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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 Higher Following Milwaukee ISM; Asia Mixed; Europe Moderately Higher 0 comments
    Mar 31, 2014 9:33 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) above its March 28th post-2008 high. The dollar is mixed. Commodities are mostly higher. Tuesday's Nikkei 225 June 2014 (NKM4) equity futures are up +0.270%.

    U.S. economic reporting focuses on March manufacturing indexes in Milwaukee, Chicago, and Dallas. The Milwaukee ISM surprised positively, and futures improved following its 9:00 release. At 9:45, March Chicago purchasing manager, may provide another early boost. Commentary focuses on interest rate, currency, and commodity price developments, macro concerns following failed U.S./Russian foreign minister meetings in Paris, and segment weakness in U.S. equities, particularly in internet and health technology stocks.

    Friday, U.S. equity markets opened strongly, but couldn't sustain their late morning intraday highs, giving up most of the gains by the close. The SPX, DJ Industrials (DJI), Nasdaq, and NYSE composite closed up +0.46%, +0.36%, +0.11%, and +0.59%, respectively. The DJ Transports (TRAN) rose +0.54%. NYSE volume fell -19.4% to 0.86x its 20-day moving average. The SPX and NYSE composite are higher on the year.

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

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

    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 quiet Asian equity markets overnight. Asia closed mixed, Europe opened strong, but gave up most gains by mid-session. European indexes improved following a better than expected Milwaukee ISM. Consensus seems to be growing that monetary stimulus expectations in China are exaggerated. Today's European inflation reports did not support greater monetary easing there, which may explain the mid-day equity weakness there.

    Friday, traders complain that the day ended by mid-morning. Rotations away from small cap and internet eased, as the RTY and QNET rose +0.03% and +0.16%, but biotech stocks sold off again, with the NBI down -2.82%. The QNET and NBI are both in correction, down -11.6% and -16.0%, respectively from month-ago highs. 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 16.9x 2013 earnings multiple, attention focuses on 2014 earnings and valuations (16.9x times survey $117.180 2014 SPX operating earnings suggests a 1976.16 SPX level next year, a +6.38% rise).

    Technicals improved as the SPX recaptured its 5-day moving average. The Nasdaq also closed below its 10- and 20-day moving averages. All major indexes remain above their respective 50-, 100-, and 200-day moving averages. Most SPX market segments closed higher. Market breadth was positive, and up volume led down volume. Volatility fell. Treasury bond markets weakened, particularly late in the session. The U.S. Treasury 10-year bond yield rose +3.98 bps to 2.7208%, compared to 2.6810% at the prior close.

    This morning, 10-year U.S. Treasury yields are up +3.81 bps at 2.7589%, compared to 2.72.08% at the prior close. Spanish and Italian 10-year debt yields are near their lowest levels since 2005, at 3.26% and 3.33%, respectively, compared to 3.24% and 3.30% the prior day. The U.S. dollar is modestly stronger compared to the euro and Japanese yen.

    U.S. options markets are unchanged at neutral to bullish, compared to bearish to neutral the prior day. The CBOE SKEW rose +5.95% to 124.98, compared to 117.96 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 1855-1862 trading range. After a fair value adjustment of -0.58 points, the SPM4 future prices at 1861.25, up +11.28 points. The SPX opens -0.29% below and +1.29%, +2.11%, and +6.21% above its respective 20-, 50-, 100-, and 200-day moving averages. Initial resistance is 1866.14. Initial support is 1849.58, then 1841.55.

    In Asia, equity markets began April with a mixed session, but ended March and 1Q2014 with losses. Economic reporting was light, with commentary emphasizing currency and commodity price developments.

    On the day, the Nikkei 225 (NYSEARCA:NKY) rose +0.90%. The Hang Sang index (HSI) rose +0.39%. The Shanghai SE composite (SHCOMP) index fell -0.41%. Today's volumes are unavailable.

    Last week, the NKY and HSI closed up +3.32% and +2.93%, respectively, while the SHCOMP closed off -0.29%. The prior 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 lost -0.09%, -3.00%, and -1.12%, 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 -8.98%, -4.96%, and -3.91%, respectively. In 2013, the NKY rose +56.7%. The HSI closed up +2.87%. The SHCOMP closed down -6.75%.

    In China, short-term interbank lending rates steadied, with 7-day Shibo rate 4.20%, unchanged from 4.20% 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 53.20, compared to 50.21 the prior day, up from an oversold 27.92 on February 4th. The HSI RSI rose to 53.15, compared to 51.45 the prior day. The SHCOMP's RSI closed at 46.73, compared to 48.70 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.

