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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 Follow Europe Higher; Asia Ends Mixed Despite Better Chinese Economic Growth 0 comments
    Jul 16, 2014 9:23 AM | about stocks: BAC, PNC, USB

    This morning. Since July 8, the market outlook is "uptrend under pressure", with 4 distributions in the past 7 sessions, including a Nasdaq distribution yesterday. Today, U.S. equity futures are moderately higher and near the top of their pre-market range. U.S. bank earnings continue with a better than expected 2Q2014 earnings report from Bank of America (NYSE:BAC), PNC Financial Services Group (NYSE:PNC) and US Bancorp (NYSE:USB). In Asia, equities closed higher. In Europe, equities are moderately weaker, with somewhat greater weakness in Madrid and Milan. The dollar is mixed. The U.S. Treasury 10-year yields are higher. Commodities are mixed. Thursday's Nikkei 225 September 2014 (NKU4) equity futures are modestly lower.

    Monday, on greater and slightly above average volume, major U.S. indexes rallied in early trading, then traded lower after release of Fed Chairman Yellen's written testimony, which included a cryptic remark on equity market valuations. Indexes ended the day mixed. The DJ Industrials (DJI) rose +0.03%, but fell -0.04% off its July 3rd record close. The S&P 500 (SPX), Nasdaq, and NYSE composite fell -0.19%, -0.54%, and -0.24%, respectively. This week, major indexes are at least +0.02% higher. In July, indexes are at least +0.19% higher. In 2014, the SPX, DJI, and Nasdaq are up +6.76%, +2.92%, +5.74%, and +5.44% higher, respectively.

    NYSE volume rose +23.4% to 1.003x its 20-day moving average.

    Other notable indexes were also mixed. The DJ Transports (TRAN) rose +0.38% and closed at a 2nd consecutive session record high. The Russell 2000 (RTY) fell -1.01%. The Nasdaq Internet (QNET) index fell -0.58%, and the Nasdaq Biotech (NBI) index fell -2.28%. The QNET is down -8.84%, from recent highs, while the NBI closed -7.60% below its recent high.

    Trading desks note mixed Asian equity markets overnight, but strong European trading as fears of a Chinese economic "hard landing", Portuguese banking insolvency, and European economic malaise abate. Regarding yesterday's trade, action was all in response to Yellen's written testimony, which was interpreted as somewhat more hawkish than expected. But earnings (principally the financials) surprised quite positively and financials equities rebounded strongly and outperformed through the session. Desk flows were active through the morning, then quieted during the afternoon. The equity bias appears higher, as sentiment improves and "yield reach" supports rising valuations.

    The 2Q2014 earnings seasons began June 18th, and now 41 of 500 SPX companies have reported with respective +10.1% and +1.99% adjusted EPS and revenues surprises. Financials lead with respective +16.3% and +3.80% EPS and revenue surprises. In 1Q2014, 499 of 499 SPX companies reported with respective +5.91% EPS and +0.20% revenue surprises.

    Forward estimates have moved up. Respective estimates for 2014, 2015 and 2016 are now $118.92, $132.35, and $146.55, respectively compared to $117.20, $130.50 and $144.96 at March-end, respective increases of +1.47%, +1.42% and +1.10%. Price earnings multiples remain elevated. With SPX equities trading at a 17.3x (compared to 17.3x the prior day) average 2014-15 earnings ($125.64), attention focuses on 2014-15 earnings and valuations (17.3x times survey 2014-15 SPX average operating earnings suggests a 2167.72 SPX level in the next year, a +9.85% rise from yesterday's close).

    Technicals were little changed. Most SPX market segments closed lower. Market breadth was negative, and up volume lagged down volume. Volatility rose, but remains well below average historical levels. Treasury bond markets ended flat. On the day, the U.S. Treasury 10-year bond yield was unchanged at 2.5468%, compared to 2.5468% at the prior close.

    This morning, 10-year U.S. Treasury yields are up +0.88 bps at 2.5540%, compared to the prior close. World sovereign bond markets are stronger. Spanish and Italian 10-year debt yields are 2.65% and +2.82%, respectively, compared to 2.71% and +2.85% the prior day.

