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Global Equities Rally On PMIs, Conflicting Ukraine Ceasefire Claims

This morning. World equities closed higher in Asia (the Shanghai Composite rose to fresh new 52-week highs) and have rallied in Europe, where conflicting reports of a Russian/Ukraine ceasefire . U.S. futures are moderately higher and near the top of their pre-session trading range. The dollar is weaker. U.S. Treasury 10-year yields are higher. Commodities are mostly higher, though the agricultural complex is lower. Economic reporting focuses on August PMIs. Wednesday's Nikkei 225 September 2014 (NKU4) equity futures are modestly higher.

Since August 13, the U.S. equity market outlook is "confirmed uptrend". Yesterday, the Nasdaq closed at a multi-year record. The Nasdaq opens -10.4% below its March 31, 2000 record close.

Tuesday, on lower, but above average volume, U.S. equity indexes closed modestly mixed. The Nasdaq closed up +0.39% to a multi-year high. The S&P 500 Index (SPX), DJ Industrials (Private:DJI), and NYSE composite fell -0.05%, -0.18%, -0.07%, respectively. Last week, indexes closed at least +0.57% higher, compared to the prior week, when indexes closed at least +1.40% higher. In August, indexes closed up at least +2.98% higher. In July, indexes closed off at least -0.87%. In 2014, the SPX, DJI, Nasdaq, and NYSE composite are up +8.33%, +2.96%, +10.1%, and +6.13%, respectively.

NYSE volume fell -3.80% to 1.02x its 20-day moving average.

Other notable indexes closed mixed. The DJ Transports (TRAN) rallied +1.29% and closed at another record. The Russell 2000 (RTY) rose +0.44%. The Nasdaq Internet (QNET) index rose +1.32%, and the Nasdaq Biotech (NBI) index fell -0.16%. The RTY, QNET, and NBI are down -2.41%, -4.73%, and -0.16%, respectively, from their recent record highs.

Trading desks report another global equity rally, spurred by stronger than expected Chinese PMIs and positive macro news from Ukraine. Gains are broad, led by consumer discretionary in China and financials in Europe. In yesterday's trade, the SPX managed to hold above 2000, narrowing moderate mid-session losses by the close. Volumes and attendance remain low following the Labor Day holiday. The day's headline focused on world sovereign bond yields, which soared on views that the ECB meeting might underwhelm bullish expectations.

The 2Q2014 earnings season began June 18th and is now largely complete as 494 of 500 SPX companies have reported with respective +5.08% and +1.53% 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 $119.64, $132.82, and $147.69, respectively compared to $118.05, $131.36 and $145.70 at June-end, respective increases of +1.35%, +1.11% and +1.36%. Price earnings multiples remain elevated. With SPX equities trading at a 17.5x (compared to 17.5x the prior day) average 2014-15 earnings ($126.23), attention focuses on prospective 2014-15 earnings and valuations (17.5x times survey 2014-15 SPX average operating earnings suggests a 2203.58 SPX level in the next year, a +9.95% rise from yesterday's close).

Technicals were little changed. Led by financials, SPX market segments closed mixed. SPX market breadth was slightly negative, and up volume lagged down volume. Volatility rose, and the CBOE SPX volatility index (VIX) now suggests a 68% probability that the 30-day change in the SPX will be less than ±4.25%. Treasury bond markets weakened, with the 10-year U.S. Treasury bond yield rising +7.80 bps to 2.4211%, compared to 2.3431% at the prior close.

This morning, 10-year U.S. Treasury yields are +2.86 bps lower at 2.4497%, compared to the prior close. World sovereign bond markets are mixed, with the German 10-year yield at 0.961%, compared to 0.931% the prior day. Spanish and Italian 10-year debt yields are lower at 2.266% and 2.453%, respectively, compared to 2.273% and +2.456% the prior day.

U.S. options markets are unchanged at neutral to bullish, compared to neutral to bullish the prior day. The CBOE SKEW rose +3.71% to 131.72, compared to 127.01 the prior day, above a neutral 115-120 range and 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 are above first resistance and near the top of their 1999-2011 trading range. After a fair value adjustment of +0.38 points, the SPU4 future prices at 2007.50, up +7.37 points. The SPX opens +1.82% and +1.79% above its respective 20- and 50-day moving averages, and +3.62% and +6.51% above its 200-day moving averages. Initial resistance is 2007.32. Initial support is 1996.05, then 1989.81.

