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U.S. Futures Stable After Yesterday's Rout; Japan End Week With Weakness; Europe Mixed

|Includes:J.C. Penney Company Inc. (JCP), JWN

This morning. U.S. equity futures are little changed following yesterday's sell off, and near the top of their morning trading range. JC Penny (NYSE:JCP) and Nordstrom (NYSE:JWN) reported better than expected earnings. In Asia, equity markets closed mixed, with greater weakness in Japan. In Europe, equities indexes are modestly lower. The dollar is mixed. Treasury 10-year yields are slightly higher following stronger than expected U.S. April housing starts and building permits. The worldwide sovereign bond market rally appears to be taking a pause. Spanish and Italian 10-year yields weakened markedly in the past 24 hours. Commodities are mixed. Monday's Nikkei 225 June 2014 (NKM4) equity futures are modestly higher.

Yesterday, the S&P 500 (SPX), DJ Industrials (Private:DJI), Nasdaq and DJ Transports (TRAN) suffered their worst day in the past 5 weeks, on stronger volume. The market outlook remains "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 -1.36% below its May 13th record close.

Economic reporting focuses on U.S. economic reports, while overseas reporting is light.

Trading desks again report another "gloomy" morning, with Japanese weakness, a modestly mixed China and now mixed Europe. Sovereign debt yields continue to suggest global growth concerns. Relative strength indicators don't suggest that the market is particularly overbought, though 17.0x price earnings multiples are well in excess of 15.9x historical average.

Thursday, on stronger volume, U.S. major equity indexes opened lower, sold off to mid-session lows, then gently improved through the afternoon. The S&P 500 (SPX), DJ Industrials (DJI), Nasdaq, and NYSE composite fell -0.94%, -1.01%, -0.76%, and -0.82%, respectively. The DJ Transports (TRAN) fell -0.68%. Momentum closed lower. The Russell 2000 (RTY) closed down -0.65%, and is now off -9.32% from if early March highs. The Nasdaq Internet (QNET) index fell -0.73%, and the Nasdaq Biotech (NBI) index fell -1.18%. The QNET and NBI are now well into correction, down -18.3% and -16.3%, respectively.

NYSE volume rose +21.0% to 1.07x its 20-day moving average. The SPX and NYSE composite are now +1.22% and +1.62% higher in 2014, respectively, while the DJI and Nasdaq are down -0.78% and -3.32%.

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 17.0 (compared to 17.1 the prior day) 2013 earnings multiple, attention focuses on 2014 earnings and valuations (17.0x times survey $117.96 2014 SPX operating earnings suggests a 2003.45 SPX level this year, a +7.09% rise).

Technicals worsened, as all the major indexes closed below their 20-day moving averages. Led by telecommunications, most SPX market segments closed lower. Market breadth was negative, and up volume lagged down volume. Volatility rose sharply. Treasury bond markets strengthened markedly. On the day, the U.S. Treasury 10-year bond yield fell -5.34 bps to 2.4893%, compared to 2.5427% at the prior close.

This morning, 10-year U.S. Treasury yields are up +0.89 bps at 2.4982%, 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 are unchanged at bearish to bullish, compared to bearish 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 top of a 1862-1869 trading range. After a fair value adjustment of +0.45 points, the SPM4 future prices at 1868.75, up +1.05 points. The SPX opens -0.40% below and +0.16% above its respective 20- and 50-day moving averages, and +1.33% and +4.77% above its 200-day moving averages. Initial resistance is 1885.22. Initial support is 1859.42, then 1847.99.

In Asia, equity markets closed with weakness in Japan, but a mixed and modest Chinese close. The Nikkei 225 (NYSEARCA:NKY) fell -1.41%, but better than its early afternoon session lows. The NKY remains in correction. On April 21st, its 50-day moving average moved below its 200-day moving average. Its 200-day moving average is now below its 100-day moving average. The Hang Sang index (HSI) closed down -0.08%, after narrowing moderate mid-session losses. The Shanghai composite (SHCOMP) rose +0.08%. 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 rise in Chinese non-performing loans.

