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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 Fall Despite Strong Empire Manufacturing; Asia Closes Lower; Europe Slides 0 comments
    May 15, 2014 9:02 AM

    This morning. U.S. equity futures are lower and, despite a strong Empire manufacturing report, now trade near the bottom of their morning trading range. In Asia, equity markets closed mixed. In Europe, equities indexes are mostly lower, though London is up modestly. The dollar is stronger. Treasury 10-year yields are lower, and near their lowest level of the year. The worldwide sovereign bond market rally continues. Commodities are mixed. Friday's Nikkei 225 June 2014 (NKM4) equity futures are moderately lower.

    Yesterday, the S&P 500 (SPX), DJ Industrials (DJI), and DJ Transports (TRAN) closed off their prior day record closes. Volumes remained weak. The market outlook remains unchanged at "in correction". 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 opens -0.47% below its May 13th record close.

    Economic reporting is heavy with a strong Empire manufacturing report, CPI, and initial and continuing jobless claims at 8:30, followed at 9:15 by April industrial production and capacity utilization, and at 10:00, Philadelphia Fed and 1Q2014 mortgage delinquencies.

    Trading desks again report a "gloomy" mood this morning, with most (Japan, China, and Europe) major markets lower following soft European GDP numbers, and a hedge fund manager's caution that its "nervous time" for equity markets. Relative strength indicators don't suggest that the market is particularly overbought, though 17.2x price earnings multiples are well in excess of 15.9x historical average.

    Wednesday, on better, but below average volume, U.S. major equity indexes opened lower, drifted through mid-afternoon, then weakened markedly into the close. The S&P 500 (SPX), DJ Industrials (DJI), Nasdaq, and NYSE composite fell -0.47%, -0.61%, -0.72%, and -0.44%, respectively. The DJ Transports (TRAN) fell -0.87%. Momentum was mixed. The Russell 2000 (RTY) closed down -1.61%, and is now off -8.73% from if early March highs. The Nasdaq Internet (QNET) index fell -0.78%, while the Nasdaq Biotech (NBI) index rose +0.49%. The QNET and NBI are now well into correction, down -17.7% and -15.3%, respectively.

    NYSE volume rose +2.65% to 0.89x its 20-day moving average. The SPX, DJI, and NYSE composite are now +2.17%, +0.23%, and +2.46% higher in 2014, respectively, while the Nasdaq is own -2.30%.

    The 1Q2014 earnings reports began on March 15th, and 459 of 499 SPX companies have now reported, with respective +6.31% EPS and +0.28% revenue surprises.

    Price earnings multiples remain elevated. With SPX equities trading at a 17.1 (compared to 17.2 the prior day) 2013 earnings multiple, attention focuses on 2014 earnings and valuations (17.1x times survey $117.95 2014 SPX operating earnings suggests a 2022.19 SPX level this year, a +7.08% rise).

    Technicals were little changed. SPX market segments closed mixed. Market breadth was negative, and up volume lagged down volume. Volatility rose slightly. Treasury bond markets strengthened markedly. On the day, the U.S. Treasury 10-year bond yield fell -6.62 bps to 2.5427%, compared to 2.6089% at the prior close.

    This morning, 10-year U.S. Treasury yields are down -1.16 bps at 2.5311%, compared to the prior close. World sovereign bond markets continue to rally. Notably, Spanish and Italian 10-year debt yields are near their lowest levels since 2005, at 2.84% and 2.91%, respectively, compared to 2.86% and 2.91% the prior day.

    U.S. options markets worsened to bearish to bullish, compared to neutral to bullish the prior day. The CBOE SKEW remains above a neutral range.

    In pre-market futures trading, June SPX equity futures (SPM4) price near the bottom of a 1881-1888 trading range. After a fair value adjustment of -0.12 points, the SPM4 future prices at 1882.50, down -2.63 points. The SPX opens +0.56% and +1.10% above its respective 20- and 50-day moving averages, and +2.32% and +5.81% above its 200-day moving averages. Initial resistance is 1895.18. Initial support is 1883.82, then 1879.12.

    In Asia, equity markets closed mixed. The Nikkei 225 (NYSEARCA:NKY) fell -0.75%, but much better than its early session lows, and remains in correction, with its 50-day moving average below its 200-day moving average and its 200-day moving average now below its 100-day moving average. The Hang Sang index (HSI) closed up +0.66%. The Shanghai composite (SHCOMP) fell -1.12%and closed near its intraday low. Both HSI and SHCOMP 50-day moving averages are also below their respective 200-day moving averages. Today's volumes are unavailable.

