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U.S. Market Outlook Worsens; Futures Lower; Asia Ends Mixed; Europe Off Small

|Includes:Citigroup Inc. (C), HSBC, RBC, SAN, ZION

This morning. Today, U.S. equity futures are moderately lower after fair value adjustment and near their morning lows. In Asia, equity markets closed mixed. In Europe, indexes are lower, but modestly so, apparently on optimism of further monetary stimulus to offset deflationary pressures. President Obama concludes his European trip and moves on to Saudi Arabia. The dollar is mixed. Commodities are mixed. Friday's Nikkei 225 June 2014 (NKM4) equity futures are down -0.478%.

U.S. economic reporting focuses on 4Q2012 final GDP, personal consumption, and initial and continuing jobless claims. Results were mixed. Commentary focuses on recent segment weakness in U.S. equities, particularly in internet and health technology stocks.

Wednesday, for a 4th 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 (Private: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.

Only the SPX remains higher on the year.

After yesterday's close, the Fed approved all but 5 financial company capital plans. Notably, the Citigroup plan was found objectionable.

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 complained of a range-bound equity market and substantial investor frustration after successive session intraday negative reversals and the day's failure to bounce as equities sold off. Explanations included the president's "threatening" tone in European remarks, news reports of Russian military activity on its boarders, and stronger demand than expected at the day's 5-year Treasury auction, which was viewed as negative for stocks. Rotations away from small cap, internet, and biotech stocks continued and accelerated, as the RTY, QNET, and NBI fell -1.92%, -2.53%, and -1.85%, with both the QNET and NBI now in correction, down -11.0% and -14.0%, respectively from month-ago highs. Flows picked up, especially as the afternoon session wore on, with late somewhat disorderly selling into the bell.

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 worsened as the SPX surrendered its 5-, 10-, and 20-day moving averages. The Nasdaq closed also closed below its 20- and 50-day moving averages. All other major indexes remain above their respective 50-, 100-, and 200-day moving averages. Most SPX market segments closed lower. Market breadth was negative, and up volume lagged down volume. Volatility rose. Treasury bond markets strengthened, particularly late in the session. The U.S. Treasury 10-year bond yield fell -5.61 bps to 2.6919%, compared to 2.7480% at the prior close.

This morning, 10-year U.S. Treasury yields are up +1.26 bps at 2.7045%, compared to the prior close. Spanish and Italian 10-year debt yields are at their lowest levels since 2005, at 3.25% and 3.30%, respectively, compared to 3.28% and 3.34% the prior day. The U.S. dollar is modestly stronger compared to the euro and Japanese yen.

U.S. options markets worsened to bearish to neutral, compared to neutral to bullish the prior day. The CBOE SKEW fell -2.27% to 119.05, compared to 121.81 the prior day, within a neutral range (115-120) for the first time since early November, and 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 bottom of a 1839-1849 trading range. After a fair value adjustment of +2.11 points, the SPM4 future prices at 1841.40, down -7.11 points. The SPX opens -0.58% below and +1.03%, +1.94%, and +6.07% above its respective 20-, 50-, 100-, and 200-day moving averages. Initial resistance is 1868.13. Initial support is 1844.77, then 1836.99.

In Asia, equity markets closed mixed with greater weakness in China. Commentary focused on currency and commodity price developments, and the further weakening of February Chinese industrial profits. Rumors remain that Chinese monetary authorities will ease monetary conditions, though credit market conditions suggest much tighter conditions. The Nikkei 225 (NYSEARCA:NKY) rose +1.01%. The Hang Sang index (HSI) fell -0.24%. The Shanghai SE composite (SHCOMP) index fell -0.83%. Only the NKY is presently in a bear market, down -10.2% from its recent year-end high. Today's volumes are unavailable.

