S&P Breaks Key Trendline For First Time In 2013 As Tech Earnings Disappoint

Tyler Durden's picture

Despite the ubiquitous last-hour rampalooza, the S&P 500 was unable to close back above its 50-day moving average. This is the first close below this key price level in 2013 as high-beta Tech (AAPL) and Homebuilders underperformed notably (on the day and week) and stocks are below Cyprus levels (and marginally above Italian election levels). VIX pushed back above 18% for the first time in 7 weeks (for its biggest spike since the Italian elections). Volume was above average and average trade size was low (suggesting no capitulation yet). Away from stocks, markets were remarkably subdued. Treasuries traded in a narrow 3bps range and closed unchanged (though stocks are catching down). The USD closed practically unchanged from yesterday's US close. Credit markets tracked lower with stocks (though the HY ETF held up). Commodities generally drifted higher (aside from Silver) with WTI up 2% on the day amid Syrian headlines. This is worst 5-day slump in 5 months.

Not a pretty week since last Thursday's all-time highs...


with Trannies and Nasdaq (Q1's winners) fading fastest...


and the pain is hitting Homebuilders and Energy most so far...


The S&P 500 (cash) closed below its 50DMA and the last 5-days are the biggest slump in 5 months...


Equities actually underperformed most other asset classes today (beta-adjusted)...


but they still have along way to go to catch up...


and SPY is catching down to HYG... (with the implied price differential dropping notably from over $11 to $7)


Protection remains well bid...


Commodities are slowly rising off the early week lows...even as the USD rises...


Single-names and earnings dominated moves...

  • AAPL -2.95% today!

GOOG: miss revenue Ex-TAC, beat EPS:

  • Revenue Ex-TAC: $11.01 billion, Expected $11.20 billion
  • Non-GAAP EPS: $11.59, Est $10.68, but effective tax rate was 8% compared to 18% in Q1 and Q4 2012
  • Q1 cost per click down 4%
  • Q1 network revenue: $3.26 billion
  • Network revenue: $3.26 billion
  • International Revenue: $7.1 billion


IBM: total debacle, missing both revenue and bottom line:

  • Q1 revenue $23.41 billion, Exp. $24.62 billion
  • EPS $3.00, Exp. $3.05 billion
  • Services revenue down 4%
  • Software revenue margin up 1.2%
  • Q1 operating gross operating margin: 46.7% as expected
  • Reaffirms forecast for full year 2013 EPS of at least $16.70


MSFT beats top and bottom line just barely:

  • Q1 revenue: $20.49 billion, Exp. $20.47 bn
  • EPS $0.72, Exp. $0.68 (Unadjusted EPS $0.65)
  • Q3 unearned revenue $17.91 billion, Exp. 417.88 billion
  • The CFO is leaving the company

Charts: Bloomberg and Capital Context

Congratulations to Capital Context's Dave Klein for winning the NAAIM's Wagner Prize for active portfolio management.

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max2205's picture

That's support not trend line

rajat_bhatia's picture

Wow! I bet you've made a lot of money through technical analysis, right? Wait, didn't you guys call the top at 1270 ?

And BTW, that green line in the 4th chart..that's the trend line he's talking about sunshine

AlphaDawg's picture

everyone, just fuck off please

AlphaDawg's picture

a bunch of cunts sold their fucking shitty shares and bounced into fucking bonds, the inverse correlation was a shit show!!!!!

manipulating bastrard cunts.

fucking fucktard faggot fucks

fuck off

AlphaDawg's picture

and bernanke, fuck you too

JPM Hater001's picture

I'm confused so it's not time to sell my April $415 puts on apple? This has further to go?

Lord Blankcheck's picture

50 day moving average is not a trend line

Jack Napier's picture

Moving averages are a source of mass delusion. They have no significance other than all the technical traders know all the other technical traders are looking at them.

A moving average based on a cycle of time that actually matters might have some relevance; such as a quarterly MA, or # of trading days in a year MA, but 50 days is irrelevant in and of itself.

spine001's picture

The gold is not there. That is why.

Bobbyrib's picture

You're wrong. It's a support trend line, which is still a trend line.