    U.S. options markets are unchanged at neutral to bullish, compared to neutral to bullish the prior day. The CBOE SKEW fell -2.16% to 136.92, compared to 139.94 the prior day, well above 130, a level that correlates well with short-term market tops. The SKEW closed at a record 143.60 on June 20th.

    In pre-market futures trading, September SPX equity futures (SPM4) price near the top of their 1967-1978 trading range. After a fair value adjustment of -1.17 points, the SPU4 future prices at 1976.00, up +9.17 points. The SPX opens +0.42% and +2.20% above its respective 20- and 50-day moving averages, and +4.03% and +7.26% above its 200-day moving averages. Initial resistance is 1982.09. Initial support is 1964.91, then 1956.53.

    "Uptrend Under Pressure" Market Outlook and Distribution Day Count. On July 9th, the market outlook worsened to "uptrend under pressure", as distribution day counts mounted. Since May 27th, distribution days number 6 for the SPX, DJI, and NYSE composite, and 6 for the Nasdaq.

    On May 27th, the market outlook improved to "confirmed uptrend", ending a period of market "in correction" that began on April 4th. The SPX closed July 3rd at a record 1985.44, +9.35% above the 1815.69 close on April 11th, the recent low close. On February 3rd, the Nasdaq closed at its 3,996.96 year-to-date low, but then recovered +11.6% to the July 3rd 4,458.65 multi-year record close.

    In Asia, equity markets closed mixed. The Nikkei 225 (NYSEARCA:NKY) fell -0.10%. The Hang Seng (HSI) Index rose +0.27%. The Shanghai SE composite (SHCOMP) fell -0.15%. The NKY, HSI, and SHCOMP 50-day moving averages are below their respective 200-day moving averages. Today's volumes are unavailable.

    Economic reporting focused on Chinese 2Q2014 YoY GDP, which at +7.5% slightly exceeded survey. Other foci were the direction of monetary policy, currency, and commodity price developments.

    This week, the NKY, HSI, and SHCOMP are up +1.42%, +1.25%, and +0.99%, respectively, compared to the prior week, when the NKY closed down -1.77%, the HSI fell -1.33% , and the SHCOMP lost -0.60%. In July, the NKY is up +1.43%, the HSI is up +1.43%, and the SHCOMP is up +0.92%. In June, the NKY gained +3.62%, the HSI gained +0.47%, and the SHCOMP gained +0.58%.

    In 2014, the NKY is down -5.60%, the HSI is up +0.93%, and the SHCOMP is down -2.30%. 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, and the SHIBO 7-day rate rose +4 bps at 3.66%, compared to 3.62% 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 are in a neutral ranges. The NKY RSI eased to 58.85, compared to 59.69 the prior session, up from an oversold 27.92 on February 4th, the most recent prior yearly low. The HSI RSI rose to 60.54, compared to 58.72 the prior day. The SHCOMP's RSI rose to 57.25, compared to 58.73 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 15,379.30, compared to 15,395.16 the prior day, -5.60% below its recent year-end 16,291.31 high and -60.5% below its late-1989 38,915.87 high close. The index rallied to a mid-morning 15,423.96 intraday high, then fell back to breakeven, where it traded until it weakened late in the session to a modest loss. Most market segments closed lower. Leaders were utilities, health care, and consumer staples, which closed up at least +0.04%. Financials lost -0.08%. Laggards were energy, consumer discretionary, and materials, which fell at least -0.19%.

    In China, in Shanghai, the SHCOMP closed at 2,067.28, compared to 2,070.36 at the prior close, +6.01% above the 1,950.01 June 27, 2013 close, last year's low. The index traded narrowly through the early afternoon, then weakened to an early afternoon 2,061.69 intraday low. Most market segments closed lower. Leaders were utilities and energy, which rose at least +0.13%, while financials shed -0.03%. Laggards included consumer discretionary, health care, and technology, which fell at least -0.47%.