Economic reporting focused on Chinese industrial profits, which at +9.4% disappointed. In China, short-term interbank lending rates remain volatile, with 7-day Shibo rates spiking to 4.82%, compared to 3.87% 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 48.52, compared to 45.05 the prior day, up from an oversold 27.92 on February 4th. The HSI RSI fell to 46.62, compared to 47.63 the prior day. The SHCOMP's RSI closed at 49.84, compared to 53.92 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 and HIS are up +2.80% and +1.86%, respectively, while the SHCOMP is down -0.05%. Last week, the NKY closed down -0.72%, the HSI lost -0.48%, and the SHCOMP gained +2.16%. In March, the NKY, HSI, and SHCOMP are down -0.47%, -4.39%, and -1.47%, respectively. 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 -10.2%, -6.32%, and -3.28%, 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 14,622.89, compared to 14,477.16 the prior day, -10.2% below its recent year-end 16,291.31 high and -62.4% below its late-1989 38,915.87 high close. The index opened lower and traded around 14,300 through the morning session, then rallied and reversed higher in early afternoon and climbed to a late 14,659.85 intraday high. The index closed -0.69%, -1.71%, and -2.96% below and +0.76% above its respective 20-, 50-, 100-, and 200-day moving averages. Most market segments closed higher. Leaders were consumer services, utilities, and basic materials, which rose at least +1.51%. Financials rose +0.52%. Laggards were consumer goods and oil and gas, which rose at least +0.22%, and telecommunications, which fell -0.92%.

In China, the HSI closed at 21,834.45, compared to 21,887.75 at the prior close. The index traded narrowly through the first hour, then weakened to a late morning 21,715.63 intraday low. The index improved and briefly reversed higher by mid-afternoon, but lost momentum and traded back below 21,850 through the close. Market segments closed mixed. Leaders were telecommunications, industrials, and utilities, which rose at least +1.13%. Financials rose +0.22%. Laggards were basic materials, consumer services, and technology, which fell at least -0.69%. The index closed -8.68% below its recent December 3rd 23,910.47 high, but +20.1% above its 18,185.59 June 4, 2012 low.

In Shanghai, the SHCOMP closed at 2,046.59, compared to 2,063.67 at the prior close, +4.95% above the 1,950.01 June 27th close, last year's low. The index opened slightly lower, but weakened to it early afternoon 2,042.87 intraday low, but rallied strongly and reversed higher to a 2,073.64 intraday high. Momentum quickly waned, however, then reversed lower at the start of the final hour to end close to the intraday low. Most market segments closed lower. Leaders were financials, which rose +0.05%, and utilities and basic materials, which fell at least -0.82%. Laggards were telecommunications, health care, and technology, which fell at least -1.55%.

In Europe, major equity indexes are moderately lower, impressively so given the drubbing in yesterday afternoon's U.S. equity markets, apparently still relying on hopes of further monetary ease. Indexes opened lower, but reversed higher by mid-morning before weakening again into the afternoon. The Euro Stoxx50, FTSE 100 CAC 40, and DAX are down -0.30%, -0.57%, -0.48%, and -0.36%, respectively. The Spanish IBEX 35 is down -0.17%, and the Italian FTSE MIB is down -0.16%. Economic reporting is light. Commentary focuses on the prospects for European monetary easing to weaken the euro and improved European competitiveness.

European bourses have recently outperformed U.S. equity indexes. Intraday Euro Stoxx50 relative strength (RSI) is 55.05, compared to 56.71 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 3,053.00, -1.50% 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 3,130.17 close, the index opened below 3,125 and traded to support at 3,120 before rallying to a late morning 3,137.87 intraday high. The index weakened by mid-session and reversed lower to an early afternoon 3,116.04 intraday low. Most market segments are lower. Leaders are technology and consumer goods, which are up at least +0.04%, and telecommunications, which is down -0.05%. Laggards are industrials, financials, and health care, which are down at least -0.56%.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +0.80%, +0.15%, +0.69%, and +0.77%, 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 -0.89%, -3.57%, -0.97%, and -2.86%, 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 +0.39% and +1.61%, respectively. The FTSE 100, and DAX are down -2.70% and -1.43%, respectively. In 2013, the indexes closed up +18.0%, +14.4%, +18.0%, and +25.5%, respectively.