This week, the HSI and SHCOMP are up +3.89% and +0.76%, respectively, while the NKY is down -0.73%. Last week, the NKY, HSI, and SHCOMP closed down -1.78%, -1.79%, and -0.75%, respectively. In May, the NKY is down -1.45%, the HSI is up +2.62%, and the SHCOMP is up +0.01%. 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 -13.5% and -2.55%, respectively, while the SHCOMP is down -4.23%. 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 -6.0 bps to 3.13%, compared to 3.19% 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 42.30, compared to 47.37 the prior day, up from an oversold 27.92 on February 4th, the most recent prior yearly low. The HSI RSI eased to 58.11, compared to 55.55 the prior day. The SHCOMP's RSI rose to 44.20, compared to 43.70 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 14,096.59, compared to 14,298.21 the prior day, -13.5% below its recent year-end 16,291.31 high and -63.8% below its late-1989 38,915.87 high close. The index opened lower and traded narrowly around 14,080 through late morning, then weakened to a mid-afternoon 14,016.49 intraday low. In the final hour, the index rallied to a late 14,108.44 intraday high. All market segments closed at least -0.81% lower. Leaders were consumer services, basic materials, and industrials. Laggards were financials, utilities, and telecommunications, which fell at least -1.78%. The index closed -13.5% below its recent December 31st 16,291.31 high.

In China, the HSI closed at 22,712.91, compared to 22,730.86 at the prior close. The index opened near 22,640 and fell quickly to the 22,555.59 intraday low. The index traded narrowly around 22,580 through early afternoon, then began a rally which buoyed the index to a late 22,718.07 intraday high. Market segments closed mixed. Leaders were telecommunications, financials, and industrials, which rose at least +0.21%. Laggards were basic materials, consumer goods, and technology, which fell at least -0.69%. The index closed -5.01% below its recent December 3rd 23,910.47 high, but +24.9% above its 18,185.59 June 4, 2012 low.

In Shanghai, the SHCOMP closed at 2,026.50, compared to 2,024.97 at the prior close, +3.92% above the 1,950.01 June 27, 2013 close, last year's low. The index traded narrowly around breakeven through mid-morning, then weakened to an early afternoon 2,012.72 intraday low. The index rallied and moved modestly higher in the final hour. Market segments closed mixed. Leaders were oil and gas, utilities, and telecommunications, which rose at least +0.37%. Laggards were basic materials, technology, and health care, which fell at least -0.16%.

In Europe, equities are modestly lower, with better strength in Milan. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -0.09%, -0.19%, -0.16%, and -0.28%, respectively. The Spanish IBEX 35 is up +0.25%. The Italian FTSE MIB is up +0.57%.

Economic reporting is light. Markets focus on yesterday's U.S. equity weakness, volatile sovereign bond yields (Spain and Italy 10-years have weakened materially in the past 24 hours) and currency and commodity developments. 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 48.33, compared to 48.32 at the prior close, in the lower end of 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 -2.12% below its 3,230.33 April 4th post-2008 high close, and -39.8% below its 5,249.55 March 31, 2000, all-time closing high. From its prior day 3,163.22 close, the index traded narrowly through the morning session, when it set its 3,171.16 intraday high, then reversed lower to an early afternoon 3,142.85 intraday low. The index recovered to breakeven by mid-afternoon and currently trades at 3,164.26. Market segments are mixed. Leaders are oil and gas, utilities, and health care, which are at least +0.395. Financials are down -0.02%. Laggards are basic materials, industrials, and telecommunications, which are down at least -0.39%.

This week, the Euro Stoxx 50 and CAC 40 are down -0.70% and -0.84%, respectively, while the FTSE 100 and DAX are up +0.22% and +0.47%. 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 FTSE 100 and DAX are up +0.73% and +0.24%, respectively, while the Euro Stoxx50 and CAC 40 are up +0.73%, and +0.24%, 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 +1.70%, +1.19%, +3.35%, and +0.77%, respectively. In 2013, the indexes closed up +18.0%, +14.4%, +18.0%, and +25.5%, respectively.

1Q2014 SPX Earnings. Of 463 (of 499) reporting companies, 351 or 75.8% surprised positively on earnings, with an average +6.14% surprise average. Of reporting companies, 246 or 53.3% reported sales or revenues above estimates. The average sales/revenue surprise is +0.21%. 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 +0.12% and -0.73% earnings and revenue surprises.

Valuation. The SPX trades at 17.0x estimated 2013 earnings ($110.15), 15.9x estimated 2014 earnings ($117.96), 14.3x estimated 2015 earnings ($131.16), and 12.9x estimated 2016 earnings ($145.41). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2014, 2015, and 2016 earnings to grow +7.09%, +11.2%, and 10.9%, respectively.

