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Equity Market Insights: January 12, 2018


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Thursday, January 12, 2018, 11:00 AM, EST
  • NASDAQ Composite +0.55% Dow +0.77% S&P 500 +0.58% Russell 2000 +0.4% S&P MID 400 +0.3%
  • NASDAQ Advancers: 1474 Decliners: 752
  • Today's Volume (100 day avg) +9%

Quarterly results from several large-cap Financials and strong economic readings are pushing the major indices to another all-time high. The hot start to year has US equities moving into "frothy" territory, but overbought condition doesn't appear to be scary to investors because funds are seeing inflows at a historic rate. Retailers are advancing today (S&P Retail Index +1.48%) on the heels of a better than expected Retail Sales (ex autos) and confirmed a strong holiday spending season.

  • For the first time since 2008, the 2 year US treasury yield has move above 2.0%, continuing its strong advance since mid-September when the yield was hanging around 1.3%. This morning's CPI's data showed acceleration in December (+0.1%) and reinforced the path of the Fed for 2018. The spread yield between the long vs short term maturity didn't benefit from this morning's number and a flattening yield curve will remain a cautionary talking point.
  • Stock funds across the global saw total inflows of ~$24(USD) billion last week (6 th highest read ever), and according to Bank of America equities have reached "maximum bullish" levels. The weekly relative strength index for the S&P 500 is now above 86, a level the large-cap index hasn't touched since 1904.
  • Retail Sales (ex autos) in November (rev +1.4% - best since 2005) set the stage for a strong holiday and this morning report didn't disappoint. In December sales rose by 0.3% with an annual rate at 4.2%, putting the Consumer Discretionary (+0.9%) sector as the best performing sector today. 3 of the 5 biggest gainers today are Department Stores, including Target (+3.9%), Kohls (+3.8%) and Nordstrom's (+3.1%).

Technical Take: The Dow's Momo is No-Joke

Two weeks into 2018 and equities are not showing any signs of letting up. This week the small cap Russell 2000 is leading all majors with a gain of 2.1% after breaking out above the 1,506 resistance we highlighted in Monday's Technical Take. On a YTD basis the Nasdaq Composite is continuing its leadership role with the top performance of 4.9%, however its elder Dow Jones Industrial Average (DJIA) index is not far behind, +4.3%. Surprisingly to some it is the Dow which has been the top performing index since this bull market accelerated higher during the week of the US Presidential elections in November 2016. Over that 14-month span the Dow has gained more than 44%, or +48% on a total return basis. Long term momentum readings are "literally" off the charts with the weekly RSI, now 90, currently at its highest level since 1904 (113 years!) , while its monthly RSI, now 89, is at the highest reading since the Dow's inception in 18 96 . Circling back to the present, 2018 is the fourth time over the last 20 years where the Dow has gained more than 4% over its first two calendar weeks. The other three occasions in 2013, 2003, and 1999, the Dow finished the year with an average gain of 25.7%.

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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.



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