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Gary Townsend - Since 2007, a founding partner, CEO and Portfolio Manager of Hill-Townsend Capital LLC, a long/short equity financial sector fund based in Chevy Chase, Maryland. Mr. Townsend has 30 years banking, regulatory, and investment experience. He started his business career in 1978, as... More
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  • U.S. Futures Ease Higher; Asia Ends Mixed Week; Europe Improves On Monetary Easing Hopes 0 comments
    Mar 28, 2014 9:23 AM

    This morning. Today, U.S. equity futures are moderately higher after fair value adjustment. In Asia, equity markets closed mixed. In Europe, indexes are higher, with the Euro Stoxx 50 (SX5E) approaching its January 15th high intraday. President Obama is in Saudi Arabia. The dollar is mixed. Commodities are mostly higher. Monday's Nikkei 225 June 2014 (NKM4) equity futures are up +0.204%.

    U.S. economic reporting focuses on February personal income and spending, which came in line with survey. At 10:00, March final University of Michigan confidence is unlikely to surprise. Commentary focuses on recent segment weakness in U.S. equities, particularly in internet and health technology stocks and the likelihood of monetary stimulus in Europe and China. Ukrainian concerns have eased, though today's WSJ headline cites Pentagon "alarm" as Russian troops "mass" near the Ukrainian border.

    Thursday, U.S. equity markets opened poorly, fell to early intraday lows, but strengthened again by mid-morning. The session's remainder saw relatively little action, trading modestly lower through the close, with a mixed finish, when the NYSE composite managed a +0.14% higher close. The SPX, DJ Industrials (Private:DJI), and Nasdaq closed down -0.19%, -0.03%, and -0.54%, respectively. The DJ Transports (TRAN) fell -0.24%. NYSE volume rose fell -7.77% to 1.04x its 20-day moving average. Only the SPX remains higher on the year.

    Though the major indexes closed mixed, other indexes such as the Russell 2000 (RTY) and Nasdaq Internet (QNET) continued to show weakness, and the Nasdaq Biotech (NBI) remains in correction.

    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 report generally quiescent equity markets overnight, with a mixed Asia and stronger Europe. Consensus seems to be growing that monetary stimulus expectation in China are exaggerated, but perhaps not in Europe. Strengthening U.S. treasury bond markets continue to suggest U.S. equity market weakness. Rotations away from small cap and internet continued, as the RTY and QNET fell -0.35% and -0.79%, respectively, but biotech stocks rebounded, with the NBI up +0.41%. The QNET and NBI are both in correction, down -11.7% and -13.6%, respectively from month-ago highs. Flows picked up early, but eased by mid-morning.

    Traders expect continued resistance to higher equity prices.

    Indexes have backed off from near recent record levels, but P/E multiples remain elevated. With SPX equities trading at a 16.8x 2013 earnings multiple, attention focuses on 2014 earnings and valuations (16.8x times survey $117.20 2014 SPX operating earnings suggests a 19867.44 SPX level next year, a +6.40% rise).

    Technicals changed little as the SPX closed again below its 5-, 10-, and 20-day moving averages. The Nasdaq 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, though market breadth was modestly positive, and up volume led down volume. Volatility fell. Treasury bond markets strengthened, particularly late in the session. The U.S. Treasury 10-year bond yield fell -1.09 bps to 2.6810%, compared to 2.6919% at the prior close.

    This morning, 10-year U.S. Treasury yields are up +0.54 bps at 2.6864%, compared to the prior close. Spanish and Italian 10-year debt yields are at their lowest levels since 2005, at 3.24% and 3.30%, respectively, compared to 3.25% and 3.31% the prior day. The U.S. dollar is modestly stronger compared to the euro and Japanese yen.