    In Japan, the NKY closed at 14,827.83, compared to 14,696.03 the prior day, -8.98% below its recent year-end 16,291.31 high and -61.9% below its late-1989 38,915.87 high close. The index gapped higher to open at 14,840, but weakened to a late morning 14,718.01 intraday low, before improving to 14,780 through most of the afternoon session. The index rallied to a late 14,843.67 intraday high. The index closed +0.90% and +2.08% above its respective 20- and 200-day moving averages, but -0.07% and -1.65% below its respective 50- and 100-day moving averages. Most market segments closed higher. Leaders were telecommunications, financials, and consumer goods, which rose at least +1.50%. Laggards were health care, utilities, and consumer services, which fell at least -0.07%.

    In China, the HSI closed at 22,151.06, compared to 22,065.53 at the prior close. The index gapped higher to open at the 22,065.53 intraday high, but fell to breakeven by mid-morning and weakened further to a mid-afternoon 22,043.51 intraday low. The index improved over the final 90 minutes to end with a modest gain. Most market segments closed higher. Leaders were consumer services, basic materials, and telecommunications, which rose at least +1.35%. Financials rose +0.56%. Laggards were industrials, consumer goods, and oil and gas, which fell at least -0.18%. The index closed -7.36% below its recent December 3rd 23,910.47 high, but +21.8% above its 18,185.59 June 4, 2012 low.

    In Shanghai, the SHCOMP closed at 2,033.31, compared to 2,041.71 at the prior close, +4.27% above the 1,950.01 June 27th close, last year's low. The index opened higher and set an early morning 2,041.71 intraday high, but immediately reversed lower to nearly 2,030 by late morning. A mid-session rally carried the index back to breakeven, the index turned decidedly negative by mid-afternoon, when it fell to its 2,024.50 intraday low. Most market segments closed lower. Leaders were oil and gas and utilities, which rose at least +0.14%, and financials which fell -0.15%. Laggards were industrials, telecommunications, and consumer services, which fell at least -0.69%.

    In Europe, major equity indexes are modestly mixed, as European bourses gave up early moderate gains. The Euro Stoxx50, FTSE 100, and DAX are up +0.15%, +0.27%, and +0.16%, respectively, while the CAC 40 id down -0.03%. The Spanish IBEX 35 is up +0.58%, and the Italian FTSE MIB is up +0.83%. Economic reporting is relatively light. Commentary focuses on European inflation reports, which were less deflationary than survey, thereby tempering expectations of monetary ease.

    European bourses have recently outperformed U.S. equity indexes. Intraday Euro Stoxx50 relative strength (RSI) is 62.55, compared to 62.06 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 3,177.15, +0.03% above its 3,172.43 March 28th post-2008 high close, and -39.6% below its 5,249.55 March 31, 2000, all-time closing high. From its prior day 3,172.43 close, the index set an early 3,185.67 intraday high, but reversed lower in early afternoon, when it set its 3,166.58 intraday low. The index subsequently improved to 3,178.41. Market segments are mixed. Leaders are financials, technology, and telecommunications, which rose at least +0.39%. Laggards are consumer goods, industrials, and utilities, which are down -0.23%.

    Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +2.45%, +0.89%, +1.75%, and +2.61%, respectively. The prior 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 +0.77%, while the FTSE 100, CAC 40, and DAX are down -2.66%, -0.05%, and -1.08%, respectively. In February, the indexes closed at least +4.14% higher.

    In 2014, the indexes are mixed. The Euro Stoxx50, CAC 40, and DAX are up +2.07%, 2.56% and +0.37%, respectively. The FTSE 100 is down -1.79%. 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 16.9x estimated 2013 earnings ($110.15), 15.9x estimated 2014 earnings ($117.18), 14.2x estimated 2015 earnings ($130.48), and 12.8x estimated 2016 earnings ($144.92). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, 2015, and 2016 earnings to grow +6.52%, +6.38%, +11.4%, and 11.1%, respectively.

    The BKX trades at 13.8x 2013 adjusted EPS ($5.16), 13.0x estimated 2014 earnings ($5.52), 11.7x estimated 2015 earnings ($6.12), and 10.4x 2016 earnings ($6.85). Analysts expect 2013, 2014, 2015, 2016 EPS will grow +19.4%, +6.90%, +10.9%, and +12.0%, respectively.

    Composite, index, and equity options. Options markets are unchanged at neutral to bullish, compared to neutral to bullish the prior session. Composite options are neutral, index options are bullish, and equity options are neutral. The composite put/call ratio is 0.98, compared to 0.83 the prior day, and worse than 5- and 10-period moving averages of 0.91 and 0.86, respectively. The index put/call ratio is 0.98 compared to 1.15 the prior day, and better than its 5- and 10-period moving averages of 1.12 and 1.02, respectively. The equity put/call ratio closed the day at 0.94, compared to 0.74 the prior day, and worse than its 5- and 10-period moving averages of 0.84 and 0.81, respectively.

