Correction Territory Attracts Trading Volume

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Thursday, February 8, 2017, 11:45 AM, EST
  • NASDAQ Composite -1.4% Dow -1.56% S&P 500 -1.46% Russell 2000 -1.26% S&P MID 400 -1.3%
  • NASDAQ Advancers: 533 Decliners: 1704
  • Today's Nasdaq Volume (100 day avg.) +18%

Declines in Europe (-1.75%) appeared to be setting the pace for US stocks in premarket activity, but the early activity showed that equites domestically were attempting to separate themselves, opening the session little changed. Two hours into trading on Thursday, all major indices have now followed the pullback in Europe, all currently off by ~1%. Companies that reported results last night and this morning are generally consistent with the stronger than expected theme we've thus far in earnings season. Separately, the Bank of England kept its rates and asset purchases unchanged, but the sterling did get a boost after the central bank shed some light on plans for hikes later this year.

  • On the economic front, initial jobless and continuing claims were slightly less than anticipated, and remain at historic lows. Trade data out of China showed an encouraging start to the year, as imports and exports were higher than expected. Emerging market economic growth has been the leading catalyst behind the iShares MSCI Emerging Market surge in 2017, gaining ~37% YoY.
  • England's Monetary Policy Committee keep its benchmark rate unchanged at 0.5% and its bond purchasing program at 435 billion pounds. Despite the polices not moving, the release did have a hawkish tone as the MPC raised its GDP forecasts for the rest of 2018, and the BOE President, Mark Carney, suggested that rates might need to be raised faster than originally anticipated. The GBP/USD Currency jumped on the news, climbing 1%.

Technical Take: Correction Territory Attracts Trading Volume

Since last Friday, the Dow has experienced the widest intraday trading ranges amongst the major indices, averaging a 4% price swing, compared to the S&P 500 and Nasdaq 3% average range. During January the markets experienced a broad-based rally pushing the Dow higher by 7% for the month, and posting its all-time high on 1/26. The potential for further and possibly aggressive tightening by the Fed initiated the sharp pullback, pushing the Dow to 10% correction territory earlier this week. Market Technicians are pointing to the lows on 2/5 as a trigger for bulls to step in and buy on the dip. The price/volume chart of the SPDR Dow ETF shows volume concentration during the final segment of trading on Monday, conveniently close to 10% down from its late January highs. Helped by a couple days of a stabilized rebound, equites have erased a portion of the losses, but still more than 7.5% from the highs.


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).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: News Headlines , MarketInsite

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