    Commentary focused on yesterday's U.S. equity market weakness, lower sovereign debt yields, and a UBS forecast of a 20% drop in Chinese corporate profitability.

    This week, the NKY, HSI, and SHCOMP are up +0.69%, +3.97%, and +0.69%, respectively. Last week, the NKY, HSI, and SHCOMP closed down -1.78%, -1.79%, and -0.75%, respectively. In May, the NKY is down -0.04%, the HSI is up +2.70%, and the SHCOMP is down -0.07%. In April, the NKY closed down -3.53%, while the HSI and SHCOMP closed down -0.08% and -0.34%, respectively.

    In 2014, the NKY and HSI are down -12.2% and -2.47%, respectively, while the SHCOMP is down -4.30%. 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 remain volatile, as the SHIBO 7-day rate fell -5.0 bps to 3.19%, compared to 3.24% 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 ended at 47.37, compared to 50.35 the prior day, up from an oversold 27.92 on February 4th, the most recent prior yearly low. The HSI RSI rose to 58.55, compared to 55.98 the prior day. The SHCOMP's RSI fell to 43.70, compared to 49.49 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 14,298.21, compared to 14,405.76 the prior day, -12.2% below its recent year-end 16,291.31 high and -63.3% below its late-1989 38,915.87 high close. The index opened lower and traded to an early 14,190.27 intraday low. The index recovered to 14,300 by mid-session. Most market segments closed lower. Leaders were utilities and oil and gas, which rose at least +0.19%, and industrials, which fell at least -0.54%. Laggards were basic materials, financials, and consumer services, which fell at least -0.83%. The index closed -12.2% below its recent December 31st 16,291.31 high.

    In China, the HSI closed at 22,730.86, compared to 22,582.77 at the prior close. The index opened above 22,720, but fell to an early 22,610.01 intraday low, then spiked to a mid-morning 22,792.63 intraday high. The index fell back to 22,650 by late morning, with proved support through the afternoon. Market segments closed mixed. Leaders were technology, industrials, and utilities, which rose at least +0.35%. Financials rose +0.35%. Laggards were oil and gas, consumer services, and basic materials, which fell at least -0.40%. The index closed -4.93% below its recent December 3rd 23,910.47 high, but +25.0% above its 18,185.59 June 4, 2012 low.

    In Shanghai, the SHCOMP closed at 2,024.97, compared to 2,047.91 at the prior close, +3.84% above the 1,950.01 June 27, 2013 close, last year's low. The index traded narrowly lower through mid-morning, then weakened and trended lower to a late 2,023.10 intraday low. All market segments closed at least -0.45% lower. Leaders were financials, utilities, and oil and gas. Laggards were consumer services, technology, and telecommunications, which fell at least -1.92%.

    In Europe, equities are mostly lower, with greater weakness in Milan. The FTSE 100 is up +0.01%, while the Euro Stoxx50, CAC 40, and DAX are down -0.33%, -0.30%, and -0.04%, respectively. The Spanish IBEX 35 is down -0.87%. The Italian FTSE MIB is down -1.73%.

    Economic reporting focuses on 1Q2014 GDP revisions, which generally have disappointed. The euro continues to weaken compared to the dollar.

    European bourses have recently outperformed U.S. equity indexes. Intraday Euro Stoxx50 relative strength (RSI) is 54.39, compared to 57.01 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.

    The Euro Stoxx50 trades -0.93% 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 3,210.42 close, the index set an early 3,224.29 intraday high, but reversed lower to a mid-morning 3,193.36 intraday low. An early afternoon rally brought the index to breakeven, but it subsequently weakened to its current 3,197.37. Market segments are mostly lower. Leaders are telecommunications, consumer goods, and basic materials, which are up +0.25%. Laggards are utilities, industrials, and financials, which are down at least -1.06%.

    This week, the Euro Stoxx 50, FTSE 100, CAC 40 and DAX are up +0.51%, +0.95%, +0.24%, and +1.80%, respectively. Last week, the Euro Stoxx 50, CAC 40 and DAX rose +0.20%, +0.43%, and +0.27%, respectively, while the FTSE 100 closed off -0.12%. In May, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +0.06%, +1.46%, +0.01%, and +1.56%, respectively. In April, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +1.16%, +2.75%, +2.18%, and +0.50%, respectively.

