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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. Equity Trend Back In Correction As Great Rotation Continues; Japan Sells-Off, Europe Lower After Friday Closing Highs 0 comments
    Apr 7, 2014 8:54 AM | about stocks: JPM

    This morning. Today, U.S. equity futures suggest continued weakness following Friday's sell-offs. In Asia, equity markets closed lower with greater weakness in Japan. In Europe, indexes are moderately lower, after Friday's post-2008 high closes on the Euro Stoxx 50 and CAC 40 record close. The dollar is mixed. Commodities are mostly lower. Monday's Nikkei 225 June 2014 (NKM4) equity futures are unchanged.

    U.S. economic reporting focuses on the March U.S. employment report. European equity indexes are moderately higher and near session highs. Commentary focuses on interest rate, currency, and commodity price developments.

    On April 4th, the U.S. equity markets distributed and the market outlook worsened to "in correction", ending a brief "confirmed uptrend" that began on April 1st. The SPX opened April 4th at a record 1888.77, up +0.88% from the April 1st 1872.34 open.

    Friday, the major equity indexes distributed. The S&P 500 (SPX), DJ Industrials (DJI), Nasdaq, and NYSE composite closed off -1.25%, -0.96%, -2.60%, and -0.77%, respectively. Volume rose to 1.04 average volume. The DJ Transports (TRAN) fell -1.46% and led other indexes lower.

    U.S. equity markets opened moderately higher, tested resistance through mid-morning, then reversed lower by late morning and fell through the afternoon to late afternoon lows. The DJI closed unchanged. NYSE volume rose +1.19% to 0.89x its 20-day moving average. The SPX, Nasdaq, and NYSE composite are higher on the year.

    Other indexes suffered greater losses. The Russell 2000 (RTY), Nasdaq Internet (QNET), and Nasdaq Biotech (NBI) fell -2.35%, -3.59%, and -4.06%, respectively. The QNET and NBI in correction, down -14.5% and -17.4%, respectively, from recent highs.

    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 20 of 500 SPX companies have now reported. JPMorgan (NYSE:JPM) initiates financial companies' 1Q2014 earnings season with its report this Friday.

    Trading desks regard Friday's retreat as bringing the equities back within their recent 1840-1880 trading range, with flat markets overall, but important underlying changes, with continued rotation away from momentum stocks.

    Price earnings multiples are elevated. With SPX equities trading at a 16.9x 2013 earnings multiple, attention focuses on 2014 earnings and valuations (16.9x times survey $117.34 2014 SPX operating earnings suggests a 1,986.89 SPX level next year, a +6.53% rise).

    Technicals worsened as the major indexes closed below their 5-day moving averages. The SPX also closed below its 10- and 20-day moving averages. The Nasdaq closed below its 5-, 10-, 20-, 50-, and 100-day moving averages. Most SPX market segments closed lower. Market breadth was negative, and up volume lagged down volume. Volatility rose, though only modestly. Treasury bond markets strengthened. The U.S. Treasury 10-year bond yield fell -7.65 bps to 2.7225%, compared to 2.7972% at the prior close.

    This morning, 10-year U.S. Treasury yields are up +0.08 bps at 2.7225%, compared to the prior close. Spanish and Italian 10-year debt yields are near their lowest levels since 2005, at 3.22% and 3.20%, respectively, compared to 3.15% and 3.17% 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 bullish, compared to neutral to bullish the prior day. The CBOE SKEW fell -1.19% to 126.61, compared to 128.13 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 bottom of a 1850-1861 trading range. After a fair value adjustment of -2.11 points, the SPM4 future prices at 1852.75, down -5.14 points. The SPX opens -0.04% below its 20-day moving average, but +1.47%, +2.19%, and +6.27% above its respective 20-, 50-, 100-, and 200-day moving averages. Initial resistance is 1887.16. Initial support is 18553.14, then 1841.19.

    In Asia, equity markets closed lower. China was closed for holiday. Economic reporting focused on U.S. economic reports, continued volatility in China's money markets, and last Friday's U.S. equity distributions. On the day, the Nikkei 225 (NYSEARCA:NKY) fell -1.69%. The Hang Sang index (HSI) fell -0.59%. Friday, the Shanghai SE composite (SHCOMP) index rose +0.74%. Today's volumes are unavailable.

