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U.S. Futures Lower Following Draghi Conference Call; Asia Closes Higher On Improved China Trade; Europe Higher

This morning. U.S. equity futures are moderately lower and near their pre-session lows. In Asia, equity markets closed moderately higher. In Europe, equities indexes are modestly higher mid-session, with better strength in Milan. The dollar continues to weaken. Treasury 10-year yields are higher, but the worldwide sovereign bond market rally continues. Commodities are mixed. Friday's Nikkei 225 June 2014 (NKM4) equity futures are modestly lower.

On April 4th, the U.S. equity markets distributed, and the market outlook worsened to "in correction", ending a brief "confirmed uptrend" that began on April 1st. The SPX opens -0.67% below the April 2nd record 1890.90 close.

Commentary focuses on Fed Chairman Yellen's dovish testimony before the Congress' Joint Economic Committee yesterday. Other issues are Ukraine, where conciliatory comments from President Putin supported markets yesterday, and the South China Sea, where naval confrontations between China and Vietnam occurred. April Chinese trade balance was better than expected. European earnings are mixed. Barclays is trading higher following announcement of its strategic overhaul.

Trading desks noted busy overnight markets, based on macro-developments, earnings reports, and economic reports. Wednesday's trade ended mostly higher, but felt weak, particularly as internet stocks moved into bear market, and biotech stocks sold off again. Technology was the day's weakest sector. The weeks-old 1840-1890 trading range continues to hold. Conviction remains low as 10-year bond strength continues to weigh on equity prices. Sentiment remains poor, and advances are regarded skeptically as indexes remain near the top of recent trading ranges. Breaks above SPX 1880 appear likely to be sold.

U.S. economic reporting focuses on the latest week's mortgage applications (higher) and non-farm productivity and unit labor costs, which disappointed. Fed Chairman Yellen testifies before the Joint Economic Committee at 10:00. The ECB meets this week, though no new actions are expected.

Wednesday, on higher and above average volume, U.S. major equity indexes opened higher, gapped lower after the 10:00 start of Chairman Yellen's testimony before the Joint Economic Committee, then (with the exception of the Nasdaq) reversed higher by late morning and traded narrowly higher to the close. The S&P 500 (SPX), DJ Industrials (DJI), and NYSE composite rose +0.56%, +0.72%, and +0.55%, respectively. The Nasdaq closed down -0.32%, as "momentum" internet and biotech stocks continued their sell-offs.

The DJ Transports (TRAN) rose +0.57%, and closed -0.54% below its recent April 23rd record high.

NYSE volume rose +9.50% to 1.06x its 20-day moving average. The SPX and NYSE composite are now +1.61% and +2.18% higher in 2014, while the DJI and Nasdaq are down -0.35% and -2.61%, respectively.

Other notable indexes closed mixed. The Russell 2000 (RTY) rose +0.05%, while the Nasdaq Internet (QNET) and Nasdaq Biotech (NBI) fell -2.72% and -0.68%, respectively. The QNET is in bear market and the NBI is in correction, down -20.0% and -16.7%, respectively, from recent highs.

The 1Q2014 earnings reports began on March 15th, with 435 of 500 SPX companies having now reported, with respective +6.25% EPS and +0.01% revenue surprises.

Price earnings multiples are elevated. With SPX equities trading at a 17.0 (compared to 17.1 the prior day) 2013 earnings multiple, attention focuses on 2014 earnings and valuations (17.0x times survey $117.83 2014 SPX operating earnings suggests a 1997.94 SPX level this year, a +6.97% rise).

Technicals continued to worsen overall. Most SPX market segments closed lower. Market breadth was negative, and up volume lagged down volume. Volatility rose. Treasury bond markets strengthened. On the day, the U.S. Treasury 10-year bond yield fell -0.36 bps to 2.5878%, compared to 2.5914% at the prior close.

This morning, 10-year U.S. Treasury yields are up +1.83 bps at 2.6161%, compared to the prior close. World sovereign bond markets continue to rally, too. Notably, Spanish and Italian 10-year debt yields are near their lowest levels since 2005, at 2.97% and 3.01%, respectively.

U.S. options markets improved to neutral to bullish, compared to bearish to bullish the prior day. The CBOE SKEW remains above a neutral range.