1Q2014 SPX Earnings. Of 15 (of 499) reporting companies, 8 or 53.3% surprised positively on earnings, with an average -1.03% surprise average. Of reporting companies, 7 or 46.7% 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 16.8x estimated 2013 earnings ($110.15), 15.8x estimated 2014 earnings ($117.26), 14.2x estimated 2015 earnings ($130.53), and 12.8x 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 14.0x 2013 adjusted EPS ($5.16), 13.0x estimated 2014 earnings ($5.54), 11.7x estimated 2015 earnings ($6.13), and 10.5x 2016 earnings ($6.88). Analysts expect 2013, 2014, 2015, 2016 EPS will grow +19.4%, +7.39%, +10.6%, and +12.3%, respectively.

Composite, index, and equity options. Options markets worsened to bearish to neutral, compared to neutral to bullish the prior session. Composite options are neutral, index options are neutral, and equity options are bearish. The composite put/call ratio is 1.01, compared to 0.75 the prior day, and worse than 5- and 10-period moving averages of 0.88 and 0.86, respectively. The index put/call ratio is 1.14 compared to 0.86 the prior day, and worse than its 5- and 10-period moving averages of 1.15 and 0.96, respectively. The equity put/call ratio closed the day at 0.96, compared to 0.71 the prior day, and better than its 5- and 10-period moving averages of 0.80 and 0.85, respectively.

NYSE Volume, Breadth Indicators. Volume rose +14.2% to 736.50 million shares, compared to 645.00 million shares the prior day, 0.97x the 756.21 million share 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged by -1,032 (compared to +555 the prior day), or 0.97:1. Up volume was 0.30:1 down volume.

Market Outlook and Distribution Day Count. The market outlook worsened to "in correction", as indexes reversed early gains by mid-session and weakened to close at their intraday lows. All indexes distributed and surrendered their respective 20-day moving averages. The Nasdaq surrendered its 50-day moving average. Since March 13, the market outlook was "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 was 6 for the SPX and 9 for the Nasdaq. The SPX's subsequent rise is +3.09%. Today, the SPX opens -1.36% below its March 7th 1878.04 record closing high.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.09030%, compared to 0.09040% the prior day. USD 3-month LIBOR is 0.23335%, down from 0.23435% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US Libor-OIS (LOIS) spread is 14.235 bps, compared to 14.335 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 14.500 bps, unchanged from 14.500 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 -3.079 bps, compared to -2.326 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 1.54%, compared to 1.57% the prior day. Japanese 10-year debt yields are 0.63%, compared to 0.63% the prior day.

· Spanish and Italian 10-year debt yields are at their best levels since 2005. Spanish 10-year debt yields are 3.26%, compared to 3.28% the prior day. Italian 10-year debt yields are at 3.30%, compared to 3.34% the prior day.

· U.S. Treasury yields are slightly lower, with 2- and 10-year maturities yielding 0.450% and 2.696%, respectively, compared to 0.442% and 2.692% Wednesday. The yield curve narrowed -0.420 bps, with the 2- to 10-year spread at +2.246%, compared to 2.250% 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$80.133, compared to a US$80.175 intraday high and US$80.032 the prior day, and worse compared to its $80.308 50-day, US$80.455 100-day, and US$80.924 200-day averages. The euro trades at US$1.3755, compared to a US$1.3741 intraday low and US$1.3781 the prior day. The euro trades better compared to its US$1.3717 50-day and US$1.3671 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥102.22, compared to ¥102.04 the prior day. The yen trades worse than its 50-day moving average ¥102.42, and better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

· Citigroup Economic Surprise Index improved to -31.30, compared to -31.70 the prior day, its 25th consecutive negative reading. The index is better compared to its respective -32.40 5-day and -32.89 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, lower precious metals, lower aluminum and copper, and mixed agriculture prices.

Volatility, Skew:

· The CBOE SPX Volatility Index (VIX) rose +6.49% to 14.93, compared to 14.02 at the prior close. The VIX is +0.64% above the 14.84 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 17.39, down -1.14% compared to 17.59 at the prior day's close. The V2X index trades -8.31% below its 19.41 20-day moving average, -28.6% below the 24.35 30-day high, and +8.72% above the 15.99 30-day low.

