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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 Rise Despite MH17, Sanctions, And Gaza; Asia Ends Mixed; Europe Slides Again 0 comments
    Jul 18, 2014 9:13 AM | about stocks: COF, GE, IBM

    This morning. Since July 8, the market outlook is "uptrend under pressure", after 5 distributions in the past 9 sessions. Today, U.S. equity futures are modestly higher and near the top of their pre-market range. In Asia, equities closed mixed, but with weakness in Tokyo. In Europe, equities are also weaker. The dollar is mixed. The U.S. Treasury 10-year yields are lower. Commodities are mixed. Monday's Nikkei 225 September 2014 (NKU4) equity futures are modestly higher.

    Thursday, on mixed but largely greater though below average volume, the S&P 500 Index (SPX), Nasdaq, and NYSE composite distributed, with the majority of the losses following news of the missile downing of MH17 in eastern Ukraine. The SPX, DJI, Nasdaq, and NYSE composite fell -1.18%, -0.94%, -1.41%, and -1.16%, respectively. This week, major indexes are mixed, as the DJI remains +0.19% higher, while other major indexes are at least -0.48% lower. In July, indexes are similarly mixed, with the DJI up +0.89%, while the others are at least -0.11% lower. In 2014, the SPX, DJI, and Nasdaq and NYSE composite are up +5.94%, +2.41%, +4.47%, and +4.71% higher, respectively.

    NYSE volume rose +4.48% to 0.96x its 20-day moving average.

    Other notable indexes also fell. The DJ Transports (TRAN) fell -1.41% from its prior session record close. Notably, the Russell 2000 (RTY) fell -1.56%. The Nasdaq Internet (QNET) index fell -1.65%, and the Nasdaq Biotech (NBI) index fell -2.32%. The QNET and NBI are again in correction, down -10.8% and -10.9% from their recent record highs.

    Trading desks note a surprisingly quiet overnight, with the MH17 downing dominating the news and the start of an Israeli ground offensive into Gaza. Asia equities ended mixed, with Tokyo down by about -1%, but much better at its close than at the start of its trading day. Europe is moderately lower, but better than its mid-session worst. Sentiment has deteriorated, due to valuations, Russian sanctions, and suggestions that Yellen is "behind the curve". Regarding yesterday's trade, markets found the combination of enhanced U.S. sanctions and the ML84 downing too great to bear. Activity levels were never particularly heavy, with a busier open due to the numerous earnings reports. The equity bias appears higher, as sentiment improves and "yield reach" supports rising valuations.

    The 2Q2014 earnings seasons began June 18th, and now 74 of 500 SPX companies have reported with respective +7.73% and +1.88% adjusted EPS and revenues surprises. Financials (19 of 84 reporting) lead with respective +15.0% and +4.112% 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 $119.17, $132.58, and $146.87, respectively compared to $118.05, $131.36 and $145.70 at June-end, respective increases of +0.95%, +0.93% and +0.80%. Price earnings multiples remain elevated. With SPX equities trading at a 17.1x (compared to 17.3x the prior day) average 2014-15 earnings ($125.88), attention focuses on 2014-15 earnings and valuations (17.1x times survey 2014-15 SPX average operating earnings suggests a 2152.96 SPX level in the next year, a +9.85% rise from yesterday's close).

    Technicals worsened as the SPX, Nasdaq, and NYSE composite surrendered their respective 20-day moving averages. Led lower by industrials, all SPX market segments closed at least -0.48% lower. Market breadth was negative, and up volume lagged down volume. Volatility surged, but remains below average historical levels. Treasury bond markets strengthened. On the day, the U.S. Treasury 10-year bond yield fell -8.02 bps to close at 2.4458%, compared to 2.5260% at the prior close.

    This morning, 10-year U.S. Treasury yields are up +3.06 bps at 2.4764%, compared to the prior close. World sovereign bond markets are mixed. Spanish and Italian 10-year debt yields are 2.62% and +2.81%, respectively, compared to 2.63% and +2.79% the prior day.

    U.S. options markets worsened to bearish to bullish, compared to neutral to bullish the prior day. The CBOE SKEW fell -2.38% to 134.86, compared to 134.86 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 1943-1959 trading range. After a fair value adjustment of -1.48 points, the SPU4 future prices at 1956.50, up -4.48 points. The SPX opens -0.46% below and +1.22% above its respective 20- and 50-day moving averages, and +3.10% and +6.27% above its 200-day moving averages. Initial resistance is 1974.75. Initial support is 1948.54, then 1938.96.

    "Uptrend Under Pressure" Market Outlook and Distribution Day Count. Since July 9th, the market outlook is " uptrend under pressure". Yesterday, volume rose on most exchanges, though DJI volume fell about -10%. Since May 27th, distribution days number 7 for the SPX, Nasdaq, and NYSE composite, and 6 for the DJI.

