked the 2013 2,494.54 closing low.

    Today, the Euro Stoxx50 trades at 3,134.23, -1.06% below its 3,168.76 January 15th post-2008 high close, and -40.3% below its 5,249.55 March 31, 2000, all-time closing high. From its prior day 3,096.64 close, the index opened at 3,105 and rallied to an early afternoon 3,136.56 intraday high. All market segments are at least +0.40% higher. Leaders are financials, consumer goods, and technology, which are up at least +1.39%. Laggards are telecommunications, health care, and utilities.

    This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.25%, +1.21%, +1.34%, and +1.39%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +3.06%, +0.45%, +2.82%, and +3.16%, respectively. In March, Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -0.45%, -2.55%, -0.33%, and -2.26%, respectively. In February, the indexes closed at least +4.14% higher.

    In 2014, the indexes are mixed. The Euro Stoxx50 and CAC 40 are up +0.84% and +2.27%, respectively. The FTSE 100, and DAX are down -1.67% and -0.83%, respectively. In 2013, the indexes closed up +18.0%, +14.4%, +18.0%, and +25.5%, respectively.

    1Q2014 SPX Earnings. Of 14 (of 499) reporting companies, 7 or 50.0% surprised positively on earnings, with an average -1.16% surprise average. Of reporting companies, 6 or 42.9% reported sales or revenues above estimates. The average sales/revenue surprise is -0.25%. Consumer discretionary leads with respective +15.9% and +1.98% earnings and revenue surprises. Industrials lag with respective -13.4% and -1.08% revenues surprises.

    Valuation. The SPX trades at 16.9x estimated 2013 earnings ($110.15), 15.9x estimated 2014 earnings ($117.26), 14.3x estimated 2015 earnings ($130.51), and 12.9x estimated 2016 earnings ($144.97). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, 2015, and 2016 earnings to grow +6.52%, +6.46%, +11.3%, and 11.1%, respectively.

    The BKX trades at 14.1x 2013 adjusted EPS ($5.16), 13.1x estimated 2014 earnings ($5.54), 11.9x estimated 2015 earnings ($6.13), and 10.6x 2016 earnings ($6.88). Analysts expect 2013, 2014, 2015, 2016 EPS will grow +19.4%, +7.42%, +10.6%, and +12.3%, respectively.

    Composite, index, and equity options. Options markets improved to neutral to bullish, compared to neutral the prior session. Composite options are bullish, index options are bullish, and equity options are neutral. The composite put/call ratio is 0.75, compared to 0.99 the prior day, and better than 5- and 10-period moving averages of 0.84 and 0.85, respectively. The index put/call ratio is 0.86 compared to 1.45 the prior day, and better than its 5- and 10-period moving averages of 1.10 and 0.95, respectively. The equity put/call ratio closed the day at 0.71, compared to 0.87 the prior day, and better than its 5- and 10-period moving averages of 0.77 and 0.85, respectively.

    NYSE Volume, Breadth Indicators. Volume fell -11.6% to 645.00 million shares, compared to 729.43 million shares the prior day, 0.86x the 752.92 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led by +555 (compared to -780 the prior day), or 1.45:1. Up volume was 1.62:1 down volume.

    Market Outlook and Distribution Day Count. Since March 13, the market outlook is "uptrend under pressure". On February 7th, with the SPX at 1797.02, the market outlook improved to "confirmed uptrend" after a brief corrective episode that began on January 23rd. The subsequent distribution day count is 5 for the SPX and 8 for the Nasdaq. The SPX's subsequent rise is +3.82%. Today, the SPX opens -0.66% below its March 7th 1878.04 record closing high.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.09040%, compared to 0.09030% the prior day. USD 3-month LIBOR is 0.23435%, down from 0.23510% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US Libor-OIS (LOIS) spread is 14.335 bps, compared to 14.630 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 14.500 bps, up from 13.100 bps the prior day, and down from the December 27, 2011, high of 98.800 bps. Moves in the LOIS indicate changes in intra-bank lending risk premiums.

    · The 3-month Euro basis swap is -3.117 bps, compared to -3.324 bps the prior day, up from a trough of -147.00 bps on December 14, 2011, but far better than a normal -10 bps and -40 bps range.

