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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 Fade To Flat; Asia And Europe Mixed 0 comments
    Aug 12, 2014 9:03 AM

    This morning. U.S. futures are modestly higher, but near the bottom of their pre-session range. In Asia, equities closed mixed, with better strength in Japan. In Europe, following disappointing business sentiment reports, equities are modestly lower, and off their best early session highs. The dollar is stronger compared to the euro. The U.S. Treasury 10-year yields are slightly higher. Commodities are mixed. Wednesday's Nikkei 225 September 2014 (NKU4) equity futures are modestly lower.

    Since August 6th, the market outlook is "in correction".

    Monday, on lower and below average volume, U.S. equity indexes rallied moderately to late morning highs, then eased through the afternoon. The S&P 500 Index (SPX), DJ Industrials (DJI), Nasdaq, and NYSE composite rose +0.28%, +0.10%, +0.70%, and +0.30%, respectively. Last week, major indexes closed at least -2.18% lower. In August, indexes are mixed. In July, indexes closed off at least -0.87%. In 2014, the SPX, Nasdaq, and NYSE composite are up +4.79%, +5.38%, and +3.10% higher, respectively, while the DJI is down -0.04%.

    NYSE volume fell -5.10% to 0.89x its 20-day moving average.

    Other notable indexes also rose. The DJ Transports (TRAN) rose +0.79%. The Russell 2000 (RTY) rose +0.94%. The Nasdaq Internet (QNET) index rose +0.89%, and the Nasdaq Biotech (NBI) index rose +0.53%. The TRAN, RTY, QNET, and NBI are down -3.68%, -5.52%, 7.45% and -7.28%, respectively, from their recent record highs.

    Trading desks report a quiet morning, with mixed Asian, modestly lower European equities, and slightly higher U.S. futures. Economic reporting is light, with little in the way of material changes in Iraq or Russia/Ukraine. Regarding Monday's trade, the past two day's rally caught some by surprise, but coincided with obviously oversold market conditions. Monday's advance lacked volume and much power, as the SPX trades back toward its recent 1940-1985 trading range. U.Sentiment remains gloomy, and probabilities remain high that there will be further testing of Thursday's 1904.78 intraday low.

    The 2Q2014 earnings season began June 18th and is now largely complete as 455 of 500 SPX companies have reported with respective +5.29% and +1.42% adjusted EPS and revenues surprises. Financials (84 of 84 reporting) lead with respective +9.47% and +2.38% 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 $119.59, $132.84, and $147.07, respectively compared to $118.05, $131.36 and $145.70 at June-end, respective increases of +1.30%, +1.12% and +0.94%. Price earnings multiples remain elevated. With SPX equities trading at a 16.9x (compared to 16.8x the prior day) average 2014-15 earnings ($126.21), attention focuses on prospective 2014-15 earnings and valuations (16.9x times survey 2014-15 SPX average operating earnings suggests a 2131.78 SPX level in the next year, a +10.1% rise from yesterday's close).

    Technicals were little changed, with the SPX above its 100- and 200-day moving averages and neutral relative strength index. Led by consumer staples, most SPX market segments closed higher. SPX market breadth was positive, and up volume led down volume. Volatility fell, and the VIX now suggests a 68% probability that the 30-day change in the SPX will be less than ±4.93%. Treasury bond markets strengthened. On the day, the U.S. Treasury 10-year bond yield rose +0.72 bps to end at 2.4275%, compared to 2.4203% at the prior close.

    This morning, 10-year U.S. Treasury yields are down -0.01 bps at 2.4274%, compared to the prior close. World sovereign bond markets are mixed, with the German 10-year yield at 1.056%, a record low. Spanish and Italian 10-year debt yields are higher at 2.609% and 2.754%, respectively, compared to 2.541% and +2.788% the prior day.

    U.S. options markets improved to neutral to bullish, compared to bearish to neutral the prior day. The CBOE SKEW rose +3.22% to 124.24, compared to 120.36 the prior day, below 130 for the 5th consecutive session, 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 bottom of their 1932-1939 trading range. After a fair value adjustment of +0.07 points, the SPU4 future prices at 1937.75, up +1.18 points. The SPX opens -1.01% and -0.95% below its respective 20- and 50-day moving averages, and +1.14% below and +3.93% above its 200-day moving averages. Initial resistance is 1943.40. Initial support is 1931.93, then 1926.95.

