Tuesday, March12, 2019, 12:31 PM, EST
- NASDAQ Composite +0.47% Dow -0.31% S&P 500 +0.38% Russell 2000 -0.10%
- NASDAQ Advancers: 1215 / Decliners: 1072
- Today's Volume (vs. Monday)-2.35%
- Crude+0.86%, Gold+0.51%
- U.S. Small Business Optimism Rises to 101.7 vs, consensus 102.5
- Theresa May’s last minute Brexit deal suffers a legal setback when Britain’s Attorney General Geoffrey Cox publishes his opinion stating legal risks still remain
- February US CPI +0.2% vs. consensus +0.2%; February ex-Food & Energy +0.1% vs. consensus +0.2%
Equities rebounded yesterday from the worst week of 2019, closing near the highs of the day as technology stocks rallied on deal news and positive retail sales installed renewed consumer confidence that the economy is not headed for a downturn. The S&P 500 broke back through and above the key 200 day moving average that it had been pushed under during last week’s market pull back. It is back within striking distance of the 2,800 mark that has stalled several previous rallies. This morning’s market is off to a somewhat muted start as the feel good carry over from yesterday’s market has been tempered early on by mounting problems at Boeing and new obstacles confronting Prime Minister May’ amended Brexit deal. As uncertainty surrounds the crash of the Boeing 737 Max 8, Malaysia, Singapore, Australia, the U.K and some Latin American countries have closed their airspace to the aircraft. This follows the lead of China and Indonesia who acted yesterday continuing to pressure Boeing's shares that remain the highest price stock in the price weighted Dow.
Overseas after British Prime Minister Theresa May flew to Strasbourg last night to meet with European Commission President Jean-Claude Junker to reach a revised divorce deal, matters took a turn for renewed uncertainty after Attorney General Geoffrey Cox said the risks surrounding the Irish backstop, a major sticking point for those who support Brexit, were unchanged. The Irish backstop is a way to avoid the restoration of a defined border between the Republic of Ireland and Northern Ireland that was previously erased with the 1998 Good Friday Peace agreement between London and Dublin. Brexit politicians don’t like that the backstop could mean that the U.K would remain within the EU customs union for an indefinite amount of time. A key vote in Parliament is scheduled for this afternoon.
On the economic front today the main focus is February’s CPI report. This is a key measure of underlying inflation in the U.S. which was up 0.2% on the broader reading as expected while core CPI, which excludes food and energy rose only 0.1% from the prior month and 2.1% from the year earlier. Those figures trailed analyst’s estimates. The data suggests that there is a greater chance that inflation will not hold up around the Fed’s target rate of 2% which would keep the Fed in a patient state of mind discouraging them from additional rate increases in the near future. Earlier this morning we had a read on February’s Small Business Optimism that rose to 101.7 vs. the estimated 102.5. 22% of employers surveyed think it is a good time to expand while net percentage of employers anticipating job creation fell to 16%.
Despite breaking a five month string of declines, small business optimism remains below the recent peak of 108.8 reached in August The report seemed to suggest that small businesses slowed operations due to the government shutdown. Crude oil is getting a boost today on continued plans by Saudi Arabia to keep its oil output well below the level required of it as part of an OPEC led supply cutting deal for April. Adding to oil’s rise this morning is the inability of Venezuela’s state run PDVSA to resume exports after a power outage hit the main port last week. Gold is mixed to a little better today as a shaky updated Brexit deal weakened the Dollar vs. other major currencies making the shiny metal attractive to non-US currency holders 9 of the 11 sectors remain in positive territory with Consumer Discretionary and Industrials the laggards, the later directly due to Boeing’s weakness.
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Brian’s Technical Take
WTI crude oil gained 1.3% yesterday and in the early going today is up another 0.8% following news that Saudi Arabia will extend production cuts into April, and a four-day blackout across Venezuela that has led to a nationwide collapse in production. Following a 35% rebound off the December lows, WTI has spent the last three weeks consolidating in a tight range roughly between $55.50 (= 38.2% Fib. Retracement) and $57.85.
Over this time the MACD has remained positive and daily RSI has held above the 55 level which is comfortably within the bullish zone. This indicates the corrective price action is digestion rather than a pending reversal. A breakout above the top of the range opens the door to a test of the 200-day moving average, now 62.17 (yellow line).
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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 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.