    U.S. options markets improved to neutral to bullish, compared to bearish to neutral the prior day. The CBOE SKEW fell -0.92% to 117.96, compared to 119.05 the prior day, within a neutral range (115-120) for the 2nd consecutive session, 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 1841-1848 trading range. After a fair value adjustment of -1.42 points, the SPM4 future prices at 1844.60, up +5.32 points. The SPX opens -0.76% below and +0.83%, +1.05%, and +5.80% above its respective 20-, 50-, 100-, and 200-day moving averages. Initial resistance is 1855.69. Initial support is 1842.25, then 1835.46.

    In Asia, equity markets closed mixed on the session and the week. Commentary focused on the probability of Chinese monetary and economic stimulus, then currency and commodity price developments. The Nikkei 225 (NYSEARCA:NKY) rose +0.50%. The Hang Sang index (HSI) rose +1.06%. The Shanghai SE composite (SHCOMP) index fell -0.24%. The NKY rise was sufficient to lift it from a bear market, down -9.79% from its recent year-end high. Today's volumes are unavailable.

    Economic reporting was light. In China, short-term interbank lending rates remain volatile, with 7-day Shibo rates falling to 4.20%, from 4.82% 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 50.21, compared to 48.52 the prior day, up from an oversold 27.92 on February 4th. The HSI RSI rose to 51.45, compared to 46.62 the prior day. The SHCOMP's RSI closed at 48.70, compared to 49.84 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 HSI closed up +3.32% and +2.93%, respectively, while the SHCOMP closed off -0.29%. 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 -0.98%, -3.38%, and -0.71%, 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 -9.79%, -5.32%, and -3.51%, 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 14,969.03, compared to 14,622.89 the prior day, -9.79% below its recent year-end 16,291.31 high and -62.2% below its late-1989 38,915.87 high close. The index opened lower and traded to an early 14,615.05 intraday low, but improved to breakeven by mid-session. The index rallied to a late 14,622.89 intraday high. The index closed -0.07%, -1.11%, and -2.51% below and +1.21% above its respective 20-, 50-, 100-, and 200-day moving averages. Most market segments closed higher. Leaders were consumer services, financials, and and basic materials, which rose at least +0.94%. Laggards were health care, technology, and telecommunications, which fell at least -0.19%.

    In China, the HSI closed at 22,065.53, compared to 21,834.45 at the prior close. The index gapped higher to open at the 21,930.40 intraday low, then rallied to 22,000 in early trading. The index rallied to 22,100 by mid-session, and set an early afternoon 22,143.24 intraday high before easing to the close. All market segments closed at least +0.15% higher. Leaders were basic materials, technology, and telecommunications, which rose at least +1.56%. Financials rose +0.94%. Laggards were oil and gas, utilities, and industrials, which fell at least -0.55%. The index closed -7.72% below its recent December 3rd 23,910.47 high, but +21.3% above its 18,185.59 June 4, 2012 low.

    In Shanghai, the SHCOMP closed at 2,041.71, compared to 2,046.59 at the prior close, +4.70% above the 1,950.01 June 27th close, last year's low. The index traded to an early 2,060.02 intraday high, but tested breakeven twice in the morning session, then rallied again to nearly 2,060 before weakening and reversing lower by mid-afternoon, falling to a final hour 2,035.32 intraday low. Most market segments closed lower. Leaders were financials and telecommunications, which rose at least +0.06%, and oil and gas, which lost -0.09%. Laggards were consumer services, health care, and technology, which fell at least -1.75%.

    In Europe, major equity indexes are moderately higher, as European outperformance continues, compared to U.S. equity markets this year. Indexes opened higher and rose to early afternoon intraday highs, then subsequently eased slightly. The Euro Stoxx50, FTSE 100 CAC 40, and DAX are up +0.62%, +0.07%, +0.31%, and +.76%, respectively. The Spanish IBEX 35 is up +0.91%, and the Italian FTSE MIB is up +1.26%. Economic reporting is relatively 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 59.78, compared to 57.18 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 3,152.63, only -0.45% below its 3,168.76 January 15th post-2008 high close, and -39.9% below its 5,249.55 March 31, 2000, all-time closing high. From its prior day 3,133.75 close, the index opened at 3,150 and traded to a late morning 3,162.96 intraday high. The index weakened to 3,152 in early afternoon and subsequently traded narrowly. Most market segments are higher. Leaders are telecommunications, consumer goods, and basic materials, which rose at least +.73%. Financials are up +0.56%. Laggards are industrials and oil and gas, which are up at least +0.21%, and technology, which is down -0.335.