    "In correction" Market Outlook and Distribution Day Count. Since August 6th, the market outlook is "in correction", following a period of "uptrend under pressure" that began on July 8th. 2Q2014 earnings continue to surprise positively, with financials' earnings leading other sectors.

    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 24th at a record 1987.01, +8.99% above the 1815.69 close on April 11th, the recent low. 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) closed up +0.20%. In China, the Hang Seng (HSI) Index rose +0.18%, and the Shanghai SE composite (SHCOMP) closed down -0.14%. The NKY and HSI 50-day moving averages are above their respective 200-day moving averages. Today's volumes are unavailable.

    Commentary focused on Ukrainian developments. Economic reporting was light.

    This week, the NKY, HSI, and SHCOMP are up +2.59%, +1.47%, and +1.24%, respectively. Last week, the NKY closed down -4.80%, while the HSI fell -0.82%, and the SHCOMP gained +0.42%. In August, the NKY and HSI are down -2.94% and -0.27%, respectively, while the SHCOMP is up +0.91%. In July, the NKY closed up +3.03%, the HSI rose +6.75%, and the SHCOMP rallied +7.48%.

    In 2014, the NKY is down -6.94%, the HSI is up +5.93%, and the SHCOMP is up +4.99%. 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 fell -3 bps to 3.40%, compared to 3.43% 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) have Tokyo in a neutral range, while the Hong Kong and Shanghai are in the upper end of neutral ranges. The NKY RSI rose to 46.40, compared to 45.41 the prior session, up from an oversold 27.92 on February 4th, the most recent prior yearly low. The HSI RSI rose to 67.47, compared to 66.63 the prior day and an overbought 81.00 on July 31st. The SHCOMP's RSI eased to 70.31, compared to 71.41 the prior day. On July 28th, the index's RSI set a record 81.72. 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 15,161.31, compared to 15,130.52 the prior day, -6.94% below its year-end 16,291.31 high and -61.0% below its late-1989 38,915.87 high close. The index gapped higher to 15,160 in early trading, then rose to a mid-morning 15,235.98 intraday high. The index eased back to 15,180 by mid-session, then eased to a mid-afternoon 15,125.93 intraday low before improving in the final hour. All market segments closed at least +1.69% higher. Leaders were utilities, health care, or industrials, which rose at least +0.59%. Financials rose +0.17%. Laggards were consumer discretionary, energy, and telecommunications, which fell at least -0.13%.

    In China, in Shanghai, the SHCOMP closed at 2,224.60, compared to 2,224.65 at the prior close, +13.9% above the 1,950.01 June 27, 2013 close, last year's low. The index opened lower and fell to a mid-morning 2,210.07 intraday low, then improved to 2,220 by mid-session, trading narrowly to the close. Most market segments closed higher. Leaders were technology, utilities, and consumer staples, which rose at least +0.38%. Laggards included energy, financials, and telecommunications, which fell at least -0.17%.

    In Europe, major equity indexes are moderately lower, with greater weakness in Frankfurt. The Euro Stoxx 50, FTSE 100, CAC 40, and DAX are down -0.36%, -0.13%, -0.60%, and -0.70%, respectively. The Spanish IBEX 35 is up +0.56%. The Italian FTSE MIB is up +0.60%. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -8.26%, -3.88%, -9.18%, and -9.12%, respectively, from their recent highs.

    Economic reporting is light, but Eurozone and German ZEW surveys were much weaker than expected. Commentary focuses on Ukrainian and Iraqi 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 35.34, compared to 36.63 at the prior close, in the lower end of a neutral (30-70) range. Friday, its RSI closed at 28.17, well below its prior February 5th 33.57 low, which coincided with its prior 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 -8.26% below its recent June 18th multi-year high and -42.1% below its 5,249.55 March 31, 2000, all-time closing high. From its prior day 3,047.56 close, the index fell to an early 3,029.51 intraday low, then rallied to an early afternoon 3,051.24 intraday high before easing again through mid-afternoon. The index currently trades at 3,034.36. Most market segments are lower. Leaders are financials, which are up +0.40%, and utilities and consumer discretionary, which are down at least -0.16%. Laggards are industrials, health care, and energy, which are down at least -0.85%.