    NYSE Volume, Breadth Indicators. Volume fell -19.4% to 639.41 million shares, compared to 793.71 million shares the prior day, 0.86x the 745.03 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led by +1,256 (compared to +147 the prior day), or 2.41:1. Up volume was 3.17:1 down volume.

    Market Outlook and Distribution Day Count. On March 26th, the market outlook worsened to "in correction". That day, the SPX opened at 1865.62, ending an uptrend that commenced on February 7th, when the SPX opened at 1773.43, during which the SPX rose +5.20%. Today, the SPX opens -0.43% below its March 26th open and -1.09% below its March 7th 1878.04 record closing high.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.08550%, compared to 0.08990% the prior day. USD 3-month LIBOR is 0.23060%, 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 14.560 bps, compared to 13.585 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 14.500 bps, down from 15.100 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 -3.359 bps, compared to -3.259 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 1.58%, compared to 1.55% the prior day. Japanese 10-year debt yields are 0.64%, compared to 0.63% the prior day.

    · Spanish and Italian 10-year debt yields are near their best levels since 2005. Spanish 10-year debt yields are 3.26%, compared to 3.24% the prior day. Italian 10-year debt yields are at 3.33%, compared to 3.30% the prior day.

    · U.S. Treasury yields are slightly higher, with 2- and 10-year maturities yielding 0.454% and 2.743%, respectively, compared to 0.450% and 2.721% Friday. The yield curve widened +1.760 bps, with the 2- to 10-year spread at +2.289%, compared to 2.271% 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 Japanese yen, but slightly weaker compared to the euro and British pound. The dollar trades at US$80.032, compared to a US$80.001 intraday low and US$80.176 the prior day, and worse compared to its $80.262 50-day, US$80.433 100-day, and US$80.901 200-day averages. The euro trades at US$1.3795, compared to a US$1.3806 intraday high and US$1.3752 the prior day. The euro trades better compared to its US$1.3726 50-day and US$1.3678 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥103.21, compared to ¥102.37 the prior day. The yen trades worse than its 50-day moving average ¥102.37, and better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

    · Citigroup Economic Surprise Index improved to -29.50, compared to -31.00 the prior day, continuing its string of consecutive negative readings since February 18th. The index is better compared to its respective -31.46 5-day and -32.66 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 lower, with lower energy, higher precious metals, higher aluminum and copper, and mostly lower 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 9:00,March ISM Milwaukee manufacturing index rose to 56.03, compared to 51.00 survey and 48.59 prior.
    • At 9:45, March Chicago purchasing manager index, with 59.8 survey and prior.
    • At 10:30, March Dallas Fed manufacturing activity index, with 3.0 survey and +0.3 prior.


    Overseas Economic Reporting and News:
     

    • Hong Kong - February YoY retail sales fell -2.3%, compared to +4.5% survey and +14.4% revised prior.
    • Japan - March Markit/JMMA Japan manufacturing index was 53.9, compared to 55.5 survey. February preliminary industrial production fell -2.3%, compared to +0.3% survey and +3.8% prior.
    • France - 4Q2013 final QoQ GDP rose +0.3%, compared to +0.3% survey and prior.
    • Germany - February MoM retail sales rose +1.3%, compared to -0.5% survey and +1.7%.
    • Portugal - February MoM industrial production fell -0.6%, compared to +0.6% revised prior.


    Company Ratings/News:
     

    • None.


    Friday's Trade. On lower and below average NYSE volume, U.S. equity indexes rallied to mid-morning highs, then gave back much of their gains through the close. Most market segments ended higher, led by oil and gas and industrials. The SPX, DJI, Nasdaq, and NYSE composite gained +0.46%, +0.36%, +0.11%, and +0.59%, respectively. The SPX and NYSE composite are higher this year.

    While the major indexes rose, damage continued in other indexes. The Russell 2000 (RTY) rose +0.03% and is now -4.70% below its March 4th record close. The Nasdaq Internet Index (QNET) rose +0.16% and is in correction, -11.6% below its March 6th closing high. The Nasdaq Biotech Index fell sharply, down -2.82%, down -16.0% 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 positive, with gainers 0.86x losing stocks. Most SPX market segments closed higher. Leaders were oil and gas, industrials, and consumer services, which rose at least +0.64%. Financials rose +0.30%. Laggards were utilities, which rose +0.15%, and telecommunications and health care, which fell at least -0.11%.