"Confirmed Uptrend" Market Outlook. Based on Nasdaq's August 13th follow-through, the U.S. equity outlook improved to "confirmed uptrend", concluding a brief "in correction" that commenced on August 6th, which followed a period of "uptrend under pressure" that began on July 8th. Since August 13th, there have been no subsequent distributions.

2Q2014 earnings continue to surprise positively, with financials' earnings leading other sectors. Friday, the SPX closed at a record 2003.38, up +3.60% compared to its August 12th 1933.75 close.

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 +15.0% to the September 2nd 4,598.19 multi-year record close.

In Asia, equity markets closed mixed. The Nikkei 225 (NYSEARCA:NKY) rose +0.38%. In China, the Hang Seng (HSI) Index soared +2.30%, and the Shanghai SE composite (SHCOMP) rose +1.00%. The NKY, HSI, and SHCOMP 50-day moving averages are above their respective 200-day moving averages. Today's volumes are unavailable.

Commentary focused on yesterday's strong U.S. economic reports, Chinese PMI, and currency and commodity developments.

This week, the NKY, HSI, and SHCOMP are up +1.97%, +2.33%, and +3.22%, respectively. Last week, the NKY, HSI, and SHCOMP closed down -0.74%, -1.47%, and -1.05%, respectively. In September, the NKY, HSI, and SHCOMP are up +1.97%, +2.33%, and +3.22%, respectively, compared to August, when the NKY and HSI closed down -1.26% and -0.06%, while the SHCOMP gained +0.71%.

In 2014, the NKY is down -3.46%, the HSI is up +8.63%, and the SHCOMP is up +8.16%. 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 -10 bps to 3.40%, compared to 3.50% 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 and Hong Kong in a neutral range, while the SHCOMP is signaling overbought. The NKY RSI rose to 62.92, compared to 60.99 the prior session, up from an oversold 27.92 on February 4th, the most recent prior yearly low. The HSI RSI rose to 67.91, compared to 53.58 the prior day, down from an overbought 81.00 on July 31st. The SHCOMP's RSI rose to 70.57, compared to 67.07 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 15,728.35, compared to 15,668.60 the prior day, -3.46% below its year-end 16,291.31 high and -59.6% below its late-1989 38,915.87 high close. The index rallied to an early afternoon 15,829.38 intraday high, then weakened through the afternoon to a late 15,723.54 intraday low. Market segments closed mixed. Leaders were consumer discretionary, financials and utilities, which rose at least +0.68%. Laggards were materials, energy, and health care, which fell at least -0.11%.

In China, in Shanghai, the SHCOMP closed at 2,288.63, compared to 2,266.05 at the prior close, +17.4% above the 1,950.01 June 27, 2013 close, last year's low. The index opened above 2,260 and rallied nearly to 2,290 by mid-morning. The index eased into the afternoon session, but rallied through the afternoon to a late 2,290.42 intraday high. All market segments closed at least +0.34% higher. Leaders were consumer discretionary, telecommunications, and energy, which rose at least +1.42%. Laggards were materials, health care and technology.

In Europe, major equity indexes opened modestly higher, but rallied in early trading on conflicting reports of a Ukraine/Russia ceasefire. Indexes improved to mid-morning highs, but have generally held their gains through mid-afternoon. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.35%, +0.81%, +1.12%, and +1.42%, respectively. The Spanish IBEX 35 is up +1.30%. The Italian FTSE MIB up +2.03%. Compared to their recent highs, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are down -2.87%, -0.22%, -3.71%, and -4.24%, respectively.

Commentary focuses on mixed European services and composite PMIs (stronger than expected in the United Kingdom) and speculation regarding Thursday's ECB meeting, where views are that recent expectations have been somewhat frothy. Other foci are currency and commodity price developments. The euro is slightly stronger compared to the dollar.