    This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.88%, +0.55%, +1.36%, and +2.00%, 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 is up +0.17%, while the FTSE 100, CAC 40, and DAX are down -3.18%, -0.32%, and -1.68%, 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 +1.47% and +2.28%, respectively. The FTSE 100, and DAX are down -2.31% and -0.24%, respectively. In 2013, the indexes closed up +18.0%, +14.4%, +18.0%, and +25.5%, respectively.

    1Q2014 SPX Earnings. Of 17 (of 500) reporting companies, 9 or 52.9% surprised positively on earnings, with an average -0.94% surprise average. Of reporting companies, 8 or 47.0% reported sales or revenues above estimates. The average sales/revenue surprise is -0.30%. 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 ($117.20), 14.2x estimated 2015 earnings ($130.50), and 12.8x estimated 2016 earnings ($144.96). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, 2015, and 2016 earnings to grow +6.52%, +6.40%, +11.4%, and 11.1%, respectively.

    The BKX trades at 13.8x 2013 adjusted EPS ($5.16), 12.9x estimated 2014 earnings ($5.52), 11.6x estimated 2015 earnings ($6.12), and 10.4x 2016 earnings ($6.86). Analysts expect 2013, 2014, 2015, 2016 EPS will grow +19.4%, +6.97%, +10.8%, and +12.1%, respectively.

    Composite, index, and equity options. Options markets improved to neutral to bullish, compared to bearish to neutral the prior session. Composite options are bullish, index options are neutral, and equity options are neutral. The composite put/call ratio is 0.83, compared to 1.01 the prior day, and better than 5- and 10-period moving averages of 0.89 and 0.84, respectively. The index put/call ratio is 1.15 compared to 1.14 the prior day, and worse than its 5- and 10-period moving averages of 1.15 and 0.99, respectively. The equity put/call ratio closed the day at 0.74, compared to 0.96 the prior day, and better than its 5- and 10-period moving averages of 0.82 and 0.81, respectively.

    NYSE Volume, Breadth Indicators. Volume rose +7.77% to 793.71 million shares, compared to 736.50 million shares the prior day, 1.04x the 761.06 million share 20-day moving average. Market breadth was modestly positive, and up volume led down volume. Advancing stocks led by +147 (compared to -1,032 the prior day), or 1.10:1. Up volume was 1.26:1 down volume.

    Market Outlook and Distribution Day Count. On March 26th, the market outlook worsened to "in correction", ending an uptrend that commenced on February 7th, during which the SPX rose +3.09%. Today, the SPX opens -1.54% below its March 7th 1878.04 record closing high.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.09080%, compared to 0.09030% the prior day. USD 3-month LIBOR is 0.23360%, down from 0.23335% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US Libor-OIS (LOIS) spread is 14.730 bps, compared to 14.235 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 15.100 bps, up 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 -3.981 bps, compared to -2.840 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 1.52%, compared to 1.54% 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 3.23%, compared to 3.25% the prior day. Italian 10-year debt yields are at 3.30%, compared to 3.31% the prior day.

    · U.S. Treasury yields are slightly lower, with 2- and 10-year maturities yielding 0.450% and 2.688%, respectively, compared to 0.446% and 2.681% Thursday. The yield curve widened +0.330 bps, with the 2- to 10-year spread at +2.239%, compared to 2.235% 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$80.151, compared to a US$80.251 intraday high and US$80.111 the prior day, and worse compared to its $80.286 50-day, US$80.443 100-day, and US$80.913 200-day averages. The euro trades at US$1.3732, compared to a US$1.3705 intraday low and US$1.3740 the prior day. The euro trades better compared to its US$1.3721 50-day and US$1.3674 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 ¥102.18 the prior day. The yen trades worse than its 50-day moving average ¥102.38, and better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

    · Citigroup Economic Surprise Index improved to -31.00, compared to -31.30 the prior day, its 26th consecutive negative reading. The index is better compared to its respective -32.08 5-day and -32.98 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 mostly higher, with mostly higher energy, higher precious metals, higher aluminum and copper, and mixed agriculture prices.