    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 -1.01%. The Hang Seng (HSI) Index fell -0.28%, but the Shanghai SE composite (SHCOMP) managed a +0.17% gain. The NKY, HSI, and SHCOMP 50-day moving averages are below their respective 200-day moving averages. Today's volumes are unavailable.

    Economic reporting was light. Other foci were ML84 and Gaza developments, the direction of monetary policy, currency, and commodity price developments.

    This week, the NKY, HSI, and SHCOMP closed up +0.34%, +0.95%, and +0.59%, 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 +0.35%, the HSI is up +1.14%, and the SHCOMP is up +0.52%. In June, the NKY gained +3.62%, the HSI gained +0.47%, and the SHCOMP gained +0.58%.

    In 2014, the NKY is down -6.60%, the HSI is up +0.64%, and the SHCOMP is down -2.69%. 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, but the SHIBO 7-day rate was unchanged at 3.65%, compared to 3.65% 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 53.29, compared to 58.34 the prior session, up from an oversold 27.92 on February 4th, the most recent prior yearly low. The HSI RSI rose to 57.37, compared to 60.43 the prior day. The SHCOMP's RSI rose to 53.29, compared to 51.89 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 15,215.71, compared to 15,370.26 the prior day, -6.60% below its recent year-end 16,291.31 high and -60.9% below its late-1989 38,915.87 high close. The index fell to an early 15,110.45 intraday low, but improved through most of the session to end near the early afternoon 15,220.50 intraday high. All market segments closed at least -0.02% lower. Leaders were energy, utilities, and telecommunications. Laggards were financials, consumer discretionary, and materials, which fell at least -1.15%.

    In China, in Shanghai, the SHCOMP closed at 2,059.07, compared to 2,055.59 at the prior close, +5.59% above the 1,950.01 June 27, 2013 close, last year's low. The index gapped lower, set an early 2,046.04 intraday low, then reversed higher by mid-morning and rose to an early afternoon 2,066.89 intraday high. The index eased back to breakeven by mid-afternoon, then eased higher to the close. Most market segments closed higher. Leaders were consumer staples, telecommunications, and health care, which rose at least +0.30%. Laggards included energy, technology, and utilities, which fell at least -0.02%.

    In Europe, equity indexes are moderately lower, with somewhat greater weakness in Madrid. The Euro Stoxx 50, FTSE 100, CAC 40, and DAX are down -0.36%, -0.30%, -0.17%, and -0.69%, respectively. The Spanish IBEX 35 is down -0.75%. The Italian FTSE MIB is down -0.23%.

    Economic reporting is light. Commentary focuses on further U.S. and Eurozone economic sanctions on Russia after yesterday's downing of ML84. The euro is weaker compared to the dollar.

    European bourses have recently underperformed U.S. equity indexes. Intraday Euro Stoxx50 relative strength (RSI) is 69.50, compared to 41.94 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 -40.1% below its 5,249.55 March 31, 2000, all-time closing high. From its prior day 3,157.82 close, the index opened lower and set an early 3,132.12 intraday low, then rallied immediately nearly to breakeven, when it set an early 3,156.94 intraday high. The index fell back to 3,135 by mid-session, then has traded narrowly. The index currently trades at 3,143.61. Most market segments are at lower. Leaders are energy and technology, which are up at least +0.07%, while health care fell -0.13%. Laggards are telecommunications, industrials, and consumer discretionary, which are down at least -0.64%.

    This week, indexes are mixed, with the FTSE 100 and DAX up +0.40%, and +0.21%, respectively, while the Euro Stoxx50 and CAC 40 are down -0.36% and -0.20%. In July, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.56%, -0.40%, -2.60%, and -1.49%, respectively. 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 mixed. The Euro Stoxx50, CAC 40, and DAX are up +1.18%, +0.28%, and +1.41%, respectively, while the FTSE 100 is down -0.48%. 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 74 of 500 SPX reporting firms have reported, with respective +7.73% EPS and +1.88% revenue surprises. Financials (19 of 84 reporting) lead with a 15.0% EPS surprise and +4.12% 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 17.8x estimated 2013 earnings ($110.15), 16.4x estimated 2014 earnings ($119.17), 14.8x estimated 2015 earnings ($132.58), and 13.3x estimated 2016 earnings ($146.87). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2014, 2015, and 2016 earnings to grow +8.19%, +11.3%, and 10.8%, respectively.

    The KBW Bank Index (BKX) trades at 13.6x 2013 adjusted EPS ($5.16), 12.8x estimated 2014 earnings ($5.47), 11.7x estimated 2015 earnings ($5.97), and 10.5x 2016 earnings ($6.67). Analysts expect 2014, 2015, 2016 EPS will grow +6.01%, +9.05%, and +11.8%, respectively.

