Market Intelligence

Equity Market Insight from Nasdaq MID - December 6, 2016

Friday, December 6, 2016, 12:16 PM, EST

  • NASDAQ Composite -0.10% Dow -0.6% S&P 500 +0.01% Russell 2000 -0.22%
  • NASDAQ Advancers: 1012 / Decliners: 1173
  • Today’s Volume (100day avg): -9%

US equities are mixed this morning, with Energy stocks suffering the steepest decline. Trading volume is lighter than normal (-10%), as the major indices attempt to close at all-time highs for the 2nd consecutive day. Telecommunication and Real Estate are the strongest performers, up 1.5% and 0.7%, respectively.

  • For the first time since the OPEC announcement, Crude Oil is moving lower (-3%). Late yesterday, WTI Crude (Jan17) started lose its bullish momentum after failing to find traction above $52/ barrel, and the theme appears to be carrying-over during today’s session.
  • Today’s economic data was largely in-line with expectations, as October’s Factory Orders (+2.75) and Trade Balance (-$42.6b) didn’t move the needle. Imports rose to its highest level in 14th months, increasing the monthly trade deficit by 18% from the September read. As long as the US Dollar remains elevated, goods made in the United States will be more expensive on the global scale, and we’ll likely see soft domestic export data.
  • Amazon is higher by 1% after an announcement that might disrupt the grocery market. The company unveiled its plan to remove check-out lines in their new small-format grocery store, which will be available to Seattle shoppers early next year. Despite retracing from its all-time high in October, Amazon’s stock is higher by 13.5% in 2016, significantly outpacing the S&P Consumer Discretionary Index (+5.2%). Netflix is also posting gains today, up more than 2.5% after an Evercore ISI upgrade and price target raise, citing higher subscriber forecasts. The Microsoft/Linkedin deal won EU’s approval, leading the way for the transaction to close this year.

Technical Take:

In early July 2016 long term rates made a generational low when the UST 10-year yield bottomed at 1.32% as investors flocked to safe havens immediately following the Brexit vote. Over the next four plus months the long yield nearly doubled to 2.49% at its peak last week on December 1st. This resistance marked an 18-month high last seen in June 2015 when the long yield was then completing an 85bps rise over a five month period of time. Reinforcing this horizontal resistance level is the clearly defined declining trend line originating from July 2006 and connecting the highs of 2010, 2011, 2013, and now the present. The numerous failures at this declining trend line reinforces its importance and suggests it will be difficult for the long yield to break above it in the near term. In addition the shorter term daily RSI reached an extreme high of 84 during its most recent surge and is just now beginning to cross down below the “overbought” 70 level. This indicates “buyer exhaustion” and suggests the yield is due for a period of consolidation either backwards in yield or sideways in time. While in the near term the long yield may not have much upside left, longer term there is an argument to be made that a secular “double bottom” low was made at the depths of 2012 and 2016 following a 35 year downtrend. Confirmation would require a breakout above the 2014 highs at 3.05%, at a minimum.

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.