    In Europe, equity indexes have rallied strong, with greater strength in Madrid and Milan. The Euro Stoxx 50, FTSE 100, CAC 40, and DAX are up +1.39%, +1.05%, +1.40%, and +1.34%, respectively. The Spanish IBEX 35 is up +1.67%. The Italian FTSE MIB is up +2.24%.

    Economic reporting is light. Commentary focuses on Chinese economic growth, and currency and commodity developments. The euro is weaker compared to the dollar.

    European bourses have recently underperformed U.S. equity indexes. Intraday Euro Stoxx50 relative strength (RSI) is 45.94, compared to 40.24 at the prior close, in the lower end of a neutral (30-70) range, better than its recent February 5th 33.57 closing low, which coincided with its 2014 low. The index's lowest recent RSI level was 25.77 on June 24, 2013, which marked the year's 2,494.54 closing low.

    The Euro Stoxx50 trades -39.1% below its 5,249.55 March 31, 2000, all-time closing high. From its prior day 3,153.75 close, the index opened higher and has rallied to a mid-afternoon 3,200.02 intraday high. The index currently trades at 3,199.58. Most market segments are at higher. Leaders are financials, energy, and telecommunications, which are up at least +1.56%. Laggards are consumer discretionary and consumer staples, which are up at least +1.00%, and technology, which is down -0.23%.

    This week, the Euro Stoxx50, FTSE 100, CAC, and DAX are up +1.34%, +1.40%, +1.21%, and +1.96%, respectively, compared to the prior week, when the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -3.47%, -2.56%, -3.41%, and -3.42%, respectively. In July, the FTSE 100 and DAX are up +0.60% and +0.23%, respectively, while the Euro Stoxx50 and CAC 40 are down -0.89% and -1.23%. In June, the Euro Stoxx50 closed up +0.03%, while the FTSE 100, CAC 40, and DAX closed down -0.88%, -1.53%, and -0.84%, respectively.

    In 2014, the indexes are higher. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.91%, +0.52%, +1.69%, and +3.18%, respectively. In 2013, the indexes closed up +18.0%, +14.4%, +18.0%, and +25.5%, respectively.

    2Q2014 SPX Earnings. The 2nd quarter earnings season began June 18th, and now 41 of 500 SPX reporting firms have reported, with respective +10.1% EPS and +1.99% revenue surprises. Financials (10 of 84 reporting) lead with a 16.3% EPS surprise and +3.80% revenue surprise.

    In 1Q2014, of 499 (of 499) reporting companies, 370 or 74.5% surprised positively on earnings, with an average +5.91% surprise average. Of reporting companies, 263 or 53.0% reported sales or revenues above estimates. The average sales/revenue surprise was +0.20%. Energy led with respective +10.0% and -1.01% earnings and revenue surprises. Financials had a respective +5.67% and +0.26% earnings and revenue surprises. Consumer staples lagged with respective +0.34% and -0.66% earnings and revenue surprises.

    Valuation. The SPX trades at 17.9x estimated 2013 earnings ($110.15), 16.6x estimated 2014 earnings ($118.92), 14.9x estimated 2015 earnings ($132.35), and 13.5x estimated 2016 earnings ($146.559). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2014, 2015, and 2016 earnings to grow +7.96%, +11.3%, and 10.7%, respectively.

    The KBW Bank Index (BKX) trades at 14.0x 2013 adjusted EPS ($5.16), 13.3x estimated 2014 earnings ($5.44), 12.1x estimated 2015 earnings ($5.97), and 10.8x 2016 earnings ($6.66). Analysts expect 2014, 2015, 2016 EPS will grow +5.34%, +9.80%, and +11.6%, 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 bullish, index options are bullish, and equity options are neutral. The composite put/call ratio is 0.82, compared to 0.88 the prior day, and better than 5- and 10-period moving averages of 0.90 and 0.83, respectively. The index put/call ratio is 0.80, compared to 0.98 the prior day, and better than its 5- and 10-period moving averages of 1.04 and 1.08, respectively. The equity put/call ratio closed the day at 0.82, compared to 0.82 the prior day, and better than its 5- and 10-period moving averages of 0.83 and 0.86, respectively.