    Composite, index, and equity options. 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 0.99, compared to 0.81 the prior day, and worse than 5- and 10-period moving averages of 0.88 and 0.82, respectively. The index put/call ratio is 0.78, compared to 1.09 the prior day, and better than its 5- and 10-period moving averages of 0.98 and 1.05, respectively. The equity put/call ratio closed the day at 1.15, compared to 0.67 the prior day, and better than its 5- and 10-period moving averages of 0.84 and 0.88, respectively.

    NYSE Volume, Breadth Indicators. Volume rose +4.48% to 705.19 million shares, compared to 674.96 million shares the prior day, 0.96x the 736.66 million share 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged by -1,929 (compared to +314 the prior day) or 0.23:1. Up volume was 0.17:1 down volume.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.09300%, compared to 0.09250% the prior day. USD 3-month LIBOR is 0.23160%, unchanged from 0.23360% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

    · The US LIBOR-OIS (LOIS) spread is 13.660 bps, compared to 14.060 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 14.200 bps, compared to 14.200 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 -10.500 bps, compared to -10.976 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 1.15%, compared to 1.15% the prior day.

    · French 10-year debt yields 1.44%, compared to 1.43% 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 2.62%, compared to 2.63% 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 2.81%, compared to 2.79% 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 0.468% and 2.480%, respectively, compared to 0.444% and 2.446% Thursday. The yield curve widened +1.020 bps, with the 2- to 10-year spread at +2.012%, compared to 2.002% 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 and Japanese yen, but stronger compared to the British pound. The dollar trades at US$80.532, compared to US$80.580 intraday high and US$80.505 the prior day, and better compared to its $80.311 50-day, US$80.057 100-day, and US$80.267 200-day averages. The euro trades at US$1.3522, compared to a US$1.3513 intraday low and US$1.3526 the prior day. The euro trades worse compared to its US$1.3621 50-day and US$1.3723 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥101.37, compared to ¥101.18 the prior day. The yen trades better than its 50-day moving average ¥101.85, and better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

    · Citigroup Economic Surprise Index improved to -16.70, compared to -13.00 the prior day. The index is mixed compared to its respective -14.88 5-day and -13.55 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 mixed, with higher energy, lower precious metals, mixed aluminum and copper, and mixed agriculture prices.

    Volatility, Skew:

    · The CBOE SPX Volatility Index (VIX) surged +32.2% to 14.54, compared to 11.00 at the prior close. The VIX is +25.42 above the 11.59 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 17.68, up +0.21% compared to 17.65 at the prior day's close. The V2X index trades +19.9% above its 14.76 20-day moving average, -5.43% below the 18.70 30-day high, and +43.7% above the 12.30 30-day low.

    · The Hang Seng volatility index (VHSI) closed at 13.31, up +5.97% compared to 12.56 at the prior close. The VHSI index trades +5.77% above its 12.58 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) fell -2.38% to 131.65, compared to 134.86 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:
     

    • At 9:55, July preliminary University of Michigan confidence, with 83.0 survey and 82.5 prior.
    • At 10:00, the June leading index, with +0.5% survey and prior.


    Overseas Economic Reporting and News:
     

    • Japan - June YoY department store sales fell -4.6%, compared to -4.2% prior.
    • Eurozone - May MoM construction output fell -1.5%, compared to +0.4% revised prior.


    Notable Company Ratings/News:
     

    • Capital One (NYSE:COF) - Reported 2Q2014 adjusted EPS of $2.06, compared to the $1.821 estimate, and $5.468 billion in revenues, compared to the $5.428 billion estimate.
    • General Electric (NYSE:GE) - Reported 2Q2014 adjusted EPS of $0.390, compared to the $0.394 estimate, and $36.233 billion in revenues, compared to the $36.311 billion estimate.
    • International Business Machine (NYSE:IBM) - Reported 2Q2014 adjusted EPS of $4.320, compared to the $4.306 estimate, and $24.364 billion in revenues, compared to the $24.123 billion estimate.


    Thursday's Trade. On greater but below average NYSE volume, major U.S. equity indexes closed lower. The SPX, DJI, Nasdaq, and NYSE composite fell -1.18%, -0.94%, -1.41%, and -1.16%, respectively. In July, indexes are most lower. The SPX, DJI, Nasdaq, and NYSE composite are at least +2.41% higher in 2014. Market breadth was negative, with gainers only 0.23x losing stocks. All SPX market segments closed at least -0.48% lower. Leaders were materials, consumer staples and consumer discretionary. Financials dropped -1.25%. Laggards were technology, energy, and industrials, which fell at least -1.31%.

    Other notable indexes closed lower. The Russell 2000 (RTY) fell -1.56% and closed -6.21% below its March 4th record high. The Nasdaq Internet Index (QNET) fell -1.65% and is down -10.8% below its March 6th closing high. The Nasdaq Biotech Index (NBI) fell -2.32%, -10.9% below its February 25th record high.

