Equity Market Insight from Nasdaq MID - December 14, 2017

Stock prices increasing and decreasing in value Credit: Shutterstock photo

Thursday, December 14, 2017, 12:00 PM, EST

  • NASDAQ Composite +0.21% , Dow +0.12% , S&P 500 +0.09% , Russell 2000 flat
  • NASDAQ Advancers: 1169 Decliners: 936
  • Today's Volume (from yesterday): -0.5%

U.S. stocks are trading mixed to higher with 7 of the 11 S&P 500 sectors in the green. Consumer Discretionary and Tech lead the way higher while Telco and Healthcare trade in the red. Large-cap names are outperforming. M&A dominates headlines with Walt Disney (DIS) and Twenty-First Century (FOXA) entering into a $52.4 billion stock deal with DIS acquiring a majority of FOXA assets including Twentieth Century Fox Film & Television studios, along with cable & international TV businesses.

  • U.S. Retail Sales in November were strong according to the U.S. Commerce Department. Overall sales increased 0.8% compared to polled expectations of a 0.3% increase. Retail sales ex auto climbed a full 1% month-over-month compared to economist expectations of a 0.6% increase. October's sales were also revised higher. This is the best year-over-year sales report since 2004 and bodes well for U.S. GDP.
  • Unemployment numbers released today again show that labor is in demand in the U.S. as weekly initial jobless claims were less than economists' forecast. According to the U.S. Department of Labor, reported Initial Jobless Claims for the week were 225,000 vs polled expectations of 236,000. Continuing Claims were also lower at 1.886 million vs polled expectations 1.9 million. Initial jobless claims continue to linger near all-time lows, indicating that employers are having a hard time finding skilled labor.
  • The FCC votes today on the net neutrality. The option to roll back the Obama-administration legislation is expected to pass. Net Neutrality states that all internet traffic must be treated equally by internet service providers. FCC Chair Ajit Pai believes that repealing this legislation will create more competition and innovation in the space while opponents believe it will drive up user costs with less options for providers thus diminishing competition.
  • Tomorrow, Friday December 15 th is "Quad Witch" The quarterly event known as quadruple witching or Quad Witch occurs on the third Friday of the last month in each calendar quarter. The four legs of the Quad Witch expirations are equity options, index options, index futures, and single-stock futures. Concurrent with tomorrow's Quad Witch is the annual rebalance day for the Nasdaq 100 Index, the Nasdaq Biotechnology Index and others, as well as the quarterly S&P family of Indexes. Tomorrow is expected to be one of the highest trading volume days of the year with the majority of the volume coming at the close of the markets.

Technical Take:

While markets and change and evolve over time, human nature does not. Hence the price patterns that have been observed and written about over the past 100 plus years are still evident in today's world of electronic and algorithmic trading. In technical analysis these similar price patterns over different time frames are known as fractals. One current example of multiple fractals can be seen in the EURUSD currency pair. After three straight years in the red, in 2017 the EURUSD gained 15.3% at its YTD high in September and as of last sale is up 12% YTD. The fractal pattern here is the common head & shoulders (H&S) pattern which is potentially forming for the third time in 2H'17. The YTD high shows there mini tops (annotated in white) and a clearly defined neckline (dotted white). The size of the pattern carried a measured move to $1.1554 which was reached in early November. As that correction played out, a potentially larger H&S pattern (violet red) formed with the left and right shoulders at the August and October highs and the neckline at 1.1662. While the neckline was pierced, it was only a temporary breakdown and the EURUSD recovered back above it in two weeks' time. Over the last four weeks the pair has potentially been forming a third H&S pattern (yellow) with a neckline at 1.172. Confirmation requires a break of the 1.172 neckline which carries a measured move down to 1.1465. This target puts the larger H&S pattern (violet red) back in play which itself carries a measured move down 4.5% to 1.1232. So far one of the three patterns have confirmed and reached its downside measured move. If the 1.172 support level breaks down (dotted yellow), that will trigger a 2 nd H&S pattern (yellow) which then puts back into play the third and largest H&S pattern with a neckline/major support range down at 1.1554 1.1662. Clear? Crystal.

Please see Nasdaq Revitalize page, where we make recommendations about improvements to the capital markets to promote growth, innovation, job formation and wealth creation. We welcome your feedback on our proposals to reduce burdens on companies with proxy reform, short sale disclosure, and tax, litigation & disclosure reform.

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 has 16 years of trading desk experience. Prior to joining Nasdaq Brian executed equity orders and provided trading ideas to institutional clients. He also contributed technical analysis to a fundamental research offering. Brian focuses on helping Nasdaq's Financial, Healthcare and Airline companies among others understand the trading in their stock. Brian is a Chartered Market Technician.

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

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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