    Volatility, Skew:

    · The CBOE SPX Volatility Index (VIX) fell -2.08% to 14.62, compared to 14.93 at the prior close. The VIX is -0.64% below the 14.86 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 17.08, down -3.15% compared to 17.64 at the prior day's close. The V2X index trades -12.1% below its 19.44 20-day moving average, -29.8% below the 24.35 30-day high, and +6.83% above the 15.99 30-day low.

    · The Hang Seng volatility index (VHSI) closed at 16.43, down -0.30% compared to 16.48 at the prior close. The VHSI index trades -7.19% below its 17.70 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) fell 0.92% to 117.96, compared to 119.05 the prior session, its 2nd consecutive 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, February Personal income rose %, compared to +0.3% survey and revised prior.
    • February personal spending rose %, with +0.3% survey and +0.4% revised prior.
    • At 9:55, March final University of Michigan confidence, with 80.5 survey and 79.9 prior.


    Overseas Economic Reporting and News:
     

    • Japan - February MoM retail sales rose +0.3%, compared to -0.1% survey and +1.6% prior.
    • South Korea - February YoY industrial production rose +4.3%, compared to +3.6% survey and -4.3% revised prior.
    • Eurozone - March economic confidence rose to 102.4, compared to 101.4 survey and 101.2 prior.
    • France - February MoM consumer spending rose +0.1%, compared to +0.8% survey and -2.1% prior.
    • Portugal - March consumer confidence was -30.7, compared to -32.6 prior.
    • Spain - February YoY retail sales fell -0.4%, compared to -0.3% revised prior.
    • United Kingdom - March GfK consumer confidence improved to -5, compared to -6 survey and -7 prior.


    Company Ratings/News:
     

    • None.


    Thursday's Trade. On greater and above average NYSE volume, U.S. equity indexes fell sharply to intraday lows in early trading, then briefly reversed higher before easing again to end mixed. Most market segments ended lower, with technology and consumer services the weakest segments. The NYSE composite managed a +0.14% gain, while the SPX, DJI, and Nasdaq lost -0.19%, -0.03%, and -0.54%, 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 another -0.32% and is now -4.73% below its March 4th record close. The Nasdaq Internet Index (QNET) fell -0.79% and is now in correction, -11.7% below its March 6th closing high. The Nasdaq Biotech Index managed a better session, rising +0.41%. It also in correction, down -13.6% from its recent February 25th record high.

    On March 26th, the market outlook worsened to "in correction", ending the uptrend which began on February 7th, with a net +3.09% gain.

    Market breadth was modestly positive, with gainers 1.10x losing stocks. Most SPX market segments closed lower. Leaders were telecommunications, oil and gas, and utilities, which rose at least +0.79%. Laggards were financials, technology, and consumer services, which fell at least -0.57%.

    NYSE volume rose +7.77% to 793.71 million shares, compared to 736.50 million shares the prior day, 1.04x the 756.21 million share 20-day moving average volume. On the day, bond markets strengthened. The U.S. 10-year yield opened at 2.6919%, and traded narrowly at that level through mid-afternoon, when the yield fell to a late 2.6576% intraday low. The yield closed at 2.6810%, down -1.09 bps compared to the 2.6810% prior close.