    NYSE volume rose +4.48% to 705.19 million shares, compared to 674.96 million shares the prior day, 0.96x the 736.66 million share 20-day moving average volume. Bond markets strengthened. The U.S. 10-year yield moved lower through the session to a late 2.4387% intraday low. The index ended at 2.4458%, down -6.02 bps from the 2.5260% prior close.

    From its prior day 1981.57 SPX close, September 2014 SPX futures (SPM4) suggested a lower open. The index fell to 1975 in early trading, but improved to breakeven by mid-morning before breaking news of the ML84 downing worsened sentiment. The SPX traded to 1966 by mid-session, then improved to 1975 in early afternoon, before falling through the afternoon to a late 1955.59 intraday low. The index closed at 1958.12, +82.2% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

    From its prior day 8,345.08 close, the DJ Transportation index (TRAN) fell -1.41%, compared to the DJI's -0.94% loss. At the open, the index fell to 8,340, but rallied and briefly turned higher with a mid-morning 8,406.17 intraday high. The index fell to 8,320 by mid-session, rallied back to 8,360 by mid-afternoon, then fell to a late session 8,269.24 intraday low. Volume rose +8.24% to 12.026 million shares, compared to 11.111 million shares the prior session, and 0.89x the 15-day moving average volume. The TRAN closed +0.60% and +2.39% above its respective 20- and 50-day moving averages, and +5.96% and +10.8% above its respective 100- and 200-day moving averages.

    Market volatility surged +32.2%, as the CBOE SPX volatility index (VIX) closed at 14.54, compared to 11.00 at the prior close. The index set an early 10.85 intraday low, rose to nearly 13.00 shortly after the release of late morning ML84 shoot down reports. The VIX climbed to a late 15.38 intraday high, then eased into the close. 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 -2.38%, to 131.65, compared to 134.86 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 worsened, as the SPX, Nasdaq, and NYSE composite surrendered their respective 20-day moving averages. The SPX relative strength (RSI) fell to 50.06, down from 62.96 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.

    This week, indexes are mixed. The DJI is up +0.19%, while the SPX, Nasdaq, and NYSE composite are down -0.48%, -1.18%, and -0.42%, respectively. Last week, the SPX, DJI, Nasdaq, and NYSE composite closed down -0.90%, -0.73%, -1.57%, and -1.52%, respectively. In July, indexes are also mixed. The DJI is up +.89%, while the SPX, Nasdaq, NYSE composite are down -0.11%, -1.01%, -1.84%, and -0.81%, 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 +5.94%, +2.41%, +4.47%, and +4.71%, 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 greater and above 15-day average volume, the BKX fell -2.14% to 70.00, compared to 71.53 at the prior day's close, -3.99% below its 72.91 March 20th post-2008 closing high. The index opened at its 71.25 intraday high, then trended lower through the session to a late 69.86 intraday low. Volume rose +27.2% to 71.284 million shares, compared to 56.024 million shares the prior day, and 1.58x the 45.225 million share 15-day moving average.

    Large cap banks underperformed the regional banks, as the KBW regional banking index (KRX) fell -2.05%.

    This week, the BKX is down -1.37%, compared to last week, when the BKX fell -1.95%. In July, the BKX is down -1.84%, compared to June, when the BKX rose +3.48%. In 2014, the BKX is up +1.07%, compared to the SPX's +5.94% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

    The BKX is now +18.3% 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 May 15th 66.81 closing low, its lowest close since early February. The BKX closed +115.0% 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 +82.2% in the same period.

    The BKX index closed -42.2% below its February 20, 2007, record 121.06 high. The BKX is up +275.9% from its 18.62 March 6, 2009, closing low, its low during the 2008-09 financial panic.

    Technical indicators worsened, as the BKX surrendered its 20-, 50-, and 100-day moving averages. The index closed -1.93%, -0.06%, and -0.09% below its respective 20-, 50-, and 100-day moving averages, and +2.20% above its 200-day moving average. The 20-day moving average fell -7 bps to 71.38. The 70.04 50-day moving average rose +5 bps. Its 70.06 100-day moving average rose +1 bp, and the 200-day moving average rose +4 bps to 68.49. The 20-day closed (by +1.34 points) above the 50-day, and the gap narrowed -12 bps. The 50-day moving average closed (by +1.55 points) above the 200-day moving average, and the gap widened +2 bps. The 100-day moving average closed (by +1.57 points) above the 200-day moving average, and the gap narrowed -3 bps.

    The directional movement indicator worsened to -5.804, compared to +8.259 the prior day, its first negative reading since May 23rd. Relative strength fell to 42.58, compared to 54.05 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 70.88; next support is 69.49.

    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: COF, GE, IBM
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