    NYSE Volume, Breadth Indicators. Volume rose +23.4% to 731.01 million shares, compared to 592.21 million shares the prior day, 1.00x the 729.05 million share 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged by -951 (compared to +874 the prior day) or 0.52:1. Up volume was 0.67:1 down volume.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.09240%, compared to 0.09420% the prior day. USD 3-month LIBOR is 0.23360%, unchanged from 0.23310% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US LIBOR-OIS (LOIS) spread is 13.860 bps, compared to 13.710 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 14.100 bps, compared to 14.000 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 curve is -10.606 bps, compared to -10.677 bps the prior day, up from a trough of -147.00 bps on December 14, 2011, and within a normal -10 bps and -40 bps range.

    · German 10-year debt yields 1.20%, compared to 1.20% the prior day.

    · French 10-year debt yields 1.41%, compared to 1.42% the prior day.

    · Japanese 10-year debt yields are 0.55%, compared to 0.54% the prior day.

    · Spanish and Italian 10-year debt yields are lower. Spanish 10-year debt yields are 2.65%, compared to 2.71% the prior day, modestly above the U.S. 10-year yield and compares to its 2.575% June 9th low. Italian 10-year debt yields are at 2.82%, compared to 2.85% the prior day and their June 9th 2.704% recent low. Spanish and Italian 10-year debt yields peaked at 7.62% and 7.26%, respectively, in July 2012 and November 2011.

    · U.S. Treasury yields are mixed, with 2- and 10-year maturities yielding 0.476% and 2.545%, respectively, compared to 0.476% and 2.547% Tuesday. The yield curve narrowed -0.180 bps, with the 2- to 10-year spread at 2.069%, compared to 2.071% the prior day. In the past year, the 2- and 10-year spread varied from a low of +2.074% on July 11, 2014, 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$80.543, compared to US$80.553 intraday high and US$80.390 the prior day, and better compared to its $80.275 50-day, US$80.046 100-day, and US$80.265 200-day averages. The euro trades at US$1.3536, compared to a US$1.3531 intraday low and US$1.3568 the prior day. The euro trades worse compared to its US$1.3632 50-day and US$1.3728 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥101.74, compared to ¥101.68 the prior day. The yen trades better than its 50-day moving average ¥101.87, and better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

    · Citigroup Economic Surprise Index improved to -15.70, compared to -15.90 the prior day. The index is mixed compared to its respective -14.262 5-day and -13.38 10-day moving averages. From a +72.70 high on January 15th, the index subsequently trended lower and turned negative on February 19th and fell to a -45.90 124-week low on April 7th. The index turned briefly positive in the latter half of May, but has been negative since May 29th. After a lag, the CESIUSD correlates with EPS revisions.

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

    Volatility, Skew:

    · The CBOE SPX Volatility Index (VIX) rose +1.18% to 11.96, compared to 11.82 at the prior close. The VIX is +4.45% above the 11.90 20-day moving average. Its 30-day high is 13.23. Its 30-day low is 10.28. Its all-time closing low is 9.31 on December 22, 1993. The long-term average is 20.00.

    · The Euro Stoxx 50 volatility index (V2X) is 14.65, down -7.71% compared to 14.46 at the prior day's close. The V2X index trades +1.28% above its 14.46 20-day moving average, -18.5% below the 17.96 30-day high, and +19.1% above the 12.30 30-day low.

    · The Hang Seng volatility index (VHSI) closed at 12.69, down -1.63% compared to 12.90 at the prior close. The VHSI index trades +0.82% above its 12.59 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) fell -2.16% to 136.92, compared to 139.94 the prior session, above a neutral reading (115-120) and since June 19th, above 130, a level that correlates well with short-term market tops. The recent record high was 143.26 on June 20, 2014. Its recent low was 112.47 on May 25, 2013. Spikes in excess of 130 correlate well with short-term market tops, as occurred last December, ahead of market declines last January. 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:

    • The latest week's MBA mortgage applications fell -3.6%, compared to +1.9% prior.
    • At 8:30, June MoM PPI final demand rose +0.4%, compared to +0.2% survey and -0.2% prior. MoM PPI ex food and energy rose +0.2%, compared to +0.2% survey and -0.1% prior.
    • At 9:15, June MoM industrial production, with +0.3% survey and +0.6% prior.
    • June capacity utilization, with 79.3% survey and 79.1% prior.
    • June manufacturing production, with +0.3% survey and +0.6% prior.
    • At 2:00, U.S. Federal Reserve July Beige Book.

