Dow Starting To Close Performance Gap

MarketInsite Stocks Graphic

Thursday, June 7, 2017, 10:36 AM, EST

  • NASDAQ Composite -0.60% Dow +0.34% S&P 500 -0.08% Russell 2000 -0.31%
  • NASDAQ Advancers: 966 Decliners: 1185
  • Today’s Volume (100 day avg) +11.1%

The market opened generally higher this morning but the momentum stalled with the Nasdaq Composite and the R2K in the red following three consecutive record closes. Most sectors are higher with Energy (+1.6%) leading and Tech (-1%) trailing. There have been a few developments on trade with China and ZTE Corp, but news flow is rather quiet. Markets in Europe are lower after soft data on exports and German factory orders, and most Asian market closed higher. Treasury yields are holding steady while the dollar index (-0.2%) and gold (-0.1%) trade slightly lower, and crude oil gains 1%.

  • Attention turns to the G-7 meeting that gets underway tomorrow and it will be Trump’s first encounter with the other leaders after imposing tariffs on steel and aluminum. Economic Advisor Larry Kudlow says the tensions as simply a “family quarrel,” but French President Emmanuel Macron says Trump’s tariffs are “insulting and unacceptable” and warns that he will not sign the closing statement unless progress in made. Germany’s Merkel and others may follow Macron’s lead.
  • Consumer comfort for the week ending June 3 cooled hitting a 5 week low of 54.8. The index declined in 3 of the 4 regions but rose in the West. Despite the decline, consumer comfort is running only slightly below the 2018 average of 55.9 after reaching a 17 year high in mid-April. Economists are still projecting a rebound in the short term as a stronger labor market and job growth should stimulate consumer spending / sentiment
  • Weekly unemployment claims continue holding near record lows with new claims coming in as expected at 222k while continuing claims inched higher to 1.74 million. This compliments data from earlier in the week that showed available jobs exceed the number of unemployed workers for the first time in seventeen years.

Technical take: The Dow is Starting to Close the Performance Gap

At the end of May the Dow Jones Industrials was the only major US equity index in the red YTD. While one day or week does not make a trend, today it is the only index in the green and MTD in June it leads all indices with a gain of 3.4% which has lifted its YTD return to +2.1%. After gaining 28% in 2017, followed up by another +5.8% in January 2018, the blue chip index has gone through the longest period of corrective price action amongst its peers and still remains more than 5% below its YTD highs. However the below daily period chart shows the Dow is now making a series of higher lows and higher highs and in the near term may look to close the performance gap. The recent gains in the Dow is likely being aided by the weakness in the US Dollar which has been in decline since running into the major resistance we highlighted in the BLOG back on May 30th. If the dollar’s decline continues, we could see a continued rebound in the Dow.

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Nasdaq's Market Intelligence Desk (MID) Team includes:

Charles Brown is Associate Vice President on The Market Intelligence Desk with over 20 years of equity capital markets experience. Charlie has extensive knowledge of equity trading on both floor and screen based marketplaces. Charlie assists with the management of The Market Intelligence Desk and works with Nasdaq listed companies providing them with insightful objective trading analysis.

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.

Brian Joyce, CMT is a Managing 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).

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.

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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