European bourses have recently underperformed U.S. equity indexes. Intraday Euro Stoxx50 relative strength (RSI) is 63.33, compared to 57.85 at the prior close, in a neutral (30-70) range. On August 8th, 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 -2.87% below its recent June 18th 3,314.80 multi-year high and -38.7% below its 5,249.55 March 31, 2000, all-time closing high. From its prior day 3,180.29 close, the index opened above 3,190 and rallied to a mid-morning 3,233.99 intraday high. The index eased to 3,220 by late morning, where it has found support through mid-afternoon. The index currently trades at 3,223.40. Most market segments are higher. Leaders are financials consumer discretionary, and utilities, which are up at least +1.78%. Laggards are consumer staples and telecommunications, which are up at least +0.51%, and technology, which is down -0.78%.

This week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +1.53%, +1.03%, +1.10%, and +1.86%, respectively. Last week, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +2.49%, +0.62%, +3.02%, and +1.40%, respectively. In August, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +1.93%, +1.33%, +3.18%, and +0.67%, 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 higher. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +3.71%, +2.09%, and +3.10%, and +0.98%, 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 494 of 500 SPX reporting firms having reported, with respective +5.08% EPS and +1.53% revenue surprises. Financials (84 of 84 reporting) lead with a 9.47% EPS surprise and +2.39% 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 18.2x estimated 2013 earnings ($110.15), 16.7x estimated 2014 earnings ($119.64), 15.1x estimated 2015 earnings ($132.82), and 13.6x estimated 2016 earnings ($147.69). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2014, 2015, and 2016 earnings to grow +8.62%, +11.0%, and 11.2%, respectively.

The KBW Bank Index (BKX) trades at 13.9x 2013 adjusted EPS ($5.16), 13.0x estimated 2014 earnings ($5.52), 12.1x estimated 2015 earnings ($5.94), and 10.8x 2016 earnings ($6.63). Analysts expect 2014, 2015, 2016 EPS will grow +6.98%, +7.65%, 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 0.95 the prior day, and better than 5- and 10-period moving averages of 0.95 and 0.90, respectively. The index put/call ratio is 0.91, compared to 0.87 the prior day, and better than its 5- and 10-period moving averages of 1.05 and 0.94, respectively. The equity put/call ratio closed the day at 0.88, compared to 0.78 the prior day, and better than its 5- and 10-period moving averages of 0.93 and 0.90, respectively.

NYSE Volume, Breadth Indicators. Volume fell -3.80% to 593.29 million shares, compared to 512.17 million shares the prior day, 0.94x the 582.99 million shares 20-day moving average. Market breadth was negative, and up volume lagged down volume. Advancing stocks lagged by -102 (compared to +1,246 the prior day), or 0.94:1. Up volume was 0.88:1 down volume.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.08950%, compared to 0.09150% the prior day. USD 3-month LIBOR is 0.23360%, compared to 0.23360% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US LIBOR-OIS (LOIS) spread is 14.11 bps, compared to 14.16 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 16.50 bps, compared to 16.40 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 -16.500 bps, compared to -17.208 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 0.961%, compared to 0.931% the prior day.

· French 10-year debt yields 1.383%, compared to 1.384% the prior day.

· Japanese 10-year debt yields are 0.534%, compared to 0.505% the prior day.

· Spanish and Italian 10-year debt yields are lower and near multi-year lows. Spanish 10-year debt yields are 2.266%, compared to 2.273% the prior day. Italian 10-year debt yields are at 2.453%, compared to 2.456% 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 0.536% and 2.453%, respectively, compared to 0.524% and 2.421% Tuesday. The yield curve widened +2.020 bps, with the 2- to 10-year spread at +1.918%, compared to 1.897% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.861% on August 27, 2014, to a high of +2.648% on December 31, 2013.

· The U.S. dollar is weaker compared to the euro, Japanese yen, and British pound. The dollar trades at US$82.877, compared to US$82.832 intraday low and US$82.992 the prior day, and better compared to its $81.198 50-day, US$80.662 100-day, and US$80.489 200-day averages. The euro trades at US$1.3151, compared to a US$1.3160 intraday high and US$1.3133 the prior day. The euro trades worse compared to its US$1.3427 50-day and US$1.3563 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥105.00, compared to ¥105.09 the prior day. The yen trades worse than its 50-day moving average ¥102.43, and better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

· Citigroup Economic Surprise Index improved to +43.50, its 8th consecutive positive reading, compared to +37.80 the prior day. The index is better compared to its respective +35.32 5-day and +21.57 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, then turned negative on May 29th and remained negative through August 5th. The index turned positive again on August 21st. After a lag, the CESIUSD correlates with EPS revisions.