In pre-market futures trading, June SPX equity futures (SPM4) price near the bottom of a 1868-1877 trading range. After a fair value adjustment of -1.24 points, the SPM4 future prices at 1871.00, down -2.26 points. The SPX opens +0.66% and +0.72% above its respective 20- and 50-day moving averages, and +2.04% and +5.53% above its 200-day moving averages. Initial resistance is 1884.76. Initial support is 1865.70, then 1853.24.

In Asia, equity markets closed moderately higher following yesterday's distributions. The Nikkei 225 (NYSEARCA:NKY) rose +0.93%, but remains in correction, with its 50-day moving average below its 200-day moving average and its 200-day moving average now below its 100-day moving average. The Hang Sang index (HSI) closed up +0.42%. The Shanghai composite (SHCOMP) rose +0.26%. Both HSI and SHCOMP 50-day moving averages are also below their respective 200-day moving averages. Today's volumes are unavailable.

Commentary focused on this week's weak Chinese manufacturing PMI report and currency and commodity price developments.

This week, the NKY, HSI, and SHCOMP are down -2.03%, -1.90%, and -0.55%, respectively. Last week, the NKY rose +0.20%. The HSI closed up +0.17%, and the SHCOMP closed off -0.50%. In May, the NKY is down -0.98%, the HSI is down -1.34%, and the SHCOMP is down -0.55%. In April, the NKY closed down -3.53%, while the HSI and SHCOMP closed down -0.08% and -0.34%, respectively.

In 2014, the NKY and HSI are down -13.1% and -6.30%, respectively, while the SHCOMP is down -4.76%. In 2013, the NKY rose +56.7%. The HSI closed up +2.87%. The SHCOMP closed down -6.75%.

In China, short-term interbank lending rates remain volatile, as the SHIBO 7-day rate rose +10.0 bps to 3.21%, compared to 3.11% Wednesday, up from a 2.26% low on March 11th, but down from the February 7th 5.41% recent high.

Regional relative strength indexes (RSI) show Tokyo, Hong Kong, and Shanghai in the lower end of neutral ranges. The NKY RSI ended at 42.98, compared to 39.01 the prior day, up from an oversold 27.92 on February 4th, the most recent prior yearly low. The HSI RSI fell to 40.21, compared to 38.00 the prior day. The SHCOMP's RSI fell to 39.17, compared to 37.32 the prior session. On June 27, 2013, the index's RSI fell to a low of 15.27, which was also last year's low index close.

In Japan, the NKY closed at 14,163.78, compared to 14,033.45 the prior day, -13.1% below its recent year-end 16,291.31 high and -63.6% below its late-1989 38,915.87 high close. The index gapped higher to open at the 14,140 and traded narrowly through the morning session. In early afternoon, the index spiked to the 14,254.44 intraday high, then eased to support at 14,140 late in the session. The index closed -1.33% and -3.03% below its 20- and 50-day moving averages, and -5.34% and -3.41% below its respective 100- and 200-day moving averages. Most market segments closed higher. Leaders were health care, consumer services, and basic materials, which closed up at least +1.35%. Financials rose +0.97%. Laggards were consumer goods and oil and gas, which closed up at least +0.53%, and telecommunications, which fell -0.21%.

In China, the HSI closed at 21,837.12, compared to 21,746.26 at the prior close. The index opened above 21,800, fell to an early 21,738.15 intraday low, then rose to a late morning 21,929.43 intraday high. The index trended lower to below 21,800 in late session, then improved into the close. Most market segments closed higher. Leaders were telecommunications, oil and gas, and basic materials, which rose at least +1.44%. Financials rose +0.38%. Laggards were technology, industrials, and consumer services, which rose at least -0.21%. The index closed -8.67% below its recent December 3rd 23,910.47 high, but +20.1% above its 18,185.59 June 4, 2012 low.

In Shanghai, the SHCOMP closed at 2,015.27, compared to 2,010.08 at the prior close, +3.35% above the 1,950.01 June 27, 2013 close, last year's low. The index opened lower, set an early 2,005.73 intraday low, then reversed higher and rallied to a late morning 2,036.82 intraday high. The index eased through the afternoon. Most market segments closed higher. Leaders were telecommunications, basic materials, and financials, which rose at least +0.32%. Laggards were industrials, which rose +0.05%, and technology and health care, which fell at least -0.04%.

In Europe, equities are moderately higher, with better strength in Milan. ECB president Draghi's 8:30 am EDT conference call briefly reversed markets lower. The Euro Stoxx50, CAC 40, and DAX are up +0.68%, +0.40%, +0.67%, and +0.45%, respectively. The Spanish IBEX 35 is up +0.89%. The Italian FTSE MIB is up +1.45%.