The KBW Bank Index (BKX) trades at 13.0x 2013 adjusted EPS ($5.16), 12.5x estimated 2014 earnings ($5.36), 11.1x estimated 2015 earnings ($6.01), and 10.0x 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 0.08840%, compared to 0.08930% the prior day. USD 3-month LIBOR is 0.22860%, up from 0.22585% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US LIBOR-OIS (LOIS) spread is 13.810 bps, compared to 13.485 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 19.600 bps, compared to 18.700 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 -6.896 bps, compared to -7.802 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 1.31%, compared to 1.31% the prior day.

· Japanese 10-year debt yields are 0.58%, compared to 0.60% the prior day.

· Spanish and Italian 10-year debt yields rose. Spanish 10-year debt yields are 3.01%, compared to 2.86% the prior day. Italian 10-year debt yields are at 3.11%, 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 0.355% and 2.498%, respectively, compared to 0.351% and 2.489% Thursday. The yield curve widened +0.490 bps, with the 2- to 10-year spread at +2.143%, compared to 2.138% 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, but weaker compared to the Japanese yen and British pound. The dollar trades at US$80.079, compared to US$80.112 intraday high and US$80.003 the prior day, and mixed compared to its $79.812 50-day, US$80.175 100-day, and US$80.429 200-day averages. The euro trades at US$1.3693, compared to a US$1.3685 intraday low and US$1.3710 the prior day. The euro trades worse compared to its US$1.3817 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 ¥101.39, compared to ¥101.58 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 -7.40, compared to -11.40 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 better compared to its respective -9.44 5-day and -11.16 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 mixed, with higher energy, lower precious metals, lower aluminum and copper, and mixed lower agriculture prices.

Volatility, Skew:

· The CBOE SPX Volatility Index (VIX) rose +8.22% to 13.17, compared to 12.17 at the prior close. The VIX is -0.32% below the 13.21 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 16.86, down -3.38% compared to 17.45 at the prior day's close. The V2X index trades -2.98% below its 17.38 20-day moving average, -17.5% below the 20.43 30-day high, and +10.3% above the 15.28 30-day low.

· The Hang Seng volatility index (VHSI) closed at 15.29, up +2.82% compared to 14.87 at the prior close. The VHSI index trades +0.56% above its 15.21 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE SKEW (SKEW) rose +0.69% to 123.60, compared to 122.75 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, April housing starts were 1,072K, compared to 980K survey and 947K revised prior.
  • April MoM housing start rose 13.2%, compared to +3.6% survey and +2.0% revised prior.
  • April MoM building permits rose 8.0%, compared to +1.3% survey and -1.1% revised prior.
  • At 9:55, May preliminary University of Michigan confidence, with 84.5 survey and 84.1 prior.


Overseas Economic Reporting and News:
 

  • Hong Kong - 1Q2014 QoQ GDP rose +0.2%, compared to +0.4% survey and +0.9% revised prior. YoY GDP rose +2.5%, compared to +3.0% survey and +2.9% revised prior.
  • Japan - March final MoM industrial production rose +0.7%, compared to +0.3% prior. YoY industrial production rose +7.4%, compared to +7.0% prior.
  • April consumer confidence was 37.0, compared to 36.7 survey and 37.5 prior.
  • France - 1Q2014 QoQ preliminary payrolls fell -0.1%, compared to -0.1% survey and +0.1% prior. QoQ wages rose +0.6%, compared to +0.2% prior.


Company Ratings/News:
 

  • None.


Thursday's Trade. On greater and above average NYSE volume, major U.S. equity indexes closed lower, falling for a 2nd consecutive day from SPX, DJI, and TRAN record closes on May 13th. The SPX, DJI, Nasdaq, and NYSE composite closed down -0.94%, -1.01%, -0.76%, and -0.82%, respectively. The DJI is now lower in 2014. The SPX and NYSE composite remain higher in 2014. Market breadth was decidedly negative, with gainers 0.43x losing stocks. Most SPX market segments closed lower. Leaders were telecommunications, which rose +0.10%, and utilities and consumer services, which fell at least -0.37%. Laggards were financials, oil and gas, and basic materials, which fell at least -1.11%.