    Last week, the NKY, HSI, and SHCOMP closed up +2.50%, +2.01%, and +0.84%, respectively. The prior week, the NKY and HSI closed up +3.32% and +2.93%, respectively, while the SHCOMP closed off -0.29%. In April, the NKY is down -0.13%, while the HSI and SHCOMP are up +1.02% and +1.26%, respectively, compared to March, when the NKY, HSI, and SHCOMP lost -0.09%, -3.00%, and -1.12%, respectively.

    In 2014, the NKY, HSI, and SHCOMP are down -9.10%, -3.99%, and -2.70%, 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 were closed. On Friday, the 7-day Shibo rate fell to 2.99%, compared to 4.11% 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 fell to 50.98, compared to 58.28 the prior day, up from an oversold 27.92 on February 4th. The HSI RSI fell to 55.46, compared to 59.03 the prior day. Friday, the SHCOMP's RSI rose to 52.96, compared to 49.21 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 14,808.85, compared to 15,063.77 the prior day, -9.10% below its recent year-end 16,291.31 high and -62.0% below its late-1989 38,915.87 high close. The index gapped lower to open at 14,800 and fell to initial support at 14,820 in early trading. The index improved to a late morning 14,895.58, but moved lower through late afternoon to the 14,764.37 intraday low. The index closed +0.62%, +0.35%, and +1.63% above its respective 20-, 50-, and 200-day moving averages, but -1.98% below its 100-day moving averages. All market segments closed at least -0.64% lower. Leaders were oil and gas, utilities, and health care. Laggards were technology, financials and telecommunications, which fell at least -2.05%.

    In China, the HSI closed at 22,377.15, compared to 22,510.08 at the prior close. The index gapped lower to open below 22,420, rose to an early 22,510.08 intraday high, then fell sharply to an early 22,326.41 low, then traded narrowly to the close. Most market segments closed lower. Leaders were telecommunications, oil and gas, and consumer goods, which rose at least +0.05%. Financials fell -0.15%. Laggards were industrials, technology, and consumer services, which fell -1.03%. The index closed -6.41% below its recent December 3rd 23,910.47 high, but +23.1% above its 18,185.59 June 4, 2012 low.

    In Shanghai, the SHCOMP closed Friday at 2,058.83, compared to 2,043.70 at the prior close, +5.58% above the 1,950.01 June 27th close, last year's low. The index opened lower, set its 2,035.37 intraday low, then strengthened and reversed higher by mid-morning and rallied to a late 2,059.91 intraday high. Most market segments closed higher. Leaders were consumer services, technology, and health care, which rose at least +1.01%. Laggards were financials and telecommunications, which rose at least +0.02%, and oil and gas, which ended unchanged.

    In Europe, major equity indexes are lower, with greater weakness in Frankfurt, and trade near their intraday lows. The Euro Stoxx50 opened at post-2008 high. The CAC 40 opened at record high. The Euro Stoxx50, FTSE 100, CAC 40, and DAX down -0.99%, -0.78%, -0.72%, and -1.44%, respectively. The Spanish IBEX 35 is down -0.61%, and the Italian FTSE MIB down -0.51%. Commentary focuses on the U.S. employment report, Friday's U.S. equity weakness, and currency and commodity price developments.

    European bourses have recently outperformed U.S. equity indexes. Intraday Euro Stoxx50 relative strength (RSI) is 61.32, compared to 68.16 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 3,198.18, -0.81% below its 3,230.33 April 4th post-2008 high close, and -39.0% below its 5,249.55 March 31, 2000, all-time closing high. From its prior day close, the index gapped lower to open below 3,220, traded narrowly at that level through late morning, then subsequently weakened through mid-afternoon to the 3,193.55 intraday low. Most market segments are lower. Leaders are consumer services, which is up +0.03%, and health care and utilities, which are down at least -0.31%. Laggards are technology, financials, and basic materials, which are down at least -1.27%.

    Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +1.83%, +1.21%, +1.66%, and +1.13%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +2.45%, +0.89%, +1.75%, and +2.61%, respectively. In April, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.34%, +0.84%, +1.43%, and +0.31%, respectively. In March, Euro Stoxx50 closed up +0.39%, while the FTSE 100, CAC 40, and DAX closed down -3.10%, -0.38%, and -1.40%, respectively.

    In 2014, the indexes are mixed. The Euro Stoxx50, CAC 40, and DAX are up +3.06%, +3.69%, and +0.34%, respectively. The FTSE 100 is down -1.41%. In 2013, the indexes closed up +18.0%, +14.4%, +18.0%, and +25.5%, respectively.

    1Q2014 SPX Earnings. Of 20 (of 500) reporting companies, 11 or 55.0% surprised positively on earnings, with an average +0.66% surprise average. Of reporting companies, 10 or 50.0% reported sales or revenues above estimates. The average sales/revenue surprise is -0.25%. Consumer discretionary leads with respective +11.3% and +0.86% 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 ($117.34), 14.3x estimated 2015 earnings ($130.72), and 12.8x estimated 2016 earnings ($145.22). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2013, 2014, 2015, and 2016 earnings to grow +6.52%, +6.53%, +11.4%, and 11.1%, respectively.

    The BKX trades at 13.9x 2013 adjusted EPS ($5.16), 13.0x estimated 2014 earnings ($5.51), 11.7x estimated 2015 earnings ($6.10), and 10.4x 2016 earnings ($6.89). Analysts expect 2013, 2014, 2015, 2016 EPS will grow +19.4%, +6.83%, +10.7%, and +12.8%, respectively.

    Composite, index, and equity options. Options markets worsened to bearish to bullish, 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 0.95, compared to 0.88 the prior day, and worse than 5- and 10-period moving averages of 0.89 and 0.90, respectively. The index put/call ratio is 0.81 compared to 1.01 the prior day, and better than its 5- and 10-period moving averages of 1.00 and 1.06, respectively. The equity put/call ratio closed the day at 1.02, compared to 0.82 the prior day, and worse than its 5- and 10-period moving averages of 0.84 and 0.84, respectively.

    NYSE Volume, Breadth Indicators. Volume rose +18.2% to 781.05 million shares, compared to 660.84 million shares the prior day, 1.04x the 748.12 million share 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged by -948 (compared to -538 the prior day), or 0.53:1. Up volume was 0.43:1 down volume.

    Market Outlook and Distribution Day Count. On April 4th, the U.S. equity markets distributed and the market outlook worsened to "in correction", ending a brief "confirmed uptrend" that began on April 1st. The SPX opened April 4th at a record 1888.77, up +0.88% from the April 1st 1872.34 open.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.08840%, compared to 0.08810% the prior day. USD 3-month LIBOR is 0.22960%, down from 0.23050% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US Libor-OIS (LOIS) spread is 14.760 bps, compared to 14.335 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 13.000 bps, up from 12.900 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 -0.266 bps, compared to -0.439 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 1.56%, compared to 1.55% the prior day. Japanese 10-year debt yields are 0.62%, compared to 0.65% the prior day.

    · Spanish and Italian 10-year debt yields are near their best levels since 2005. Spanish 10-year debt yields are 3.22%, compared to 3.15% the prior day. Italian 10-year debt yields are at 3.20%, compared to 3.17% the prior day.

    · U.S. Treasury yields are slightly lower, with 2- and 10-year maturities yielding 0.415% and 2.718%, respectively, compared to 0.411% and 2.721% Friday. The yield curve narrowed -0.670 bps, with the 2- to 10-year spread at +2.303%, compared to 2.310% 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 mixed, stronger compared to the British pound, but weaker compared to the euro and Japanese yen. The dollar trades at US$80.354, compared to a US$80.332 intraday low and US$80.423 the prior day, and mixed compared to its $80.221 50-day, US$80.401 100-day, and US$80.836 200-day averages. The euro trades at US$1.3726, compared to a US$1.3728 intraday high and US$1.3705 the prior day. The euro trades mixed compared to its US$1.3736 50-day and US$1.3689 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥103.25, compared to ¥103.29 the prior day. The yen trades worse than its 50-day moving average ¥102.40, but better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

    · Citigroup Economic Surprise Index worsened to -43.80, compared to -41.80 the prior day, at its worst level since May 2012 and continuing its string of consecutive negative readings since February 18th. The index is worse compared to its respective -37.02 5-day and -34.24 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 -43.80 124-week low on April 7th . After a lag, the CESIUSD correlates with EPS revisions.