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

Volatility, Skew:

· The CBOE SPX volatility index (VIX) rose +2.25% to 12.25, compared to 11.98 at the prior close. The VIX is -7.00% below the 13.17 20-day moving average. Its 30-day high is 17.57. Its 30-day low is 11.24. 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 16.92, down -5.14% compared to the 17.84 prior day close. The V2X index trades -5.45% below its 17.89 20-day moving average, -23.6% below the 22.15 30-day high, and +14.7% above the 14.76 30-day low.

· The Hang Seng volatility index (VHSI) closed at 14.07, up +6.11% compared to 13.26 at the prior close. The VHSI index trades -4.72% below its 14.77 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE SKEW (SKEW) rose +3.71% to 131.72, compared to 127.01 the prior session, above a neutral reading (115-120) since March 27th, and 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 rose +0.2%, compared to the +2.8% prior.

· At 9:45, August ISM New York, with 68.1 prior.

· At 10:00, July factory orders with +11.0% survey and +1.1% prior.

· At 2:00, Federal Reserve semi-monthly Beige Book.

Overseas Economic Reporting and News:

· Eurozone - August final Markit services PMI was 53.1, compared to 53.5 survey and prior. July MoM retail sales fell -0.4%, compared to -0.3% survey and +0.3% revised prior.

· France - August final Markit services PMI was 50.3, compared to 51.1 survey and prior. Markit composite PMI was 49.5, compared to 50.0 survey and prior.

· Italy - August Markit/ADACI composite PMI was 49.9, compared to 53.1 prior. Markit/ADACI services PMI was 49.8, compared to 52.0 survey and 52.8 prior.

· Spain - August Markit services PMI was 58.1, compared to 55.5 survey and 56.2 prior. Markit composite PMI was 56.9, compared to 55.7 prior.

· United Kingdom - Markit/CIPS services PMI was 60.5, compared to 58.5 survey and 59.1 prior. Markit/CIPS composite PMI was 59.3, compared to 58.6 prior.

Notable Company Ratings/News:

· None.

Tuesday's Trade. Led by financials, the major indexes ended modestly mixed, with Nasdaq recording the better result and closing at another multi-year high. Major indexes rallied early, but eased at mid-session, then strengthened again in late afternoon. The Nasdaq rose +0.39%, while the SPX, DJI, and NYSE composite fell -0.05%, -0.18%, and -0.07%, respectively. Last week, indexes closed at least +0.57% higher, compared to the prior week, when indexes closed up at least +1.40%. In August, indexes closed up at least +2.98. In July, indexes closed down at least -1.51%. In 2014, indexes are up at least +2.96%. Market breadth was negative, with gainers 0.94x losing stocks. SPX market segments closed mixed. Leaders were financials, industrials, and consumer discretionary, which rose at least +0.18%. Laggards were materials, utilities, and energy, which fell at least -0.39%.

Other notable indexes closed mixed. The Russell 2000 (RTY) rose +0.44% and closed -2.41% below its March 4th record high. The Nasdaq Internet Index (QNET) rose +1.322%, down -4.73% below its March 6th closing high. The NBI fell -0.16%, closing -0.16% below its August 29th 2,892.71 record high.

NYSE volume fell -3.80% to 593.29 million shares, compared to 616.71 million shares the prior day, 1.02x the 582.99 million share 20-day moving average volume. Bond markets weakened. From its prior day 2.3431% close, the U.S. 10-year yield trended higher through the session to a late 2.4229% intraday high. The index ended at 2.4211%, up +7.80 bps from the prior close.