Other notable indexes also closed lower. The Russell 2000 (RTY) fell -0.65%, and closed -9.32% below its March 4th record close. The Nasdaq Internet Index (QNET) fell -0.73% and is in correction, -18.3% below its March 6th closing high. The Nasdaq Biotech Index (NBI) fell -1.18% and is in correction, down -16.28% from its recent February 25th record high.

NYSE volume rose +21.0% to 750.26 million shares, compared to 620.14 million shares the prior day, 1.07x the 701.90 million share 20-day moving average volume. For a 2nd consecutive day, bond markets strengthened markedly. The U.S. 10-year yield opened at 2.5409%, rose to 2.5606% in early session, but moved lower following U.S. economic reports to a late morning 2.4716% intraday low. The yield ended at 2.4893%, down -5.34 bps compared to the 2.5427% prior close.

From its prior day 1888.53 SPX record close, June 2014 SPX futures (SPM4) suggested a moderately lower open. In early trading, the index opened at 1885, but fell sharply through 1870 by mid-morning, then declined to a late morning 1862.36 intraday low. The index closed at 1870.85, -1.36% off its May 13th record close. The index closed +74.1% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

The DJ Transportation index (TRAN) fell -0.68%, compared to the DJI's -1.01% loss, with 2 successive losses after both indexes closed May 13th at record highs. From its prior 7,834.39 close, the TRAN set an opening 7,817.32 intraday high, then fell sharply to initial support at 77,720 and a late morning 7,706.53 intraday low. The index improved through the afternoon and closed at 7,781.32, -1.55% below its recent record high close. Volume rose +4.19% to 11.208 million shares, compared to 10.757 million shares the prior session, and 0.94x the 15-day moving average volume. The TRAN closed +0.91% and +2.36% above its 20- and 50-day moving averages, and +4.33% and +9.32% above its respective 100- and 200-day moving averages.

Market volatility rose, as the CBOE SPX volatility index (VIX) closed at 13.17, compared to 12.17 at the prior close. The VIX opened at 12.80 and rose to a late morning 13.77 intraday high. The index eased to 13.40 by mid-afternoon and fell below 13.20 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 worsened, as indexes surrendered their 20-day moving averages. The SPX relative strength (RSI) worsened to 48.60, compared to 56.23 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 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 down -0.41%, -0.82%, -0.06%, and -0.36%, respectively. 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 down -0.70%, -0.81%, -1.10%, and -0.55%, respectively. 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 and NYSE composite are up +1.22% and +1.62%, respectively, while the DJI and Nasdaq are down +0.78% and -2.57%. 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 and above average volume, the BKX fell -1.05% to 66.96, compared to 67.67 at the prior day's close, its 26th consecutive close below 70.0, -8.16% below its 72.91 March 20th post-2008 closing high, and its lowest close since February 5th. The index gapped lower to open below 67.40 and fell to a mid-session 66.22 intraday low, then trended higher through the close. Volume rose +12.6% to 52.731 million shares, compared to 35.594 million shares the prior day, and 1.13x the 46.817 million share 15-day moving average.

Large cap banks underperformed the regional banks, as the KBW regional banking index (KRX) fell -0.52%.

This week, the BKX is down -1.49%, compared to last week, when the BKX closed down -0.85%. In May, the BKX is down -2.15%, compared to April, when the BKX closed off -5.34%. In 2014, the BKX is down -3.32%, compared to the SPX's +1.22% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

The BKX is now +13.3% 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 +105.7% 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 +74.1% in the same period.

The BKX index closed -44.7% below its February 20, 2007, record 121.06 high. The BKX is up +259.6% 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 200-day moving average. The index closed -2.10% and -4.29% below its respective 20- and 50-day moving averages, and -3.54% and -0.28% below its respective 100- and 200-day moving average. The 20-day moving average fell -12 bps to 68.40. The 69.96 50-day moving average fell -6 bps. Its 100-day moving average fell 1 bp to 69.42, and the 200-day moving average rose +1 bp to 67.15. The 20-day closed (by -1.56 points) below the 50-day, and the negative gap widened -5 bps. The 50-day moving average closed (by +2.81 points) above the 200-day moving average, and the gap narrowed -7 bps. The 100-day moving average closed (by +2.27 points) above the 200-day moving average, and the gap fell -2 bps.

The directional movement indicator worsened to -21.237, compared to -16.508 the prior day, its 28th consecutive negative reading. Relative strength fell to 37.84, compared to 41.66 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 67.61; next support is 66.26.

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

Stocks: JCP, JWN