    This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.14%, +0.91%, +0.69%, and +1.39%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -2.14%, -2.42%, -2.32%, and -4.23%, respectively. In August, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.39%, -1.53%, -1.64%, and -2.90%, respectively. In July, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed down -3.49%, -0.21%, -4.00%, and -4.33%, respectively.

    In 2014, the indexes are lower. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.19%, -1.81%, -2.78%, -4.37%, 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 is now largely complete, with 455 of 500 SPX reporting firms having reported, with respective +5.29% EPS and +1.42% revenue surprises. Financials (84 of 84 reporting) lead with a 9.47% EPS surprise and +2.38% 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 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 17.6x estimated 2013 earnings ($110.15), 16.2x estimated 2014 earnings ($119.59), 14.6x estimated 2015 earnings ($132.84), and 13.2x estimated 2016 earnings ($147.07). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2014, 2015, and 2016 earnings to grow +8.57%, +11.1%, and 10.7%, respectively.

    The KBW Bank Index (BKX) trades at 13.3x 2013 adjusted EPS ($5.16), 12.5x estimated 2014 earnings ($5.51), 11.6x estimated 2015 earnings ($5.94), and 10.4x 2016 earnings ($6.63). Analysts expect 2014, 2015, 2016 EPS will grow +6.77%, +7.84%, and +11.7%, respectively.

    Composite, index, and equity options. Options markets improved to neutral to bullish, compared to bearish to neutral the prior session. Composite options are bullish, index options are bullish, and equity options are neutral. The composite put/call ratio is 0.74, compared to 1.07 the prior day, and better than 5- and 10-period moving averages of 1.03 and 1.03, respectively. The index put/call ratio is 0.63, compared to 1.13 the prior day, and better than its 5- and 10-period moving averages of 1.09 and 1.07, respectively. The equity put/call ratio closed the day at 0.84, compared to 0.96 the prior day, and better than its 5- and 10-period moving averages of 1.00 and 1.03, respectively.

    NYSE Volume, Breadth Indicators. Volume fell -5.10% to 596.45 million shares, compared to 628.51 million shares the prior day, 0.89x the 667.71 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led by +1,443 (compared to +1,589 the prior day), or 2.79:1. Up volume was 2.67:1 down volume.

    Libor, LOIS, Currencies, Treasuries, Commodities:

    · USD LIBOR is 0.08950%, compared to 0.08950% the prior day. USD 3-month LIBOR is 0.23510%, down 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 14.160 bps, compared to 14.110 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 15.200 bps, compared to 14.800 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 -12.836 bps, compared to -12.320 bps the prior day, up from a trough of -147.00 bps on December 14, 2011, and within the lower end of a normal -10 bps and -40 bps range.

    · German 10-year debt yields 1.061%, a record low, compared to 1.059% the prior day.

    · French 10-year debt yields 1.293%, compared to 1.291% the prior day.

    · Japanese 10-year debt yields are 0.514%, compared to 0.517% the prior day.

    · Spanish and Italian 10-year debt yields are higher, but remain near multi-year lows. Spanish 10-year debt yields are 2.609%, compared to 2.541% the prior day, notably below the U.S. 10-year yield. Italian 10-year debt yields are at 2.754%, compared to 2.788% the prior day. 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 higher, with 2- and 10-year maturities yielding 0.436% and 2.426%, respectively, compared to 0.440% and 2.428% Monday. The yield curve widened +0.220 bps, with the 2- to 10-year spread at +1.990%, compared to 1.987% the prior day. In the past year, the 2- and 10-year spread varied from a low of +0.690% on July 29, 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$81.640, compared to US$81.676 intraday high and US$81.466 the prior day, and better compared to its $80.636 50-day, US$80.294 100-day, and US$80.380 200-day averages. The euro trades at US$1.3342, compared to a US$1.3336 intraday low and US$1.3385 the prior day. The euro trades worse compared to its US$1.3537 50-day and US$1.3651 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥102.27, compared to ¥102.19 the prior day. The yen trades worse than its 50-day moving average ¥101.94, and better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

    · Citigroup Economic Surprise Index improved to +4.10, compared to +3.00 the prior day, its 3rd consecutive positive reading. The index is better compared to its respective -1.84 5-day and -7.86 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, turned negative on May 29th. After a lag, the CESIUSD correlates with EPS revisions.