Headbanger's picture

But can you tell us what's the better way to go.. a ported or un-ported 357??

Thanks so much for your genius observations!

Awakened Sheeple's picture

That last hour was more tense then the finale of The Good, The Bad, and The Ugly


HD's picture

So when does Ben announce he's going to move to 200 billion a month to support *cough* employment?

venturen's picture

F$%K It...just give the banks printing presses and be done with it!

spine001's picture

Banks are effectively printing presses. Only limited by the reserve requeriments imposed by the Fed. Everytime they loan money it is the same effect as if they were printing it...

Panafrican Funktron Robot's picture

Some other large cap stuff that's at least 10% below their 200 day SMA:

Infosys (wait, what?  I thought India was perpetually miraculous!!!)

Arcelor Mittal (how can steel be down!  growth 'n stuff!  homebuilderz and new biznesses!)

Gerdau (uh, well, they'll rebound, Brazil growth miracle!)

POSCO (they'll rebound too, South Korean growth miracle!)

VMware (tech stocks r. hawt!)

Baidu (tech stocks r. hawt!  Also, China growth miracle!)

China Telecom (but, what about Iphones, and China growth!)

China Unicom (see above)

America Movil (but, but.... phones!)

France Telecom (see above)

Telecom Italia (yeah, but Grillo, so it's his fault)

Rio Tinto (well, cheap materials are bullish for economic recovery!)

Vale (same)

BHP Billiton (same)

Petroleo Brasileiro (ok, I don't even know who that is... wait, waht, 227 billion combined market cap?)

Ecopetrol (yeah, but Columbians are all druggies so they don't count)

Suncor (blame Canada!)

CNOOC (yeah, but... China growth and stuff!)

Apache (yeah, that is concerning, they're native people and deserve our respect!)

National Oilwell Varco (who cares, stupid name for a company)

Apple (Saint Jobs will rise again)


And so much more.  But please, let's keep it up with the "gold is a bad, useless investment" because "the world economy is just one big fucking miracle" and "perpetual growth forever".

Or maybe, just maybe, it's down because in spite of double plaid warp speed printing, these pretty important stocks are all at least 10% below their 200 day SMA.  Maybe, gold is trying to tell us something important.  Are we listening?

freewolf7's picture

Bring. It. All. Down.

centerline's picture

And the VIX says "yaaaaawwwwwwwnnnnnn"

resurger's picture

Fuck the VIX, it does not represent shit cuz its rigged

SnobGobbler's picture

not rigged.  just tells you when the algos get confused and duke it out instead of raping "sideline money"; or "invisible handjobbing" peoples 401k's

SheepDog-One's picture

That's right, this time when the wheels fly of this shitwagon there won't be any pre-indications or warnings....just bodies strewn everywhere.

Common_Cents22's picture

the vix represents people buying puts on their positions, not selling their positions.   

spine001's picture

Look at the yale investor confidence index, developed by Schiller in 1989. In the 2000 bubble investors knew they were in a bubble. In the 2003 and 2009 crashes investors were convinced valuations for the market were correct. Today they also thing valuations are right. They will most be caught with their pants (skirts up) down again...

Archimedes's picture

I think it is time to buy some Puts in UNG.

Headbanger's picture

I think it's time to buy a lot more ammo..  If I can find any!

Blano's picture

I was hoping after the background check defeat prices would start coming down.  Give it a couple weeks maybe.

thismarketisrigged's picture

well considering that ibm accounts for 11 percent of dow, the dow should be down modestly just from ibm.


also, google missed huge on revenue, cost per click down 4 percent, how is the stock not at 730 now is beyond me, google should bring the s&p down tomm nicely hopefully

Archimedes's picture

Perhaps in a normal market. But I would not count on it.

Haager's picture

It's all priced in...

Headbanger's picture

And...  It's all good too!

ebworthen's picture

The only thing that made Microsoft not miss was entertainment (XBOX 360, Live, Online).

Business revenue was down and a miss (operating systems, Office, etc.).

