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US Markets

Equities Mixed on Trade Rhetoric

Today the market is trading in mixed territory with not a great deal of conviction.

  • NASDAQ Composite -0.08% Dow +0.21% S&P 500 +0.05% Russell 2000 +0.06%
  • NASDAQ Advancers: 1144 Decliners: 1110
  • Today’s Volume (vs. Thursday) -10.76%
  • Crude -1.21% , Gold +0.03%

Market Movers

  • November US Markit PMI - Manufacturing - Flash 52.2 vs.  consensus 51.5 (Oct final reading was 51.3 and Oct flash 51.5)
  • November US Markit PMI - Services - Flash 51.6 vs. consensus 51.2 (Oct final reading was 50.6 and Oct flash 51.0)
  • November US Michigan Consumer Sentiment (final) 96.8 vs  consensus 95.7

Charlie’s Commentary

Stealing a tune from Led Zeppelin, yesterday’s market headline could have been “The Song Remains the Same” as trade news continued to drive the day much the way it has to some extent for the last several weeks. Nothing new really developed but the lack of tangible progress in either direction failed to provide investors with any conviction. The S&P 500 lost -0.2% for its third straight decline. The Dow  and Nasdaq also fell  -0.2%  performing in-line with the benchmark index, while the Russell 2000 slipped -0.5%. The day finished with eight of the eleven sectors in the red as traders booked some profits.

Today the market is trading in mixed territory with not a great deal of conviction. Two sound bites appear to be driving the narrative, one from each side of the negotiations. Earlier today President Xi of China told  an audience that China wants to work out a deal with the US based on mutual respect and equality, but qualified those remarks by saying it wasn’t afraid to fight back if necessary. Domestically, President Trump told Fox news that both sides were “very close” and “we have a very good chance to make a deal”. I would be remiss if I didn’t say that we have heard all this before, but for now that has provided a slight bid to the market.

The economic calendar is a little more robust today highlighted by manufacturing and services purchasing managers indexes. The IHS manufacturing purchasing managers index rose to 52.2 for November which represents a seven month high with measures of output, new orders and employment all improving. This was the third straight advance of the factory gauge indicating that the drag on the manufacturing sector may be in the rear view mirror. The services purchasing managers index increased to a four month high of 51.6, up from the previous period's reading of 50.6 as employment picked up. The University of Michigan’s index of consumer sentiment unexpectedly rose to 96.8 from 95.5 the prior month. According to the Survey of Consumers, consumer sentiment has not been at 95 or higher in 30 of the past 35 months! 

Looking at the commodity space today, oil has pared back its third weekly advance on unsettled trade talks that has weighed on global fuel demand. Despite the slight pressure it is being limited by expectations of an extension to OPEC production cuts into 2020.  Gold prices are slightly elevated given the continued uncertainty and lack of clear direction to the trade deal.

Sector strength is led by Financials (+0.58%), followed by Energy (+0.40%) and Basic Materials (+030%). Under some pressure this morning is Real Estate (-0.80%), Utilities (-0.64%) and Consumer Staples (-0.40%).

Sector Recap

MID Chart 1 112219

Brian’s Technical Take

In the two weeks since we last covered bitcoin, it has blown through all potential support levels - the 8,784 price gap, the 200-day moving average, and the 61.8% Fib) and declined more than 20% as of today’s lows. We noted then bitcoin’s history of massive price swings, as measured by the Average True Range (ATR), and participants should thus reduce position size accordingly. Bitcoin falls into the “Adult Swim Only” category.  

At today’s lows bitcoin entered into the 6,426 - 6,867 price gap, another potential support zone, made all the way back in early May.  It is seeing a relatively modest bounce so far, but nothing that gives strong conviction that THE low is in. Both the break below the 200-day sma, and price currently at the low end of this week’s range, are fair warning to potential knife catchers looking at say one potential support level, the 6,867 price gap, as a buy signal.  

That’s said price is approaching the lower end of the five-month declining price channel, which coincides with the gap, but I would like to see a bullish reversal pattern on the weekly candlestick before dipping a toe into the water.

MID Chart 2 112219

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 Associate Vice President 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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