    From its prior day 1842.60 close, June 2014 SPX futures (SPM4) suggested a moderately lower open. The SPX index opened lower and fell rapidly to an early 1842.11 intraday low, but found support and rallied back to its 1855.55 intraday high by mid-morning. Unable to press farther, buying slackened, and the index again reversed lower to 1844 by early afternoon. The index traded narrowly to the close. The SPX ended at 1849.04, -1.54% below its March 7th record close. The index closed +72.04% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

    The DJ Transportation index (TRAN) fell -0.24%, compared to DJI's -0.03% loss. From its prior 7,429.54 close, the TRAN fell to its early 7,412.19 intraday low, then briefly rallied higher to a mid-morning 7,442.19 intraday high. The index tested support at 7,400 in early afternoon and again late in the session, but traded narrowly through the afternoon. The index closed at 7,411.43, -2.38% below its recent 7,592.36 March 7th record close. Volume fell rose -7.40% to 11.527 million shares, compared to 12.448 million shares the prior session, and 0.84x the 15-day moving average volume. The TRAN closed -1.23% below and +0.51% above its respective 20- and 50-day moving averages, and +1.66% and +7.46% above its respective 100- and 200-day moving averages.

    Market volatility fell -2.08%, as the CBOE SPX volatility index (VIX) closed at 14.62, compared to 14.93 at the prior close. The VIX opened at 15.00, rose to an early 15.63 intraday high, then dropped back to a mid-morning 14.49 intraday low as equities rallied off the early lows. The index rose back to 15.45 by mid-session then fell back to 15.00 until late afternoon, when the VIX eased lower through most of the final hour. 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 were little changed. The SPX, DJI, Nasdaq, and NYSE composite again closed below their 5-, 10-, and 20-day moving averages, and the Nasdaq also closed below its 50-day moving average, its 2nd consecutive such close. All other exchanges closed above their 50-, 100-, and 200-day moving averages. SPX relative strength (RSI) eased to 48.43, compared to 49.79 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 -0.92% to 117.96, compared to 119.05 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 -0.94%, -0.24%, -2.94%, and -0.18%, 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 -0.56%, -0.35%, -3.64% and -0.50%, 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 +0.04%, while the DJI, Nasdaq, NYSE composite are down -1.88%, -0.61%, and -0.26%, 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, and above average volume, the BKX fell -1.31% to 71.07, compared to 72.01 at the prior day's close, its 10th consecutive close above 70.00, but -2.52% below its 72.91 March 20th post-2008 closing high. In early trading, the index eased briefly higher to the 72.15 intraday high, but immediately reversed lower and slipped to its early afternoon 70.70 intraday low. The index traded narrowly to the close. Volume rose +68.1% to 85.400 million shares, compared to 50.799 million shares the prior day, and 1.52x the 56.090 million share 15-day moving average.

    Large cap banks outperformed the regional banks, as the KBW regional banking index (KRX) fell -1.91%.

    This week, the BKX is down -2.24%. Last week, the BKX rose +4.94%, compared to a loss of -2.89% loss the prior week. In March, the BKX is up +2.97%. In February, the BKX closed up +2.41%, compared to January, when the BKX closed down -1.07%. In 2014, the BKX is up +2.61%, compared to the SPX's +0.04% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

    The BKX is now +20.1% 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 +118.3% 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 +72.0% in the same period.

    The BKX index closed -41.3% below its February 20, 2007, record 121.06 high. The BKX is up +281.7% from its 18.62 March 6, 2009, closing low.

    Technical indicators were little changed. The index closed +0.27%, +2.37%, +3.81%, and +7.52% above its respective 20-, 50-, 100-, and 200-day moving averages. The 20-day moving average rose +12 bps to 70.88. The 69.42 50-day moving average rose +1 bp. Its 100-day moving average rose +6 bps to 68.46, and the 200-day moving average rose +5 bps to 66.10. The 20-day closed (by +1.45 points) above the 50-day, and the gap widened +20 bps. The 50-day moving average closed (by +3.32 points) above the 200-day moving average, and the gap narrowed -4 bps. The 100-day moving average closed (by +2.36 points) above the 200-day moving average, and the gap widened +1 bp.

    The directional movement indicator narrowed to +18.791, compared to +23.382 its 18th consecutive positive reading. Relative strength fell to 50.21, compared to 60.99 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 71.91; next support is 70.46.

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