Economic reporting focuses on Bank of England and European Central Bank interest rate non-action, earnings reports, and China's improved April trade balance.

European bourses have recently outperformed U.S. equity indexes. Intraday Euro Stoxx50 relative strength (RSI) is 52.79, compared to 49.95 at the prior close, in the middle of a neutral (30-70) range, but better than its recent February 5th 33.57 low, which coincided with its 2014 low. The indexes lowest recent RSI level was 25.77 on June 24th, which marked the 2013 2,494.54 closing low.

The Euro Stoxx50 trades -1.63% below its 3,230.33 April 4th post-2008 high close, and -39.5% below its 5,249.55 March 31, 2000, all-time closing high. From its prior day 3,159.67 close, the index moved higher to 3,180 by late morning, then traded narrowly to the start of the Draghi conference call, when his focus on the strong euro briefly reversed markets lower, with the Euro Stoxx 50 falling to its 3,153.03 intraday low. When it became clear that no particular ECB action would be taken to weaken the euro, markets recovered to their pre-conference call levels. The index currently trades at 3,177.34. Most market segments are higher. Leaders are utilities, oil and gas, and basic materials, which are up at least +0.77%. Financials are up +0.43%. Laggards are consumer services, which is unchanged, and telecommunications and technology, which are down at least -0.08%.

This week, the Euro Stoxx 50 and FTSE 100 are down -0.01% and -0.02%, respectively, while the CAC 40 and DAX are up +0.30% and +0.00%, respectively. Last week, the Euro Stoxx50 and FTSE 100, closed up +0.97% and +0.43%, respectively, while the CAC 40 and DAX closed down -0.65% and -0.49%. In May, the FTSE 100 is up +0.60%, compared to the Euro Stoxx50, CAC 40, and DAX, which are down -0.65%, -0.35%, and -0.49%, respectively. In April, the Euro Stoxx50, FTSE 100, CAC 40, and DAX closed up +1.16%, +2.75%, +2.18%, and +0.50%, respectively.

In 2014, the indexes are higher. The Euro Stoxx50, FTSE 100, CAC 40, and DAX are up +2.21%, +1.06%, +4.09%, and +0.04%, respectively. In 2013, the indexes closed up +18.0%, +14.4%, +18.0%, and +25.5%, respectively.

1Q2014 SPX Earnings. Of 435 (of 498) reporting companies, 327 or 75.4% surprised positively on earnings, with an average +6.27% surprise average. Of reporting companies, 227 or 52.7% reported sales or revenues above estimates. The average sales/revenue surprise is +0.01%. Energy leads with respective +9.97% and -2.06% earnings and revenue surprises. Financials have a respective +5.69% and +0.02% earnings and revenue surprises. Consumer staples lags with respective +1.01% and -0.54% earnings and revenue surprises.

Valuation. The SPX trades at 17.1x estimated 2013 earnings ($110.15), 15.9x estimated 2014 earnings ($117.83), 14.3x estimated 2015 earnings ($131.00), and 12.9x estimated 2016 earnings ($145.55). The 10-year average median price/earnings multiple is 15.9x. Analysts expect 2014, 2015, and 2016 earnings to grow +6.97%, +11.2%, and 11.1%, respectively.

The KBW Bank Index (BKX) trades at 13.2x 2013 adjusted EPS ($5.16), 12.7x estimated 2014 earnings ($5.37), 11.3x estimated 2015 earnings ($6.02), and 10.1x 2016 earnings ($6.72). Analysts expect 2014, 2015, 2016 EPS will grow +4.07%, +12.1%, and +11.7%, respectively.

Composite, index, and equity options. Options markets improved to neutral to bullish, compared to bearish to bullish the prior session. Composite options are bullish, index options are bullish, and equity options are neutral. The composite put/call ratio is 0.86, compared to 0.90 the prior day, and better than 5- and 10-period moving averages of 0.88 and 0.89, respectively. The index put/call ratio is 0.76, compared to 0.71 the prior day, and better than its 5- and 10-period moving averages of 0.84 and 0.93, respectively. The equity put/call ratio closed the day at 0.90, compared to 0.98 the prior day, and worse than its 5- and 10-period moving averages of 0.89 and 0.88, respectively.