From its prior day 2003.37 SPX record close, September 2014 SPX futures (SPM4) suggested a moderately higher open. The index set an early 2,006.12 intraday high, but reversed lower by late morning and fell to a 1994.85 intraday low. The index rallied through the final two hours. The index closed at 2002.28, +3.54% above the August 12th 1933.75 close (which marked the start of the current market uptrend), and +86.3% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

From its prior day 8,408.02 close, the DJ Transportation index (TRAN) rose and by mid-morning found resistance at a record 8,520. The index eased back to 8,480 by mid-session, but rallied through the afternoon to a late 8,519.64 intraday high. The index closed at a record 8,516.25, compared to its prior 8,454.25 August 25th record close. Volume rose +23.6% to 12.458 million shares, compared to 10.082 million shares the prior session, and 1.20x the 15-day moving average volume. The TRAN closed +2.62% and +2.86% above its respective 20- and 50-day moving averages, and +5.52% and +10.6% above its respective 100- and 200-day moving averages.

Market volatility fell, as the CBOE SPX volatility index (VIX) rose +2.25% to 12.25, compared to 11.98 at the prior close. The VIX set an early 13.41 intraday high, but quickly moderated, and traded narrowly around 12.40 through the session. 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 -0.48% to 1315.10, compared to 135.75 the prior session, above a neutral 115-120 range and above 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 were little changed. The SPX relative strength (RSI) eased to 65.59, compared to 66.34 the prior day, in a neutral range. The latest RSI compares to an oversold 32.85 on August 7th, an overbought 73.73 on June 9th, and an oversold 31.24 on February 3rd, its previous yearly low, when the SPX closed at 1741.89. The RSI compares to an overbought 71.26 on December 31st, when the SPX closed at an earlier record 1848.36 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 closed up +0.75%, +0.57%, +0.92%, and +0.90%, respectively, compared to the prior week, when the SPX, DJI, Nasdaq, and NYSE composite closed up +1.71%, +2.03%, +1.65%, and +1.40%, respectively. In August, the SPX, DJI, Nasdaq, and NYSE composite rallied +3.77%, +3.23%, +4.82%, and +2.98%, respectively. 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, DJI, Nasdaq, and NYSE composite are up +8.33%, +2.96%, +10.1%, and +6.13%, 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 lower, and below 15-day average volume, the BKX rose +0.57% to 71.90, compared to 71.49 at the prior day's close, its 9th consecutive close above 70. The index closed -1.39% below its 72.91 March 20th post-2008 closing high. The index opened higher and set a mid-morning 71.94 intraday high, but briefly reversed lower in early afternoon, when it set its 71.40 intraday low. The index rallied through the final two hours as the 10-year Treasury yield rose through 2.40%. Volume fell -16.1% to 35.957 million shares, compared to 349.761 million shares the prior day, and 0.93x the 35.957 million share 15-day moving average.

Large cap banks outperformed the regional banks, as the KBW regional banking index (KRX) rose +1.12%.

Last week, the BKX closed up +0.56%, compared to the prior week, when the BKX closed up +3.01%. In August, the BKX rose +0.57%, compared to July, when the BKX closed off -1.64%. In 2014, the BKX is up +3.81%, compared to the SPX's +8.33% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

The BKX is now +21.5% 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 +120.8% above the 32.56 intraday low on October 4, 2011, the bottom of that year's correction. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +86.3% in the same period. The BKX index closed -40.6% below its February 20, 2007, record 121.06 high. The BKX is up +286.1% from its 18.62 March 6, 2009, closing low, its low at the end of the 2008-09 financial panic.

Technical indicators were little changed. The index closed +2.61% and +1.72% above its respective 20- and 200-day moving averages, and +2.91% and +3.49% above its 50- and 100-day moving averages. The 20-day moving average rose +12bps to 70.07. The 70.68 50-day moving average was unchanged. Its 69.87 100-day moving average rose +1 bp, and the 200-day moving average rose +3 bps to 69.48. The 20-day closed (by -0.61 points) below the 50-day, and the negative gap narrowed -2 bps. The 50-day moving average closed (by +1.21 points) above the 200-day moving average, and the gap narrowed -2 bps. The 100-day moving average closed (by +0.39 points) above the 200-day moving average, and the gap narrowed -4 bps.

The directional movement indicator improved to +5.931, compared to +2.331 the prior day, its 8th consecutive positive reading. Relative strength rose to 61.94, compared to 59.08 the prior day, in a neutral range, down from an overbought 73.14 on June 9th, but compares to 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 72.09; next support is 71.55.

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