    NYSE volume fell -19.4% to 639.41 million shares, compared to 793.71 million shares the prior day, 0.86x the 745.03 million share 20-day moving average volume. On the day, bond markets weakened. The U.S. 10-year yield opened at 2.6801%, and traded narrowly at that level through mid-afternoon, then rose to a late session 2.7316% intraday high. The yield closed at 2.72.08%, up +3.98 bps compared to the 2.6810% prior close.

    From its prior day 1849.04 SPX close, June 2014 SPX futures (SPM4) suggested a moderately higher open. The SPX index rallied in early trading and rose to a mid-morning 1849.04 intraday high, then eased through mid-afternoon back to 1854.00, then improved modestly to the close. The SPX ended at 1857.62, -1.09% below its March 7th record close. The index closed +72.8% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

    The DJ Transportation index (TRAN) rose +0.54%, compared to DJI's +0.36% gain. From its prior 7,411.43 close, the TRAN rose to a mid-morning 7,511.52 intraday high, then eased back to 7,440 by mid-afternoon. The index closed at 7,451.36, -1.86% below its recent 7,592.36 March 7th record close. Volume fell -3.01% to 11.180 million shares, compared to 11.527 million shares the prior session, and 0.82x the 15-day moving average volume. The TRAN closed -0.77% below and +1.07% above its respective 20- and 50-day moving averages, and +2.15% and +7.94% above its respective 100- and 200-day moving averages.

    Market volatility fell -1.44%, as the CBOE SPX volatility index (VIX) closed at 14.41, compared to 14.62 at the prior close. The VIX opened below 14.20 and set an early 13.73 intraday low before moving narrowly around 14.00 through mid-session. The index rose through the mid-afternoon to the 14.86 intraday high, then eased lower to the close. 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 DJI and NYSE composite recaptured their respective 20-day moving averages. The SPX, DJI, Nasdaq, and NYSE composite again closed above their 50-, 100-, and 200-day moving averages. SPX relative strength (RSI) improved to 51.86, compared to 48.43 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 rose +5.95% to 124.98, compared to 117.96 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.

    Last week, the DJI rose +0.12%, while the SPX, Nasdaq, and NYSE composite closed down -0.48%, -2.83%, and -1.73%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed up +1.38%, +1.48%, +0.74%, and +1.04%, respectively. In March, the DJI and NYSE composite are up +0.01% and +0.09%, respectively, while the SPX and Nasdaq are down -0.10% and -3.54%, 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 lower and below average volume, the BKX rose +0.52% to 71.44, compared to 71.07 at the prior day's close, its 10th consecutive close above 70.00, but -2.02% below its 72.91 March 20th post-2008 closing high. In early trading, the index rallied to a mid-morning 71.88 intraday high, but eased back to 71.40 by early afternoon, where it traded narrowly to the close. Volume fell -50.1% to 41.945 million shares, compared to 85.400 million shares the prior day, and 0.76x the 55.365 million share 15-day moving average.

    Friday, large cap banks outperformed the regional banks, as the KBW regional banking index (KRX) rose +0.18%.

    Last week, the BKX is down -1.73%, compared to the prior week, when the BKX rose +4.94%. In March, the BKX is up +3.51%. In February, the BKX closed up +0.73%, compared to January, when the BKX closed down -2.89%. In 2014, the BKX is up +3.51%, compared to the SPX's +0.50% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

    The BKX is now +20.7% 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 +119.4% 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 +72.8% in the same period.

    The BKX index closed -41.0% below its February 20, 2007, record 121.06 high. The BKX is up +283.7% from its 18.62 March 6, 2009, closing low.

    Technical indicators were little changed. The index closed +0.62%, +2.90%, +4.24%, and +7.99% above its respective 20-, 50-, 100-, and 200-day moving averages. The 20-day moving average rose +24 bps to 70.17. The 69.43 50-day moving average rose +1 bp. Its 100-day moving average rose +7 bps to 68.53, and the 200-day moving average rose +6 bps to 66.10. The 20-day closed (by +1.57 points) above the 50-day, and the gap widened +12 bps. The 50-day moving average closed (by +3.27 points) above the 200-day moving average, and the gap narrowed -5 bps. The 100-day moving average closed (by +2.38 points) above the 200-day moving average, and the gap widened +2 bps.

    The directional movement indicator narrowed to +7.130, compared to +7.571 the prior day, its 20th consecutive positive reading. Relative strength rose to 55.78, compared to 53.46 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 71.85; next support is 71.06.

    SPX, DJI, RTY, TRAN, CCMP, NYA, VIX, SKEW, NKY, EURUSD, USGG10YR, HSI, SHCOMP, SX5E, CAC, DAX, FTSE, JPY, GBP, EUR

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