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

    Volatility, Skew:

    · The CBOE SPX Volatility Index (VIX) rose +4.41% to 13.96, compared to 13.37 at the prior close. The VIX is -4.64% below the 14.64 20-day moving average. Its 30-day high is 18.22. Its 30-day low is 12.92. 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 17.06, up +7.40% compared to 15.88 at the prior day's close. The V2X index trades -9.18% below its 19.00 20-day moving average, -30.0% below the 24.35 30-day high, and +9.99% above the 15.50 30-day low.

    · The Hang Seng volatility index (VHSI) closed at 15.14, up +4.70% compared to 14.46 at the prior close. The VHSI index trades -11.4% below its 17.09 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) fell -1.19% to 126.61, compared to 128.13 the prior session, above a neutral reading (115-120), but 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:
     

    • None.


    Overseas Economic Reporting and News:
     

    • Australia - March AiG construction performance index was 46.2, compared to 44.2 prior.
    • Japan - February preliminary leading index was 108.5, compared to 108.8 survey and 113.1 prior.
    • Eurozone - April Sentix investor confidence was 14.1, compared to 13.9 survey and 13.9 prior.
    • France - March Markit retail PMI was 50.0, compared to 48.4 prior.
    • Germany - February MoM industrials production rose +0.4%, compared to +0.3% survey and +0.7% revised prior.
    • Spain - February YoY industrial output rose +3.1%, compared to -0.1% prior.
    • United Kingdom - March Lloyds employment confidence was -2, compared to -2 prior.


    Company Ratings/News:
     

    • None.


    Friday's Trade. On greater and above average NYSE volume, U.S. equity indexes distributed, falling from recent record highs. The market outlook returned to "in correction". On the day, the SPX, DJI, Nasdaq, and NYSE composite fell -1.25%, -0.96%, -2.60%, and -0.77%, respectively. On the week, the Nasdaq closed lower. In 2014, the SPX and NYSE composite are higher.

    Other narrower indexes fared poorly. The Russell 2000 (RTY) fell -2.35% and is -4.57% below its March 4th record close. The Nasdaq Internet Index (QNET) fell -3.59%, in correction and -14.5% below its March 6th closing high. The Nasdaq Biotech Index fell -4.06%, in correction and down -17.4% from its recent February 25th record high.

    On April 4th, the U.S. equity markets distributed and the market outlook worsened to "in correction", ending a brief "confirmed uptrend" that began on April 1st. The SPX opened April 4th at a record 1888.77, up +0.88% from the April 1st 1872.34 open.

    Market breadth was negative, with gainers 0.53x losing stocks. Most SPX market segments closed lower. Leaders were utilities, which rose +0.55%, and telecommunications and oil and gas, which fell at least -0.19%. Financials fell -1.30%. Laggards were health care, consumer services, and technology, which fell at least -1.50%.

    NYSE volume rose +18.2% to 781.05 million shares, compared to 660.84 million shares the prior day, 1.04x the 748.12 million share 20-day moving average volume. On the day, bond markets strengthened markedly. The U.S. 10-year yield opened at 2.7945%, and moved narrowly through mid-afternoon, when the yield fell sharply to session's late 2.7189% intraday low. The yield closed at 2.7207%, down -8.65 bps compared to the 2.7972% prior close.