    In 2014, the indexes are higher. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.93%, +1.93%, +4.47%, and +2.11%, respectively. In 2013, the indexes closed up +18.0%, +14.4%, +18.0%, and +25.5%, respectively.

    1Q2014 SPX Earnings. Of 459 (of 499) reporting companies, 347 or 75.9% surprised positively on earnings, with an average +6.31% surprise average. Of reporting companies, 242 or 53.1% reported sales or revenues above estimates. The average sales/revenue surprise is +0.28%. Energy leads with respective +10.0% and -1.01% earnings and revenue surprises. Financials have a respective +5.63% and +0.03% earnings and revenue surprises. Consumer staples lags with respective +1.06% and -0.54% earnings and revenue surprises.

    Valuation. The SPX trades at 17.1x estimated 2013 earnings ($110.15), 16.0x estimated 2014 earnings ($117.95), 14.4x estimated 2015 earnings ($131.16), and 13.0x estimated 2016 earnings ($145.42). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2014, 2015, and 2016 earnings to grow +7.08%, +11.2%, and 10.9%, respectively.

    The KBW Bank Index (BKX) trades at 13.1x 2013 adjusted EPS ($5.16), 12.6x estimated 2014 earnings ($5.36), 11.3x estimated 2015 earnings ($6.01), and 10.1x 2016 earnings ($6.70). Analysts expect 2014, 2015, 2016 EPS will grow +3.90%, +12.0%, and +11.6%, 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 bullish, and equity options are bearish. The composite put/call ratio is 1.08, compared to 0.88 the prior day, and worse than 5- and 10-period moving averages of 0.89 and 0.89, respectively. The index put/call ratio is 0.72, compared to 0.61 the prior day, and worse than its 5- and 10-period moving averages of 0.65 and 0.64, respectively. The equity put/call ratio closed the day at 0.98, compared to 0.88 the prior day, and worse than its 5- and 10-period moving averages of 0.95 and 0.92, respectively.

    NYSE Volume, Breadth Indicators. Volume rose +2.65% to 620.14 million shares, compared to 604.14 million shares the prior day, 0.89x the 698.14 million shares 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged by -742 (compared to -392 the prior day) or 0.61:1. Up volume was 0.49:1 down volume.

    "In Correction" Market Outlook and Distribution Day Count. The market outlook remains unchanged at "in correction". 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 3rd at a record 1890.90, up +0.99% from the April 1st 1872.34 open. Today, the SPX opens -0.43% above the May 13th record close.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.08930%, compared to 0.08790% the prior day. USD 3-month LIBOR is 0.22585%, up from 0.22535% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US LIBOR-OIS (LOIS) spread is 13.785 bps, compared to 13.235 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 18.700 bps, compared to 18.000 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 -7.795 bps, compared to -7.052 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 1.37%, compared to 1.37% the prior day.

    · Japanese 10-year debt yields are 0.60%, compared to 0.60% the prior day.

    · Spanish and Italian 10-year debt yields are at their best levels since 2005. Spanish 10-year debt yields are 2.84%, compared to 2.86% the prior day. Italian 10-year debt yields are at 2.91%, compared to 2.91% the prior day. Spanish and Italian 10-year debt years peaked at 7.621% and 7.261%, respectively, in July 2012 and November 2011.

    · U.S. Treasury yields are lower, with 2- and 10-year maturities yielding 0.363% and 2.543%, respectively, compared to 0.367% and 2.543% Wednesday. The yield curve widened -0.400 bps, with the 2- to 10-year spread at +2.180%, compared to 2.176% 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, Japanese yen, and British pound. The dollar trades at US$80.275, compared to US$80.307 intraday high and US$80.073 the prior day, and mixed compared to its $79.810 50-day, US$80.181 100-day, and US$80.436 200-day averages. The euro trades at US$1.3655, compared to a US$1.3651 intraday low and US$1.3715 the prior day. The euro trades worse compared to its US$1.3820 50-day and US$1.3741 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥101.93, compared to ¥101.90 the prior day. The yen trades better than its 50-day moving average ¥102.35, and better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

    · Citigroup Economic Surprise Index improved to -11.40, compared to -12.70 the prior day, better than its recent -45.90 worst on April 7th, but continuing its string of consecutive negative readings since February 18th. The index is mixed compared to its respective -9.86 5-day and -15.40 10-day moving averages. Last year, on 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 -45.90 124-week low on April 7th . After a lag, the CESIUSD correlates with EPS revisions.

