Wednesday, February 14, 2018, 11:30 AM, EST
- NASDAQ Composite +0.86% Dow +0.08% S&P 500 +0.3% Russell 2000 +0.66% S&P MID 400 +0.56%
- NASDAQ Advancers: 1518 Decliners: 659
- Today's Nasdaq Volume (100 day avg.) +4%
Monthly CPI and Retail Sales sent US equities sharply lower in the premarket on the perception of an increased likelihood of higher interest rates and more frequent hikes. The US 10-year Treasury yield and US Dollar index jumped after the economic data was released. However, the initial pullback for the major indices was met by investors buying on dips, pushing stock back into the green by mid-morning and raising hopes of a four-day winning streak. Oil is weaker again today (-1%), now off by >9% in February and dragging the S&P Energy Index to its lowest level since August.
- Concerns the Fed may be more aggressive in 2018 accelerated this morning in response to the January CPI and Retail Sales data. Rising apparel cost pushed US consumer prices up 0.5%, with the YoY growth rate at 2.1%. Signals are showing that inflation may be accelerating at a faster clip than the Fed's objective. This morning's market reaction was the 2 nd time in the past 2 weeks that investors made a snap-decision to sell (2/2- NF Payroll) after some economic data. Retail Sales was softer than expected, unable to hold on the strong data trend that closed out 2017. January's Sales experienced a 0.3% decline compared to an anticipated 0.2% increase. The end of year data showed signals to support the 4 th quarter S&P Retail Index rally, up 8.6%, the best quarter since late 2014.
- Crude oil has only been positive three of the past thirteen sessions and continues lower today, down about 0.2% and off earlier lows. Inventory data from both API and DOE reflected builds of 3.9B and 1.84B barrels respectively, although the DOE number is less than expected. Still, this marks the third weekly increase in crude stocks and gasoline inventories are up for a second week. Also today Reuters writes that the spread between crude oil futures and physical oil prices continues narrowing, and that suggest prices are headed lower.
- Information Tech and Financials are the top performing sector this morning, both up more than 0.8%. All FANG compenents are firmly in the green midway through the session. Fossil is the best performing stock on the Nasdaq, higher by 62%, helped by strong demand for the company's wearable tech and e-commerce.
Technical Take: Mining for a Heart of Gold
It has already been a "busy" morning so far which started off with equity futures in the green, but disappointing economic data turned things around leading to a 500 point freefall in the Dow futures and a spike into the green for the VIX Index. The initial bearish reaction to the disappointing retail sales and CPI data was short lived as all major equity indices quickly reversed higher and now are already back in the green with the VIX down 18%. Leading to the upside today are the gold miners (ticker GDX) which gained as much as 4.5%. Strength in the miners is due in part to USDJPY currency pair which has an inverse correlation of -0.5. This week the USDJPY is breaking down below a 10-month support zone. The size of the prior consolidation range carries a measured move towards the 102 level. A breakdown in the USDJPY is typically associated with broader risk-off sentiment, thus equities are hoping this is a false breakdown and the USDJPY will soon reverse sharply higher. Meanwhile the GDX has run into a cluster of technical resistance at the $22.85 - $23.05 zone representing the 50, 100, 150, and 200-day sma's, as well as the pivot high and low from November and January. Where the GDX goes from here is anybody's guess, but it could very likely be determined on the ability of the USDJPY to find support.
Nasdaq's Market Intelligence Desk (MID) Team includes:
Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.
Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.
Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.
Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.
Annie O'Callaghan is Director on the Market Intelligence Desk (MID) at Nasdaq. Annie has worked for NASDAQ in a variety of roles including support of Nasdaq C-level management in client retention and customer service. Annie also served as a Sales Director in Nasdaq's Transactions Services business. Prior to joining Nasdaq, Annie worked at AX Trading, managing accounts for its Alternative Trading System and served on Credit Suisse's trading desk as an Electronic & Algorithmic Sales Trading Analyst.
Brian Joyce, CMT is a Director on the Market Intelligence Desk (MID) at Nasdaq. Before joining Nasdaq Brian spent 16 years as an institutional trader executing equity and options orders for both the buy side and sell side. He also provided trading ideas and wrote technical analysis commentary for an institutional research offering. Brian focuses on helping Nasdaq's Financial, Healthcare and Transportation companies, among others, understand the trading in their stock. Brian is a Chartered Market Technician (CMT).