EclecticParrot's picture

Interesting.  A glance at various charts from hourly to weekly indicates were at a crossroads, particularly in the lovely Russell.   Personally, I expect the current pivot point to be defended for a few weeks, for if it isn't it's a good, solid bungee shot down, either to the Jan or Feb interrium lows or, if the risk evaluation proceeds accordingly, we could fill the odd gap that rung in the new year.  And they'll 'defend' it not like a brother, but purely to unload whatever they have at March VWAPs before shorting themselves.  Of course, the BTFD crowd will loudly disagree, but that's precisely what'll make watching this unfold such a pack of popcorn-munching fun.

Awakened Sheeple's picture

I wouldn't be short going into tomorrow. Agreed, this could take a few weeks to play out. The employment report in May looks pivotal.

fuu's picture

I'm still not convinced those numbers have anything to do with reality.

spine001's picture

They can fudge the emoyment numbers for ever. That is we designed tbe index the way we did. Ooops.... :)

What we couldn't fudge was the % occupation rate. Just look at the % of the population with full time jobs and tbe changes in median wages. Nothing else should be paid attention to...


Awakened Sheeple's picture

This decline is being telegraphed by the fed and news media. All this talk lately about tapering QE, and deflation. Whether or not they are going to deliberately crash the markets, like EKM believes, I don't know. But we are going down.

Fuck you Bernanke, but thanks for the heads up!

Shizzmoney's picture

How long can they fudge this for? 6 months? 14? Decades?

SheepDog-One's picture

Like Yellen said the other day, no way to skim yeild anymore, the parasites are starving to death gorging on empty worthless digital dollars.

bonin006's picture

how long have they fudged CPI? 30 years?

GernB's picture

Gee, I thought, since I was repeatedly told so, that we shouldn't fight the Fed. Even last week I was told the recovery was taking hold and we could see so much better GDP growth this year that the Fed might have to ease back on QE. What I don't hear this week is all talking heads on CNBC explaining why they were wrong last week.

Iam Yue2's picture

Just wait until Spain unravels over the next two months.

orangegeek's picture

S&P500 Daily shows a break in channel support - first time since November 2010.




If this is a change in trend, downside momentum is going to accelerate tomorrow.

GernB's picture

Often a break of support is followed by a reaction. I wouldn't be shocked if the market rallied tomorrow.

spine001's picture

Buy buy buy emergency POMO coming...

machineh's picture

It used to take a 20% decline to activate the Bernanke put.

But now a bad hair day, or a fly in Mrs. Bernanke's soup, is excuse enough to hit the Turbo button on the presses.

To infinity ... and beyond!

Edward Fiatski's picture

Oh boy, battle for 1555 fought & lost already?

We shall see.

Tombstone's picture

Not to worry...the markets (except gold which Benny dislikes) cannot fall for long.  Benny will never let the markets fall even if he has to triple QE/month from here.  All you bulls are saved.  Buy, buy, buy and never look the gift horse of central planning in the mouth.

polo007's picture

According to Macquarie Research:


Corporate Bond Rate + CPI Inflation Implies S&P 500 at 1742

Our research theme for several months has surrounded the ongoing Risk-off Rally in the equity markets, highlighting sector preference for defensives and yield plays, but the common question we have received is regarding fair value for the equity market. While bottoms-up consensus EPS augers for a fair value range of 1550 – 1600, the unnatural impact of monetary policy on bond rates suggests a cross-asset arbitrage model may provide a better perspective. Using our CPI Inflation model we find that the fair value of the S&P 500 could be ~1742, or around ~12% above its current price of 1552.

Given that our cross-asset arbitrage model uses the S&P 500 Dividend Yield as valuation, presumably yield stocks would significantly outperform during a rally to 1742.

While this analysis is more for thought than basing investment decisions, it does provide perspective that the ongoing global quantitative easing undertaken by central banks should continue to push investors out on the risk curve and support higher equity markets. The question then becomes, as the Monetary valuation regime, is increasingly detached from a Fundamental/ Economic valuation regime, what happens when central banks ultimately reverse course?

Artful Dodger's picture

Re Google: where the fuck do I get an 8% "effective" tax rate?