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

    Volatility, Skew:

    · The CBOE SPX Volatility Index (VIX) rose +0.33% to 12.17, compared to 12.13 at the prior close. The VIX is -8.24% below the 13.26 20-day moving average. Its 30-day high is 17.85. Its 30-day low is 11.88. 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 16.02, up +0.88% compared to 15.88 at the prior day's close. The V2X index trades -8.09% below its 17.43 20-day moving average, -21.6% below the 20.43 30-day high, and +4.81% above the 15.28 30-day low.

    · The Hang Seng volatility index (VHSI) closed at 14.87, down -1.46% compared to 15.09 at the prior close. The VHSI index trades -2.64% below its 15.27 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) fell -1.25% to 122.75, compared to 124.30 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:
     

    • At 8:30, May Empire manufacturing was 19.01, with 6.00 survey and 1.29 prior.
    • April MoM CPI was +0.3%, compared to +0.3% survey and +0.2% prior; ex-food and energy rise 0.2%, compared to +0.1% survey and +0.2% prior.
    • The latest weeks' initial and continuing jobless claims were 297K and 2667K, respectively, compared to 320K and 2690K survey and 321K and 2676K revised prior.
    • At 9:15, April MoM industrial production, with +0.0% survey and +0.7% prior.
    • April capacity utilization, with 79.1% survey and 79.2% prior.
    • At 10:00, May Philadelphia Fed business conditions, with 14.0 survey and 16.6 prior.


    Overseas Economic Reporting and News:
     

    • Japan - April consumer confidence was 37.0, compared to 36.7 survey and 37.5 prior.
    • Eurozone - April MoM CPI rose +0.2%, compared to +0.2% survey and +0.9% prior. 1Q2014 QoQ GDP rose +0.2%, compared to +0.4% survey and +0.2% prior. YoY GDP rose +0.9%, compared to +1.1% survey and +0.5% prior.
    • France - 1Q2014 QoQ GDP rose +0.0%, compared to +0.1% survey and +0.2% revised prior. YoY GDP rose +0.8%, compared to +0.9% survey and +0.8% prior.
    • Germany - 1Q2014 QoQ GDP rose +0.8%, compared to +0.7% survey and +0.4% prior. YoY GDP rose +2.3%, compared to +2.2% survey and +0.4% prior.
    • Italy - 1Q2014 QoQ GDP fell -0.1%, compared to +0.2% survey and +0.1% prior. YoY GDP fell -0.5%, compared to -0.1% survey and -0.9% prior.


    Company Ratings/News:
     

    • None.


    Wednesday's Trade. On better, but well below average NYSE volume, major U.S. equity indexes closed lower, off the prior day record closes of the SPX, DJI, and TRAN. The SPX, DJI, Nasdaq, and NYSE composite closed down -0.47%, -0.61%, -0.72%, and -0.44%, respectively. The SPX, DJI, and NYSE composite are higher in 2014. Market breadth was negative, with gainers 0.61x losing stocks. SPX market segments closed lower. Leaders were telecommunications, utilities, and basic materials, which rose at least +0.09%. Laggards were financials, industrials, and consumer services, which fell at least -0.80%.

    Other notable indexes closed mixed. The Russell 2000 (RTY) fell -1.61%, and closed -8.73% below its March 4th record close. The Nasdaq Internet Index (QNET) fell -0.78% and is in correction, -17.7% below its March 6th closing high. The Nasdaq Biotech Index (NBI) rose +0.49% and is in correction, down -15.3% from its recent February 25th record high.

    NYSE volume rose +2.65% to 620.14 million shares, compared to 604.14 million shares the prior day, 0.89x the 698.14 million share 20-day moving average volume. On the day, bond markets strengthened markedly. The U.S. 10-year yield opened at the 2.6134%, but trended lower through the session to 2.5800% ahead of the equity market open, and a late session 2.5231% intraday low. The yield ended at 2.5427%, down -6.62 bps compared to the 2.6089% prior close.

    From its prior day 1897.45 SPX record close, June 2014 SPX futures (SPM4) suggested a moderately modestly open. In early trading, the index fell to 1894, then traded narrowly until late afternoon, then declined to a late session 1885.77 intraday low. The index closed at 1888.53, -0.43% its prior day record high. 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 -0.87%, compared to the DJI's -0.61% loss. Both indexes closed off prior day record highs. From its prior 7,903.51 close, the TRAN fell sharply at the open, finding support at 7,850 though late afternoon, when the index weakened further to a late 7,820.95 intraday low. The index closed at 7,834.39. Volume rose +0.41% to 10.757 million shares, compared to 10.713 million shares the prior session, and 0.88x the 15-day moving average volume. The TRAN closed +1.72% and +3.14% above its 20- and 50-day moving averages, and +5.12% and +10.2% above its respective 100- and 200-day moving averages.