    From its prior day 1890.90 SPX close, June 2014 SPX futures (SPM4) suggested a modestly lower open. The SPX index rose to an early 1893.80 intraday high, but reversed lower by mid-morning and fell to a late afternoon 1882.65 intraday low. The index rallied through the final hour, moderating the day's loss. The SPX ended at 1888.77, -0.11% below its April 2nd record close. The index closed +75.7% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

    The DJ Transportation index (TRAN) fell -1.46%, compared to DJI's -0.96% loss. From its prior 7,683.19 close, the TRAN set an early 7,711.33 intraday high, but reversed lower by mid-morning, leading other averages lower to a mid-afternoon 7,547.20 intraday low. Volume rose +13.6% to 11.2233 million shares, compared to 9.890 million shares the prior session, and 0.84x the 15-day moving average volume. The TRAN closed +0.32% and +2.49% above its respective 20- and 50-day moving averages, and +3.37% and +9.15% above its respective 100- and 200-day moving averages.

    Market volatility rose +4.41%, as the CBOE SPX volatility index (VIX) closed at 13.96, compared to 13.37 at the prior close. The VIX opened modestly lower, set an early 12.60 intraday low as equity indexes peaked, then trended higher to a late afternoon 14.55 intraday high. Volatility trended lower through the final hour as equities steadied. The VIX's all-time closing low was 9.31, on December 22, 1993. Its record high was 89.53 in December 2008. Its lifetime average is 20.01.

    The market's technical factors worsened. Major indexes surrendered their 5-day moving averages, the SPX also surrendered its 20-day moving average, and Nasdaq also surrendered its 50- and 100-day moving averages. SPX relative strength (RSI) fell to 51.35, compared to 62.73 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 -1.19%, compared to 128.13 the prior session, above a neutral 115-120 range, but below 130, a level that correlates well with short-term market tops.

    Last week, the SPX, DJI, and NYSE composite closed up +0.40%, +0.55%, and +0.79%, respectively, while the Nasdaq closed down -0.67%. The prior week, the DJI rose +0.12%, while the SPX, Nasdaq, and NYSE composite closed down -0.48%, -2.83%, and -1.73%, respectively. In April, the SPX, DJI, Nasdaq, and NYSE composite are down -0.39%, -0.27%, -1.70%, and -0.10%, 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 2014, the SPX and NYSE composite are up +0.91% and +1.12%, respectively, while the Nasdaq and DJI are down -1.17% and -0.99%. 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 greater, but below average volume, the BKX fell -1.38% to 71.69, compared to 72.69 at the prior day's close, its 15th consecutive close above 70.00, but -1.67% below its 72.91 March 20th post-2008 closing high. The index opened higher and traded to an early 73.08 intraday high, but reversed lower by mid-morning and trended lower to a late 71.68 intraday low. Volume rose +57.1% to 54.344 million shares, compared to 34.591 million shares the prior day, and 0.97x the 56.138 million share 15-day moving average.

    Large cap banks outperformed the regional banks, as the KBW regional banking index (KRX) fell -2.51%.

    Last week, the BKX closed up +0.35%, compared to a decline of -1.73% the prior week. In April, the BKX is down -0.83%, compared to March, when the BKX closed up +4.74%. In 2014, the BKX is up +3.51%, compared to the SPX's +0.91% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

    The BKX is now +21.1% 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 +120.2% 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 +73.5% in the same period.

    The BKX index closed -40.8% below its February 20, 2007, record 121.06 high. The BKX is up +285.0% from its 18.62 March 6, 2009, closing low.

    Technical indicators worsened, as the BKX surrendered its 5- and 10-day moving averages. The index closed +0.13%, +3.01%, +4.01%, and +7.89% above its respective 20-, 50-, 100-, and 200-day moving averages. The 20-day moving average rose +1 bp to 71.59. The 69.60 50-day moving average rose +3 bps. Its 100-day moving average rose +6 bps to 68.93, and the 200-day moving average rose +6 bps to 66.45. The 20-day closed (by +2.00 points) above the 50-day, but the gap narrowed -1 bp. The 50-day moving average closed (by +3.15 points) above the 200-day moving average, and the gap narrowed -3 bps. The 100-day moving average closed (by +2.48 points) above the 200-day moving average, and the gap was unchanged.

    The directional movement indicator narrowed to +5.773, compared to -11.404 the prior day, its 25th consecutive positive reading. Relative strength rose to 53.87, compared to 62.71 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 72.62; next support is 71.22.

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