NYSE Volume, Breadth Indicators. Volume rose +9.50% to 766.15 million shares, compared to 699.66 million shares the prior day, 1.06x the 726.08 million share 20-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led by +920 (compared to -1,124 the prior day) or 1.86:1. Up volume was 2.02:1 down volume.

"In Correction" Market Outlook and Distribution Day Count. On April 4th, the U.S. equity markets distributed, and the market outlook worsened to "in correction", ending a brief "confirmed uptrend" that began on April 1st. The SPX opened April 3rd at a record 1890.90, up +0.99% from the April 1st 1872.34 open. Today, the SPX opens -0.67% below the April 2nd record close.

Libor, LOIS, Currencies, Treasuries, Commodities:

· USD LIBOR is 0.08850%, compared to 0.08910% the prior day. USD 3-month LIBOR is 0.22335%, down from 0.22395% the prior day, and compares to the January 4, 2013, recent peak of 0.58250%.

· The US LIBOR-OIS (LOIS) spread is 12.585 bps, compared to 12.795 bps the prior day, and compares to the recent June 12, 2012, 46.785 bps high. Euribor-OIS is 16.300 bps, compared to 16.000 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 is -3.879 bps, compared to -3.691 bps the prior day, up from a trough of -147.00 bps on December 14, 2011, but far better than a normal -10 bps and -40 bps range.

· German 10-year debt yields are 1.49%, compared to 1.47% the prior day.

· Japanese 10-year debt yields are 0.61%, compared to 0.60% the prior day.

· Spanish and Italian 10-year debt yields are at their best levels since 2005. Spanish 10-year debt yields are 2.97%, compared to 2.97% the prior day. Italian 10-year debt yields are at 3.01%, compared to 3.02% the prior day. Spanish and Italian 10-year debt years peaked at 7.621% and 7.261% in July 2012 and November 2011, respectively.

· U.S. Treasury yields are slightly lower, with 2- and 10-year maturities yielding 0.399% and 2.627%, respectively, compared to 0.399% and 2.588% Wednesday. The yield curve widened +3.910 bps, with the 2- to 10-year spread at +2.228%, compared to 2.189% the prior day. In the past year, the 2- and 10-year spread varied from a low of +1.429% on May 1, 2013, to a high of +2.648% on December 31, 2013.

· The U.S. dollar is weaker compared to the Euro, Japanese yen, and British pound. The dollar trades at US$79.091, compared to a US$79.064 intraday low and US$79.202 the prior day, and worse compared to its $79.793 50-day, US$80.201 100-day, and US$80.471 200-day averages. The euro trades at US$1.3942, compared to a US$1.3950 intraday high and US$1.3910 the prior day. The euro trades better compared to its US$1.3827 50-day and US$1.3740 100-day averages, and compares to a multi-year low of US$1.1877 on June 7, 2010. In Japan, the dollar trades at ¥101.78, compared to ¥101.90 the prior day. The yen trades better than its 50-day moving average ¥102.37, and better than its January 1st 105.31 closing low, its weakest prior multi-year closing low.

· Citigroup Economic Surprise Index improved to -11.20, compared to -12.00 the prior day, better than its recent -45.90 worst on April 7th, but continuing its string of consecutive negative readings since February 18th. The index is better compared to its respective -16.68 5-day and -21.07 10-day moving averages. Last year, on June 10th, the index fell to a then 52-week low of -33.26. The index improved and turned positive on July 30th and rose to 53.30 on October 1st, but subsequently fell on dollar weakness to -2.10 on October 31st. It subsequently strengthened to a +72.70 high on January 15th, but then subsequently trended lower and turned negative on February 19th and fell to a -45.90 124-week low on April 7th . After a lag, the CESIUSD correlates with EPS revisions.

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

Volatility, Skew:

· The CBOE SPX Volatility Index (VIX) fell -2.90% to 13.40, compared to 13.80 at the prior close. The VIX is -4.57% below the 14.04 20-day moving average. Its 30-day high is 17.85. Its 30-day low is 12.60. The index's all-time closing low is 9.31 on December 22, 1993. The long-term average is 20.14.

· The Euro Stoxx 50 volatility index (V2X) is 17.31, down -1.40% compared to 17.56 at the prior day's close. The V2X index trades -2.97% below its 17.73 20-day moving average, -15.2% below the 20.43 30-day high, and +11.7% above the 15.50 30-day low.

· The Hang Seng volatility index (VHSI) closed Friday at 15.66, down -1.88% compared to 15.96 at the prior close. The VHSI index trades +3.41% above its 15.14 20-day moving average. Its lowest historical close was 11.72, on June 30, 2005.