    Market volatility rose, as the CBOE SPX volatility index (VIX) closed at 12.17, compared to 12.13 at the prior close. The VIX set its early 12.51 intraday high, then fell to a late-morning 12.03 intraday low. The index moved narrowly through 3:00, then rose to 12.45 in the final hour. The VIX's all-time closing low is 9.31, on December 22, 1993. Its record high is 89.53 in December 2008. Its lifetime average is 20.01. The CBOE put/call SKEW fell -1.25% to 122.75, compared to 124.30 the prior session, above a neutral 115-120 range, but below 130, a level that correlates well with short-term market tops.

    The market's technical factors were little changed. The SPX relative strength (RSI) worsened to 56.23, compared to 60.69 the prior day, above the middle of 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 at an earlier record high, but above earlier oversold levels of 35.14 on August 27th and 39.19 on October 9th. This week, the SPX, DJI, Nasdaq, and NYSE composite are up +0.54%, +0.18%, +0.71%, and +0.47%, respectively, compared to last week, when the SPX, DJI, and NYSE composite closed up +0.81%, +1.36%, and +0.97%, respectively, while the Nasdaq closed off -0.09%. In May, the SPX, DJI, Nasdaq, and NYSE composite are up +0.24%, +0.20%, and +0.27%, respectively, while the Nasdaq is down -0.34%. In April, the SPX, DJI, and NYSE composite closed up +0.62%, +0.75%, and +0.94%, respectively, while the Nasdaq closed off -2.01%.

    In 2014, the SPX, DJI, and NYSE composite are up +2.17%, +0.23%, and +2.46%, respectively, while the Nasdaq is down -1.82%. 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 -1.56% to 67.67, compared to 68.74 at the prior day's close, its 25th consecutive close below 70.0, -7.19% below its 72.91 March 20th post-2008 closing high. The index gapped lower to open at 68.60 and fell to 67.80 by mid-morning, then eased through the session to a late 67.56 intraday low. Volume rose +10.8% to 35.594 million shares, compared to 32.124 million shares the prior day, and 0.77x the 46.273 million share 15-day moving average.

    Large cap banks underperformed the regional banks, as the KBW regional banking index (KRX) fell -2.24%.

    This week, the BKX is down -0.44%, compared to last week, when the BKX closed down -0.85%. In May, the BKX is down -1.11%, compared to April, when the BKX closed off -5.34%. In 2014, the BKX is down -2.30%, compared to the SPX's +2.17% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

    The BKX is now +14.3% better than the June 24, 2013, 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. On April 10th, the BKX fell below 70.00 and then eased consistently to the Mary 6th 67.13 closing low, its lowest close since early February. The BKX closed +107.8% 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 +75.7% in the same period.

    The BKX index closed -44.1% below its February 20, 2007, record 121.06 high. The BKX is up +263.4% from its 18.62 March 6, 2009, closing low, its low during the 2008-09 financial panic.

    Technical indicators worsened as the index surrendered its 20-day moving average. The index closed -1.23% and -3.36% below its respective 20- and 50-day moving averages, and -2.54% below and +2.57% above its respective 100- and 200-day moving average. The 20-day moving average fell -7 bps to 68.52. The 70.02 50-day moving average fell -5 bps. Its 100-day moving average was unchanged at 69.43, and the 200-day moving average rose +1 bp to 67.14. The 20-day closed (by -1.51 points) below the 50-day, and the negative gap widened -4 bps. The 50-day moving average closed (by +2.88 points) above the 200-day moving average, and the gap narrowed -5 bps. The 100-day moving average closed (by +2.29 points) above the 200-day moving average, and the gap fell -2 bps.

    The directional movement indicator worsened to -16.508, compared to -3.405 the prior day, its 27th consecutive negative reading. Relative strength fell to 41.66, compared to 48.53 the prior day, in the lower end of a neutral range, up from the recent 32.95 low on February 3rd, but down from an overbought 75.56 and 71.88 on January 9th and 10th, respectively. The recent low RSI level was 31.08 on November 14, 2012, which is also the date of the BKX's 2012 closing low. Next resistance is 68.36; next support is 67.27.

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

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