· The Hang Seng volatility index (VHSI) closed at 16.48, up +1.85% compared to 16.18 at the prior close. The VHSI index trades -7.04% below its 17.73 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE SKEW (SKEW) fell -2.27% to 119.05, compared to 121.81 the prior session, its first neutral reading (115-120) since November 5th, and 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:
 

  • At 8:30, final 4Q2013 QoQ GDP was revised down to +2.6%, compared to +2.7% survey and +2.4% prior.
  • Final 4Q2012 personal consumption was revised upward to +3.3%, compared to +2.7% survey and +2.6% prior.
  • Final 4Q2013 GDP rose 1.6%, compared to +1.6% survey and prior.
  • Core QoQ final 4Q2013 PCE rose +1.3%, compared to +1.3% survey and prior.
  • The latest weeks' initial and continuing jobless claims were 311K and 2823K, compared to 323K and 2882K survey and 321K and 2876K revised prior.
  • At 10:00, February MoM pending home sales, with +0.2% survey and +0.1% prior. February YoY pending home sales, with -9.0% survey and -9.1% prior.
  • March Kansas City Fed manufacturing, with 5 survey and 4 prior.


Overseas Economic Reporting and News:
 

  • Australia - 4Q2013 CBA/HIA house affordability was 74.7, compared to 75.1 prior.
  • China - February YoY industrial profits rose +9.4%.
  • Eurozone - February YoY M3 money supply rose +1.3%, compared to +1.3% survey and +1.2% prior.
  • France - March consumer confidence was 88, compared to 85 survey and prior.
  • Italy - March business confidence was 99.2, compared to 99.5 survey and 99.1 prior. March economic sentiment was 89.5, compared to 88.2 revised prior.
  • United Kingdom - February MoM retail sales ex-autos rose +1.8%, compared to +0.3% survey and -2.0% revised prior.


Company Ratings/News:
 

  • CCAR - The Federal Reserve objected to Citigroup (NYSE:C), HSBC, RBS, Santander (NYSE:SAN), and ZION capital plans. Goldman Sachs (NYSE:GS) will resubmit.


Wednesday's Trade. On greater but below average NYSE volume, U.S. equity indexes opened higher, reversed lower, distributed, and ended near or at their intraday lows. Most market segments ended lower, with technology and basic materials showing particular weakness. The SPX, DJI, Nasdaq, and NYSE composite lost -0.70%, -0.60%, -1.43%, and -0.55%, respectively. Only the SPX remains higher this year.

While the major indexes fell moderately, damage was greater in other indexes. The Russell 2000 (RTY) fell -1.92% and is now -4.40% below its March 4th record close. The Nasdaq Internet Index (QNET) fell -2.53% and is now in correction, -11.0% below its March 6th closing high. The Nasdaq Biotech Index fell -1.85%, and is also in correction, down -14.0% from its recent February 25th record high.

The market outlook worsened to "in correction", from "uptrend under pressure", the trend which began on March 13th. On February 7th, the U.S. equity market outlook improved to "confirmed uptrend". The subsequent distribution count was 6 on the SPX and 9 on the Nasdaq. The SPX closed +3.09% above the February 7th 1797.02 close and -1.36% below the recent March 7, 2014, record close.

Market breadth was negative, with gainers 0.50x losing stocks. Most SPX market segments closed lower. Leaders were health care, which rose +0.11%, and consumer goods and telecommunications, which fell at least -0.09%. Laggards were financials, technology, and basic materials, which fell at least -0.99%.

NYSE volume rose +14.2% to 736.50 million shares, compared to 645.00 million shares the prior day, 0.97x the 756.21 million share 20-day moving average volume. On the day, bond markets strengthened. The U.S. 10-year yield opened at 2.7471%, and traded narrowly at that level through mid-afternoon, when the yield rose to the 2.7580% intraday high. The yield then fell steadily to close at 2.6919%, down -5.61 bps compared to the 2.7480% prior close.