    · German 10-year debt yields are 1.57%, compared to 1.58% the prior day. Japanese 10-year debt yields are 0.63%, compared to 0.61% the prior day.

    · Spanish and Italian 10-year debt yields are at their best levels since 2005. Spanish 10-year debt yields are 3.29%, compared to 3.33% the prior day. Italian 10-year debt yields are at 3.36%, compared to 3.39% the prior day.

    · U.S. Treasury yields are slightly lower, with 2- and 10-year maturities yielding 0.465% and 2.744%, respectively, compared to 0.425% and 2.748% Tuesday. The yield curve narrowed -4.400 bps, with the 2- to 10-year spread at +2.279%, compared to 2.323% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.429% on May 1, 2013, to a high of +2.648% on December 31, 2013.

    · The U.S. dollar is stronger compared to the euro and Japanese yen, but slightly weaker compared to the British pound. The dollar trades at US$80.049, compared to a US$80.091 intraday high and US$79.944 the prior day, and worse compared to its $80.324 50-day, US$80.462 100-day, and US$80.933 200-day averages. The euro trades at US$1.3800, compared to a US$1.3790 intraday low and US$1.3826 the prior day. The euro trades better compared to its US$1.3715 50-day and US$1.3667 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥102.36, compared to ¥102.26 the prior day. The yen trades worse than its 50-day moving average ¥102.52, and better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

    · Citigroup Economic Surprise Index improved to -31.70, compared to -33.80 the prior day, its 24th consecutive negative reading. The index is better compared to its respective -33.10 5-day and -33.17 10-day moving averages. Last June 10th, the index fell to a then 52-week low of -33.26. The index improved and turned positive on July 30th and rose to 53.30 on October 1st, but subsequently fell on dollar weakness to -2.10 on October 31st. It subsequently strengthened to a +72.70 high on January 15th, but then subsequently trended lower and turned negative on February 19th and fell to a -34.80 52-week low on March 19th. After a lag, the CESIUSD correlates with EPS revisions.

    · Commodities prices are mixed, with mostly higher energy, higher precious metals, higher aluminum and copper, and mostly lower agriculture prices.

    Volatility, Skew:

    · The CBOE SPX Volatility Index (VIX) fell -7.09% to 14.02, compared to 15.09 at the prior close. The VIX is -5.31% below the 14.81 20-day moving average. Its 30-day high is 18.22. Its 30-day low is 13.44. The index's all-time closing low is 9.31 on December 22, 1993. The long-term average is 20.14.

    · The Euro Stoxx 50 volatility index (V2X) is 17.32, down -5.16% compared to 18.26 at the prior day's close. The V2X index trades -10.4% below its 19.34 20-day moving average, -28.9% below the 24.35 30-day high, and +8.31% above the 15.99 30-day low.

    · The Hang Seng volatility index (VHSI) closed at 16.18, down -4.26% compared to 16.90 at the prior close. The VHSI index trades -9.16% below its 17.81 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) fell -8.21% to 121.81, compared to 132.70 the prior session, above a neutral (115-120) range, but again below 130, a level that correlates well with short-term market tops. The recent record high was 143.20 on December 20th. Its recent low was 112.47 on May 25, 2013. Spikes in excess of 130 correlate well with short-term market tops, though not in October or November. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

    U.S. Economic Reporting and News:
     

    • The latest week's MBA mortgage applications fell -3.5%, compared to +0.2% revise prior.
    • At 8:30, February durable goods orders rose +2.2%, compared to +0.8% survey and -1.3% revised prior.
    • February durable goods ex-transportation rose +0.2%, compared to +0.3% survey and +0.9% revised prior.
    • February capital goods orders, nondefense, excluding aircraft fell -1.3%, compared to +0.5% survey and +0.8% revised prior.
    • February capital goods shipments, nondefense, excluding aircraft rose +0.5%, compared to +0.8% survey and -1.4% revised prior.
    • At 9:45, March Markit composite PMI, with 54.1 prior.
    • March Markit services PMI, with 53.3 prior.