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

    Volatility, Skew:

    · The CBOE SPX volatility index (VIX) fell -9.77% to 14.23, compared to 15.77 at the prior close. The VIX is +2.07% above the 13.94 20-day moving average. Its 30-day high is 17.57. 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 19.15, down -1.43% compared to 19.43 at the prior day's close. The V2X index trades +8.26% above its 17.69 20-day moving average, -13.5% below the 22.15 30-day high, and +50.1% above the 12.76 30-day low.

    · The Hang Seng volatility index (VHSI) closed at 15.63, down -5.79% compared to 16.59 at the prior close. The VHSI index trades +5.63% above its 14.80 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

    · CBOE SKEW (SKEW) rose +3.22% to 124.24, compared to 120.36 the prior session, above a neutral reading (115-120) and its 3rd consecutive reading under 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:

    · July NFIB small business optimism was 95.7, compared to 96.0 survey and 95.0 prior.

    Overseas Economic Reporting and News:

    · Japan - June final MoM industrial production fell -3.4%, compared to -3.3% prior. June MoM capacity utilization fell -3.3%, compared to -0.7% prior.

    · Eurozone - August ZEW current situation fell to 23.7, compared to 48.1 prior.

    · German - August ZEW current situation fell to 44.3, compared to 54.0 survey and 61.8 prior. ZEW expectations fell 8.6, compared to 17.0 survey and 27.1 prior.

    Notable Company Ratings/News:

    · None.

    Monday's Trade. On lower and below average NYSE volume, major U.S. equity indexes extended Friday's rally and ended with modest gains. The SPX, DJI, Nasdaq, and NYSE composite rose +0.28%, +0.10%, +0.70%, and +0.30%, respectively. Last week, the indexes closed mixed, as in the prior week. In August, indexes are also mixed. In July, indexes closed down at least -1.51%. In 2014, the DJI is now -0.14% lower, while the others are at least +2.80% higher. Market breadth was positive, with gainers 2.79x losing stocks. Most SPX market segments closed higher. Leaders were consumer staples, technology, and consumer discretionary, which rose at least +0.44%. Financials were up +0.15%. Laggards were materials, energy, and utilities, which fell at least -0.07%.

    Other notable indexes closed higher. The Russell 2000 (RTY) rose +0.94%, and closed -5.52% below its March 4th record high. The Nasdaq Internet Index (QNET) rose +0.89% and is down -7.45% below its March 6th closing high. The Nasdaq Biotech Index (NBI) rose +0.53% and ended -7.28% below its February 25th record high.

    NYSE volume fell -5.10% to 596.45 million shares, compared to 628.51 million shares the prior day, 0.89x the 667.71 million share 20-day moving average volume. Bond markets weakened. In early trading, the U.S. 10-year yield traded narrowly, with a mid-morning 2.4383% intraday high and 2.4095% intraday low in mid-afternoon. The index ended at 2.4275%, up +0.72 bps from the 2.4203% prior close.

    From its prior day 1909.57 SPX close, September 2014 SPX futures (SPM4) suggested a moderately higher open. In early trading, the index broke through initial resistance at 1939 and rallied to a late morning 1944.90. The index trended lower through the afternoon, failing to hold 1939, but finding support at 1936. The index closed at 1936.92, +80.2% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

    From its prior day 7,992.08 close, the DJ Transportation index (TRAN) rose +0.79%, outpacing the DJI's +0.10% gain, closing -3.68% off its July 24th record close. In early trading, the index opened above 8,120 and rose to a mid-session 8,213.79 late morning intraday high, then trended lower through the afternoon session, through late 8,160 resistance. The index closed at 8,156.65. Volume fell -7.13% to 11.091 million shares, compared to 11.942 million shares the prior session, and 0.86x the 15-day moving average volume. The TRAN closed -1.21% and -0.58% below its respective 20- and 50-day moving averages, and +2.67% and +7.28% above its respective 100- and 200-day moving averages.