    Overseas Economic Reporting and News:

    • China - YoY 2Q2014 GDP rose +7.5%, compared to +7.4% survey and prior.

    Company Ratings/News:

    • Bank of America (BAC) - Reported 2Q2014 adjusted EPS of $0.410, compared to the $0.291 estimate, and $21.960 billion in revenues, compared to the $21.632 billion estimate.
    • PNC Financial Services (PNC) - Reported 2Q2014 adjusted EPS of $1.790, compared to the $1.779 estimate, and $3.857 billion in revenues, compared to the $3.798 billion estimate.
    • US Bancorp (USB) - Reported 2Q2014 adjusted EPS of $0.780, compared to the $0.766 estimate, and $4.974 billion in revenues, compared to the $4.920 billion estimate.

    Tuesday's Trade. On greater and slightly above average NYSE volume, major U.S. equity indexes closed modestly mixed. Both the DJ Industrials and Transports closed higher, up +0.03% and +0.38%, respectively, with the TRAN at a new record high. The SPX, Nasdaq, NYSE composite fell -0.19%, -0.54%, and -0.24%, respectively. In July, indexes are at least +0.19% higher. The SPX, DJI, Nasdaq, and NYSE composite are at least +2.92% higher in 2014. Market breadth was negative, with gainers 0.52x losing stocks. Most SPX market segments closed lower. Leaders were financials, telecommunications, and utilities, which rose at least +0.51%. Laggards were energy, consumer staples, and health care, which fell at least -0.44%.

    Other notable indexes closed lower. The Russell 2000 (RTY) fell -1.01% and closed -4.54% below its March 4th record high. The Nasdaq Internet Index (QNET) fell -0.58% and is down -8.84% below its March 6th closing high. The Nasdaq Biotech Index (NBI) fell -2.28%, -7.60% below its February 25th record high.

    NYSE volume rose +23.4% to 731.01 million shares, compared to 592.21 million shares the prior day, 1.003x the 729.05 million share 20-day moving average volume. Bond markets were unchanged. The U.S. 10-year yield moved narrowly through session, with the exception of the period around Yellen's Senate testimony, falling to the 2.5187% intraday low after release of her written testimony, and rising to the 2.5685% intraday high during her oral testimony and Q&A. The index ended at 2.5468%, unchanged compared to the 2.5468% prior close.

    From its prior day 1972.83 SPX close, September 2014 SPX futures (SPM4) suggested a higher open. The index rose to an early 1982.52 intraday high, then weakened on the release of Yellen's confusing written testimony. The index trended lower to an early afternoon 1965.34 intraday low, then improved through mid-afternoon to resistance at 1975. The index closed at 1973.28, +83.6% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

    From its prior day 8,254.31 close, the DJ Transportation index (TRAN) rose +0.38%, compared to the DJI's +0.03% gain. At the open, the index rallied sharply to the 8,364.15 intraday high, but eased back to breakeven by mid-morning. After trading narrowly around breakeven through early afternoon, then rose through the session's remainder. The TRAN closed at a record 8,345.08, its 2nd consecutive record close. Volume rose +46.5% to 15.160 million shares, compared to 13.077 million shares the prior session, and 1.13x the 15-day moving average volume. The TRAN closed +1.67% and +3.55% above its respective 20- and 50-day moving averages, and +7.08% and +12.0% above its respective 100- and 200-day moving averages.

    Market volatility rose +1.18%, as the CBOE SPX volatility index (VIX) closed at 11.96, compared to 11.82 at the prior close. The index set and early 11.46 intraday low, then spiked on release of Yellen's written testimony and set a 12.47 intraday high as her oral testimony ended. 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 -2.16%, to 136.92, compared to 139.94 the prior session, above a neutral 115-120 range, and well above 130, a level that correlates well with short-term market tops. Its record 143.26 high came on June 20th.