· CBOE SKEW (SKEW) rose +1.72% to 123.27, compared to 121.18 the prior session, above a neutral reading (115-120), but below 130, a level that correlates well with short-term market tops. The recent record high was 143.20 on December 20th. Its recent low was 112.47 on May 25, 2013. Spikes in excess of 130 correlate well with short-term market tops, though not in October or November. The index rarely falls below 110, last on July 31, 2009. The index correlates with market tail risks, the cost of buying out-of-the-money, long-dated options, i.e., options not affected by expirations. A rise suggests that investors are buying more puts than calls, a bearish signal.

U.S. Economic Reporting and News:

  • The latest weeks' initial and continuing jobless claims were 319K and 2685K, compared to 325K and 2758K survey and 345K and 2761K revised prior.

Overseas Economic Reporting and News:

  • China - April trade surplus was $18.46 billion, compared to $16.70 billion survey and $7.70 billion revised prior.
  • Eurozone - ECB interest rates were unchanged at 0.25%.
  • Germany - March MoM industrial production fell -0.5%, compared to +0.2% survey and +0.6% revised prior.
  • Spain - March YoY industrial output rose +8.1%, compared to +2.0% survey and +2.7% revised prior.
  • United Kingdom - BOE bank rate was unchanged at +0.50%.

Company Ratings/News:

  • None.

Wednesday's Trade. On greater and above average NYSE volume, major U.S. equity indexes opened higher, but reversed lower in early trading and closed mixed, with greater weakness on the Nasdaq. The SPX, DJI, and NYSE composite rose +0.56%, +0.72%, and +0.55%, while the Nasdaq closed off -0.32%. The SPX and NYSE composite are higher in 2014. Market breadth was positive, with gainers 1.86x losing stocks. Most SPX market segments closed higher. Leaders were utilities, financial, and consumer goods, which rose at least +1.14%. Laggards were health care, which closed up +0.26%, and consumer services and technology, which fell at least -0.20%.

Other notable indexes closed mixed. The Russell 2000 (RTY) rose +0.05%, and closed -8.28% below its March 4th record close. The Nasdaq Internet Index (QNET) fell -2.72% and is in bear market at -20.0% below its March 6th closing high. The Nasdaq Biotech Index (NBI) fell -0.68% and is in correction, down -16.7% from its recent February 25th record high.

On April 4th, the U.S. equity markets distributed, and the market outlook worsened to "in correction", ending a brief "confirmed uptrend" that began on April 1st. Today, the SPX opens -0.67% below the April 2nd record 1890.90 close.

NYSE volume rose +9.50% to 766.15 million shares, compared to 608.75 million shares the prior day, 1.06x the 726.08 million share 20-day moving average volume. On the day, bond markets strengthened slightly. The U.S. 10-year yield opened at the 2.5942%, and traded narrowly through the session, with an early session 2.5752% intraday low and mid-session 2.6149% intraday high. The yield ended at 2.5878%, down -0.36 bps compared to the 2.5914% prior close.

From its prior day 1867.72 SPX close, June 2014 SPX futures (SPM4) suggested a moderately higher open. The index gapped higher and rose above 1875 in early trading, then reversed lower as Yellen's testimony commenced, falling to a 1859.79 intraday low. The index recovered to breakeven before 11:00, and reversed higher moving into the afternoon. The index traded narrowly around 1880 through the afternoon, ending near the 1878.83 intraday high. The index closed at 1878.21, -0.67% below its recent April 2nd record closing high. The index closed +74.8% above the 1074.77 October 4, 2011, intraday low, the bottom of the most recent correction.

The DJ Transportation index (TRAN) rose +0.57%, compared to the DJI's +0.72% gain. From its prior 7,656.51 close, the TRAN traded to nearly 7,700 in early trading, then fell to a mid-morning 7,621.49 intraday low, then reversed higher to 7,695 by late morning. The index traded back below breakeven by mid-afternoon, but rallied through the final two hours to a late 7,703.91 intraday high. The index closed at 7,700.26, -0.54% below its recent April 23rd closing record high. Volume rose +1.99% to 11.041 million shares, compared to 10.826 million shares the prior session, and 0.84x the 15-day moving average volume. The TRAN closed +1.14% and +1.99% above its 20- and 50-day moving averages, and +3.80% and +8.80% above its respective 100- and 200-day moving averages.