    Market volatility fell, as the CBOE SPX volatility index (VIX) fell -9.77% to 14.23, compared to 15.77 at the prior close. The VIX opened lower, setting an early 15.16 intraday high, then fell to a mid-session 13.72 intraday low. 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 rose +3.22% to 124.24, compared to 120.36 the prior session, above a neutral 115-120 range, but below 130 for the first time since June 18th, a level that correlates well with short-term market tops. Its record 143.26 high came on June 20th.

    The market's technical factors improved. The SPX relative strength (RSI) improved to 45.21, compared to 43.04 the prior day and last Thursday's oversold 32.85, now comfortably into a neutral range, down from an overbought 73.73 on June 9th and up from an oversold 31.24 on February 3rd, its previous yearly low. 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, and Nasdaq closed up +0.33%, +0.37%, and +0.42%, respectively, but the NYSE composite closed off -0.01%. The prior week, the SPX, DJI, Nasdaq, and NYSE composite fell -2.68%, -2.75%, -2.18%, and -2.67%, respectively. In August, the SPX, DJI, and Nasdaq are up +0.32%, +0.04%, and +0.72%, respectively, while the NYSE composite is down -0.01%. In July, the SPX, DJI, Nasdaq, and NYSE composite closed down up -1.51%, -1.56%, -0.87%, and -2.30%, respectively.

    In 2014, the SPX, Nasdaq, and NYSE composite are up +4.79%, +5.38%, and +3.10%, respectively, while the DJI is now -0.04% lower. 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 lower and below 15-day average volume, the BKX fell -0.25% to 68.66, compared to 68.83 at the prior day's close, -5.83% below its 72.91 March 20th post-2008 closing high. The index traded lower to a mid-morning 68.11, then traded narrowly around breakeven through early afternoon, when buying strengthened. The index rallied to an early 68.97 intraday high, but traded narrowly around breakeven through early afternoon before weakening to support at 68.66, with a mid-afternoon 68.57 intraday low. Volume fell -13.6% to 32.945 million shares, compared to 41.916 million shares the prior day, and 0.79x the 41.555 million share 15-day moving average.

    Large cap banks outperformed the regional banks, as the KBW regional banking index (KRX) rose +0.53%.

    Last week, the BKX closed off -0.48%. The prior week, the BKX fell -3.41%. In August, the BKX is down -2.11%, compared to July, when the BKX closed off -1.64%. In 2014, the BKX is down -0.87%, compared to the SPX's +4.50% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

    The BKX is now +16.0% 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. On June 5th, the BKX rose back above 70, but then again surrendered that level on August 1st.

    The BKX closed +110.9% 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 +80.2% in the same period. The BKX index closed -43.3% below its February 20, 2007, record 121.06 high. The BKX is up +268.7% from its 18.62 March 6, 2009, closing low, its low at the end of the 2008-09 financial panic.

    Technical indicators worsened as its 50-day moving average is now declining. The average closed -2.26%, -2.94%, -2.03%, and -0.56% below its 20-, 50-, 100-, and 200-day moving averages. The 20-day moving average fell -13 bps to 70.25. The 70.74 50-day moving average fell -1 bp. Its 70.09 100-day moving average fell -2 bps, and the 200-day moving average rose +2 bps to 69.05. The 20-day closed (by -0.49 points) below the 50-day, and the negative gap widened -12 bps. The 50-day moving average closed (by +1.69 points) above the 200-day moving average, and the gap fell -3 bps. The 100-day moving average closed (by +1.04 points) above the 200-day moving average, and the gap narrowed -4 bps.

    The directional movement indicator improved -15.251, compared to -16.928 the prior day, its 8th consecutive negative reading. Relative strength worsened to 38.65, compared to 39.64 the prior day, in a neutral range, down from an overbought 73.14 on June 9th, but compares to up from the recent lows of 32.95 on February 3rd and 31.08 on November 14, 2012, which is also the date of the BKX's 2012 closing low. Next resistance is 68.90; next support is 68.50.

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

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