    The market's technical factors were little changed. The SPX relative strength (RSI) fell to 59.54, compared to 62.00 the prior day, in a neutral range, down from an overbought 73.73 on June 9th and up from an oversold 31.24 on February 3rd. The RSI compares to an overbought 71.26 on December 31st, when the SPX closed at an earlier record high, and compares to earlier oversold levels of 35.14 on August 27th and 39.19 on October 9th.

    Last week, the SPX, DJI, Nasdaq, and NYSE composite are up +0.29%, +0.69%, +0.02%, and +0.27%, respectively. The prior week, the SPX, DJI, Nasdaq, and NYSE composite closed down -0.90%, -0.73%, -1.57%, and -1.52%, respectively. In July, the SPX, DJI, and Nasdaq are up +0.67%, +1.39%, and +0.19%, respectively, while the NYSE composite is down -0.13%, respectively. In June, the SPX, DJI, Nasdaq, and NYSE composite rose +1.91%, +0.65%, +3.90%, and +2.07%, respectively.

    In 2014, the SPX, DJI, Nasdaq, and NYSE composite are up +6.76%, +2.92%, +5.74%, and +5.44%, respectively. In 2013, the SPX, DJI, Nasdaq, and NYSE composite closed up +29.6%, +26.5%, +38.2%, +23.2%, respectively. All closed at least +5.91% higher in 2012.

    KBW Bank Index (BKX). On higher and above 15-day average volume, the BKX rose +1.35% to 72.18, compared to at the prior day's close, its 28th consecutive close above 70, but -1.00% below its 72.91 March 20th post-2008 closing high. The index gapped higher and found resistance at 72.18 in early trading, then traded narrowly to the close. Volume rose +15.7% to 44.620 million shares, compared to 38.580 million shares the prior day, and 1.15x the 38.197 million share 15-day moving average.

    Large cap banks outperformed the regional banks, as the KBW regional banking index (KRX) rose +0.91%.

    This week, the BKX is up +1.70%, compared to last week, the BKX is down -1.95%. In July, the BKX is up +1.22%, compared to June, when the BKX rose +3.48%. In 2014, the BKX is up +4.22%, compared to the SPX's +6.76% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

    The BKX is now +22.0% 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 May 15th 66.81 closing low, its lowest close since early February. The BKX closed +121.7% 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 +83.6% in the same period.

    The BKX index closed -40.4% below its February 20, 2007, record 121.06 high. The BKX is up +287.7% from its 18.62 March 6, 2009, closing low, its low during the 2008-09 financial panic.

    Technical indicators improved as the index recaptured its 20-day moving average. The index closed +1.05% and +3.24% above its respective 20- and 50-day moving averages, and +3.09% and +5.51% above its respective 100- and 200-day moving average. The 20-day moving average rose +19 bps to 69.28. The 69.92 50-day moving average rose +8 bps. Its 70.01 100-day moving average rose +4 bps, and the 200-day moving average rose +5 bps to 68.41. The 20-day closed (by +1.51 points) above the 50-day, and the gap widened +3 bps. The 50-day moving average closed (by +1.51 points) above the 200-day moving average, and the gap widened +2 bps. The 100-day moving average closed (by +1.61 points) above the 200-day moving average, and the gap was unchanged.

    The directional movement indicator is +14.643, compared to +15.228 the prior day, extending its string of positive readings since May 23rd. Relative strength rose sharply to 60.47, compared to 52.78 the prior day, in a neutral range, down from an overbought 73.14 on June 9th, but up from the recent 32.95 low on February 3rd. The lowest recent RSI level was 31.08 on November 14, 2012, which is also the date of the BKX's 2012 closing low. Next resistance is 72.51; next support is 71.60.

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

    Themes: SPX, DJI, RTY, TRAN, CCMP, NYA, VIX, SKEW, NKY, EURUSD, USGG10YR, HSI, SHCOMP, SX5E, CAC, DAX, FTSE, JPY, GBP, EUR Stocks: BAC, PNC, USB
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Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.