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

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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