    Overseas Economic Reporting and News:
     

    • Japan - February YoY corporate services price index rose +0.7%, compared to +0.8% survey and +0.7% revised prior.
    • Germany - April GfK consumer confidence was 8.5, compared to 8.5 survey and prior.
    • Italy - January MoM retail sales rose +0.0%, compared to +0.1% survey and -0.3% prior. March consumer confidence was 101.7, compared to 98.4 survey and 97.7 prior.


    Company Ratings/News:
     

    • None.


    Tuesday's Trade. On lower and below average NYSE volume, U.S. equity indexes ended moderately higher, with better strength in technology, while financials and consumer services closed lower. Indexes initially rallied strongly, but despite a stronger than expected U.S. consumer confidence report at 10:00, stalled and dropped back to modest losses in early afternoon. Indexes improved through the session's remainder. The SPX, DJI, Nasdaq, and NYSE composite gained +0.44%, +0.56%, +0.19%, and +0.53%, respectively. The SPX, Nasdaq, and NYSE composite are higher this year.

    While the major indexes rose moderately, the Russell 2000 (RTY) fell -0.02% and is now -2.53% below its March 4th record close. The Nasdaq Internet Index (QNET) fell -0.24% and is -8.69% below its March 6th closing high. The Nasdaq Biotech Index rose +0.11%, but is in correction, down -12.3% from its recent February 25th record high.

    Since March 13th, the U.S. equity market outlook is "uptrend under pressure". On February 7th, the U.S. equity market outlook improved to "confirmed uptrend". The subsequent distribution count is 5 on the SPX and 8 on the Nasdaq. The SPX closed +3.82% above the February 7th 1797.02 close and -0.66% below the recent March 7, 2014, record close.

    Market breadth was positive, with gainers 0.86x losing stocks. Most SPX market segments closed higher. Leaders were technology, health care, and oil and gas, which rose at least +0.85%. Laggards were consumer goods, which rose +0.19%, and financials and consumer services, which fell at least -0.11%.

    NYSE volume fell -11.6% to 645.00 million shares, compared to 729.43 million shares the prior day, 0.86x the 752.92 million share 20-day moving average volume. On the day, bond markets weakened slightly. The U.S. 10-year yield opened at 2.7317%, and traded narrowly at that level through mid-afternoon, when the yield rose to the 2.7607% intraday high. The index ended at 2.74.80%, up +1.99 bps compared to the 2.7281% prior close.

    From its prior day 1857.44 close, SPX futures suggested a moderately higher open. The index gapped higher to open above 1865 and after the 10:00 consumer confidence set its 1871.87 intraday high. The index then trended lower through early afternoon, when it set the 1855.96 intraday low. The index rallied back to 1865 by mid-afternoon, then traded narrowly to the close. The SPX then ended at 1865.62, -0.66% below its March 7th record close. The index closed +73.6% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

    The DJ Transportation index (TRAN) rose +0.51%, compared to DJI's +0.56% gain. From its prior 7,510.38 close, the TRAN rose to its early 7,595.64 intraday high, but eased back to support at 7,550 by mid-morning, where it traded narrowly through the close. The index closed at 7,549.00, 0.57% below its recent 7,592.36 March 7th record close. Volume fell -18.6% to 11.406 million shares, compared to 14.008 million shares the prior session, and 0.84x the 15-day moving average volume. The TRAN closed +0.77% and +2.38% above its respective 20- and 50-day moving averages, and +3.67% and +9.63% above its respective 100- and 200-day moving averages.

    Market volatility fell -7.09%, as the CBOE SPX volatility index (VIX) closed at 14.02 compared to 15.09 at the prior close. The VIX opened below 14.20 and set an early 13.96 intraday low, but rose to the 15.05 intraday high in early afternoon. The index trended lower through the afternoon. The VIX's all-time closing low was 9.31, on December 22, 1993. Its lifetime average is 20.09.