Market volatility fell -2.94%, as the CBOE SPX volatility index (VIX) closed at 13.40, compared to 13.80 at the prior close. The VIX opened at 13.60 and rose to a mid-morning 14.49 intraday high, then eased to breakeven by 11:00 and then traded narrowly lower to the session 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 rose to 123.27, compared to 121.18 the prior session, above a neutral 115-120 range, but below 130, a level that correlates well with short-term market tops.

The market's technical factors were little changed. The SPX relative strength (RSI) rose to 53.96, compared to 50.02 the prior day, in the middle of a neutral range, but better than an oversold 31.24 on February 3rd. The RSI is also down from an overbought 71.26 on December 31st, when the SPX closed at an earlier record high, but above earlier oversold levels of 35.14 on August 27th and 39.19 on October 9th. This week, the SPX, DJI, and NYSE composite are up +0.79%, +0.96%, and +01.16%, respectively, while the Nasdaq is down -0.19%. Last week, the SPX DJI, Nasdaq, and NYSE composite closed down -0.08%, -0.29%, -0.49%, and -0.26%, respectively. In May, the SPX, DJI, Nasdaq, and NYSE composite are down -0.30%, -0.38%, -1.14%, and -0.003%, respectively. In April, the SPX, DJI, and NYSE composite closed up +0.62%, +0.75%, and +0.94%, respectively, while the Nasdaq closed off -2.01%.

In 2014, the SPX and NYSE composite are up +1.61% and +2.18%, respectively, while the DJI and Nasdaq are down -0.35% and -2.61%, 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 average volume, the BKX rose +1.21% to 67.94, compared to 67.13 at the prior day's close, its 20th consecutive close below 70.0, -6.82% below its 72.91 March 20th post-2008 closing high. In early trading, the index moved higher to 67.60, but weakened and briefly reversed lower with a 67.08 intraday mid-morning low. The index rose to 67.80 by mid-session, then trended higher to a late 67.13 intraday high. Volume fell -5.77% to 45.487 million shares, compared to 48.271 million shares the prior day, and 0.89x the 51.038 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 down -0.89%, compared to last week, when the BKX closed unchanged. In May, the BKX is down -0.72%, compared to April, when the BKX closed off -5.34%. In 2014, the BKX is down -1.91%, compared to the SPX's +1.61% gain. In 2013, the BKX rose +35.1%, better than the SPX's +29.6% rise.

The BKX is now +14.8% better than the June 24, 2013 59.19 close, its worst since May 13, 2013. The index crossed above 50 on December 17, 2012, 60 on May 15, 2013, and 70 on January 8, 2014, but then dropped back below 70 on January 24th, which persisted until March 6th. On April 10th, the BKX fell below 70.00 and then eased consistently to the Mary 6th 67.13 closing low, its lowest close since early February. The BKX closed +108.7% above the 32.56 intraday low on October 4, 2011, the bottom of that year's correction. Large-cap bank stocks have outperformed the broader market's rebound, with the SPX up +74.8% in the same period.

The BKX index closed -43.9% below its February 20, 2007, record 121.06 high. The BKX is up +264.9% from its 18.62 March 6, 2009, closing low, its low during the 2008-09 financial panic.

Technical indicators were little changed. The index's 20-day moving average remains below its 50- and 100-day moving averages. The index closed -1.14% and -3.05% below its respective 20- and 50-day moving averages, but -2.06% below and +1.27% above its respective 100- and 200-day moving average. The 20-day moving average fell -13 bps to 68.73. The 70.08 50-day moving average was unchanged. Its 100-day moving average rose +2 bps to 69.37, and the 200-day moving average rose +1 bp to 67.09. The 20-day closed (by -1.35 points) below the 50-day, and the negative gap widened -13 bps. The 50-day moving average closed (by +2.99 points) above the 200-day moving average, and the gap narrowed -1 bp. The 100-day moving average closed (by +2.28 points) above the 200-day moving average, and the gap widened +1 bp.

The directional movement indicator improved to -15.511, compared to -16.311 the prior day, its 22nd consecutive negative reading. Relative strength rose to 41.86, compared to 34.96 the prior day, in the lower end of a neutral range, up from the recent 32.95 low on February 3rd, but down from an overbought 75.56 and 71.88 on January 9th and 10th, respectively. The recent low RSI level was 31.08 on November 14, 2012, which is also the date of the BKX's 2012 closing low. Next resistance is 68.24; next support is 67.36.

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