From its prior day 1857.44 close, SPX futures suggested a moderately higher open. The index gapped higher and set its early 1875.92 intraday high, then began a modest weakening trend. The index finally reversed lower in mid-afternoon when it dropped to first support at 1860, then following a failed rally at 3:00, fell more sharply to close at the intraday low. The SPX ended at 1852.56, -1.36% below its March 7th record close. The index closed +73.4% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

The DJ Transportation index (TRAN) fell -1.58%, compared to DJI's -0.60% loss. From its prior 7,549.00 close, the TRAN rose to its early 7,587.62, then eased and reversed lower by mid-morning, then trended lower through the close to end at the intraday low. The index closed at 7,429.54, -2.14% below its recent 7,592.36 March 7th record close. Volume rose -9.14% to 12.448 million shares, compared to 11.406 million shares the prior session, and 0.91x the 15-day moving average volume. The TRAN closed -0.93% below and +0.74% above its respective 20- and 50-day moving averages, and +1.97% and +7.81% above its respective 100- and 200-day moving averages.

Market volatility rose +6.49%, as the CBOE SPX volatility index (VIX) closed at 14.93, compared to 14.02 at the prior close. The VIX opened at 13.50, set an early 13.46 intraday low, then eased up to 14.00, where it moved narrowly through early afternoon. The index rose as equities weakened, with a more rapid rise to a late 15.28 intraday high as the equity selloff bloomed in late session. 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 worsened. The SPX, DJI, Nasdaq, and NYSE composite all closed below their 5-, 10-, and 20-day moving averages, and the Nasdaq also closed below its 50-day moving average, its first such close since February 6th. All other exchanges closed above their 50-, 100-, and 200-day moving averages. SPX relative strength (RSI) eased to 49.79, compared to 55.08 the prior day, in a neutral range, and 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 -2.27% to 119.05, compared to 121.81 the prior session, in a neutral 115-120 range for the first time since last November, and again below 130, a level that correlates well with short-term market tops.

This week, the SPX, DJI, Nasdaq, and NYSE composite are down -0.75%, -0.21%, -2.41%, and -0.32%, respectively. 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, DJI, Nasdaq, and NYSE composite are down -0.37%, -0.32%, -3.12% and -0.64%, 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 is up +0.23%, while the DJI, Nasdaq, NYSE composite are down -1.86%, -0.07%, and -0.39%, respectively. 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 higher, but below average volume, the BKX fell -0.89% to 72.01, compared to 72.66 at the prior day's close, its 8th consecutive close above 70.00, but -1.36% below its 72.91 March 20th post-2008 closing high. In early trading, the index gapped higher and set an early 73.06 intraday high, but quickly fell back to breakeven, then reversed lower by mid-morning. The index trended lower through the session remainder and closed at the intraday low. Volume rose +13.3% to 50.799 million shares, compared to 44.831 million shares the prior day, and 0.94x the 54.219 million share 15-day moving average.

Large cap banks outperformed the regional banks, as the KBW regional banking index (KRX) fell -1.50%.

This week, the BKX is down -0.95%. Last week, the BKX rose +4.94%, compared to a loss of -2.89% loss the prior week. In March, the BKX is up +4.33%. In February, the BKX closed up +2.41%, compared to January, when the BKX closed down -1.07%. In 2014, the BKX is up +3.97%, compared to the SPX's +0.23% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

The BKX is now +21.7% 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 +121.2% 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 +72.4% in the same period.

The BKX index closed -40.5% below its February 20, 2007, record 121.06 high. The BKX is up +286.7% from its 18.62 March 6, 2009, closing low.

Technical indicators were little changed. The index closed +1.77%, +3.75%, +5.29%, and +9.03% above its respective 20-, 50-, 100-, and 200-day moving averages. The 20-day moving average rose +18 bps to 70.76. The 69.41 50-day moving average rose +5 bps. Its 100-day moving average rose +8 bps to 68.40, and the 200-day moving average rose +5 bps to 66.05. The 20-day closed (by +1.25 points) above the 50-day, and the gap widened +3 bps. The 50-day moving average closed (by +3.36 points) above the 200-day moving average, and the gap was unchanged. The 100-day moving average closed (by +2.35 points) above the 200-day moving average, and the gap widened +2 bps.

The directional movement indicator narrowed to +18.791, compared to +23.382 its 18th consecutive positive reading. Relative strength fell to 60.99, compared to 67.06 the prior day, in 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 72.71; next support is 71.66.

Stocks: C, HSBC, RBC, SAN, ZION