    The market's technical factors improved. The SPX and NYSE composite recaptured their 5-, 10-, and 20-day moving averages. The Nasdaq again closed below its 5-, 10-, and 20-day moving averages. All exchanges closed above their 50-, 100-, and 200-day moving averages. SPX relative strength (RSI) rose to 55.08, compared to 52.12 the prior day, in a neutral range, but much better than an oversold 31.24 on February 3rd. The RSI is also down from an overbought 71.26 on December 31st, when the SPX closed an earlier record high, but above earlier oversold levels of 35.14 on August 27th and 39.19 on October 9th. The CBOE put/call SKEW fell -8.21% to 121.81, compared to 132.70 the prior session, above a neutral 115-120 range, and above 130 for a 3rd consecutive session, a level that correlates well with short-term market tops.

    This week, the DJI and NYSE composite are up +0.40% and +0.24%, respectively, while the SPX and Nasdaq are down -0.05% and -0.99%. Last week, the SPX, DJI, Nasdaq, and NYSE composite closed up +1.38%, +1.48%, +0.74%, and +1.04%, respectively. In March, the SPX and DJI are up +0.33% and +0.28%, respectively, while the Nasdaq and NYSE composite are down -1.17% and -0.08%, respectively. In February, the SPX, DJI, Nasdaq, and NYSE composite closed up +4.31%, +3.97%, +4.98%, and +4.60%, respectively.

    In 2014, the SPX, Nasdaq, NYSE composite are up +0.93%, +1.38%, and +0.16%, respectively, while the DJI is down -1.26%. In 2013, the SPX, DJI, Nasdaq, and NYSE composite closed up +29.6%, +26.5%, +38.2%, +23.2%, respectively. All closed at least +5.91% higher in 2012.

    KBW Bank Index (BKX). On lower, below average volume, the BKX rose +0.04% to 72.66, compared to 72.63 at the prior day's close, its 7th consecutive close above 70.00, but -0.34% below its 72.91 March 20th post-2008 closing high. In early trading, the index gapped higher and set an early 72.98 intraday high, but reversed lower by mid-morning to an early afternoon 72.39 intraday low. The index recovered to breakeven by mid-afternoon, and traded narrowly to the close. Volume fell -17.6% to 44.831 million shares, compared to 54.426 million shares the prior day, and 0.80x the 55.808 million share 15-day moving average.

    Large cap banks outperformed the regional banks, as the KBW regional banking index (KRX) fell -0.19%.

    This week, the BKX is down -0.06%. Last week, the BKX rose +4.94%, compared to a loss of -2.89% loss the prior week. In March, the BKX is up +5.27%. In February, the BKX closed up +2.41%, compared to January, when the BKX closed down -1.07%. In 2014, the BKX is up +4.91%, compared to the SPX's +0.93% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

    The BKX is now +22.8% better than the June 24th 59.19 close, its worst since May 13, 2013. The index crossed above 50 on December 17, 2012, 60 on May 15, 2013, and 70 on January 8, 2014, but then dropped back below 70 on January 24th, which persisted until March 6th. The BKX closed +123.2% above the 32.56 intraday low on October 4, 2011, the bottom of that year's correction. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +73.6% in the same period.

    The BKX index closed -40.0% below its February 20, 2007, record 121.06 high. The BKX is up +290.2% from its 18.62 March 6, 2009, closing low.

    Technical indicators were little changed. The index closed +2.94%, +4.75%, +6.35%, and +10.1% above its respective 20-, 50-, 100-, and 200-day moving averages. The 20-day moving average rose +22 bps to 70.58. The 69.36 50-day moving average rose +3 bps. Its 100-day moving average rose +7 bps to 68.32, and the 200-day moving average rose +6 bps to 66.00. The 20-day closed (by +1.22 points) above the 50-day, and the gap widened +18 bps. The 50-day moving average closed (by +3.36 points) above the 200-day moving average, and the gap narrowed -2 bps. The 100-day moving average closed (by +2.33 points) above the 200-day moving average, and the gap widened +2 bps.

    The directional movement indicator narrowed to +23.382, compared to 24.446 the prior day, its 17th consecutive positive reading. Relative strength rose to 67.06, compared to 66.92 the prior day, in the upper end of a neutral range, up from the recent 32.95 low on February 3rd, but down from an overbought 75.56 and 71.88 on January 9th and 10th, respectively. The recent low RSI level 31.08 on November 14, 2012, which is also the date of the BKX's 2012 closing low. Next resistance is 72.96; next support is 72.37.

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