Friday, February 10, 2017, 11:40 AM, EST
- NASDAQ Composite +0.2% Dow +0.3% S&P 500 +0.25% Russell 2000 +0.46%
- NASDAQ Advancers: 1280 / Decliners: 867
- Today’s Volume (100day avg): +12%
US stocks will attempt to close higher for the 4th consecutive session (longest streak in over a month), and set another all-time high. Japanese stocks soared today, with the NKY Index (2.5%) advancing by its largest margin since early 2016. Crude’s midweek bullish reversal is continuing today, helping energy stocks outperform (+0.85%), while Consumer Staples are the lone sector in the red (-0.07%).
- Japan’s PM Shinzo Abe will meet with President Trump today, and there’s speculations the two will discuss how Japan can invest in US infrastructure, which might spur a rally in Japanese equities. The Yen initially weakened significantly vs. the US Dollar since the election, then rallied somewhat over the past six weeks, but we’ve seen a slight reversal over the last two days.
- On the earnings front, ATVI has jumped this morning, up more than 15% and poised to have one of its best trading day’s ever. Despite a slight sales dip from their hit game, Call of Duty, the company was able to beat analyst expectations and issue an optimistic outlook. Other large cap stocks seeing upside; CBRE Group (+9.5%), News Corp (+5%) and Mead Johnson Nutrition (+5%), while Cerner (-4.4%), Teradata (-2.5%) and Western Union (-2.4%) are weaker.
- The IEA’s Monthly Report out this morning indicated OPEC has achieved about 90% of their planned production cuts. Although that represents record level of compliance the IEA goes on to say that OPEC’s six-month plan won’t be sufficient to bring markets into balance. The IEA also boosted its global demand forecast for 2017 by 1.4m barrels per day. That along with the strong level of compliance has crude oil up about 1.5% this morning, and that’s despite inventory levels consistently going higher since the OPEC plan went into effect.
Is it hammertime for energy stocks?
Earlier this week we noted crude oil was at an important technical inflection point as it tested a cluster of technical support combined with conflicting seasonal and positioning data. Thus far it has held where it needed to by responding with back to back gains of 1.3% and 1.6%, yet it needs to get above the $55 resistance before bulls can feel comfortable again. YTD oil is essentially flat with a modest gain of 0.22%, however energy stocks are in the red with the XLE ETF down 2.75% YTD. After leading all sectors in 2016 with an annual gain of 24.9%, the XLE is on pace to be down seven out of the last nine weeks. The long term weekly chart, however, shows the XLE has successfully tested a key support zone, $71.70 - $72, for the second week in a row, and then rallied back near the top of the weekly range forming consecutive hammer candlestick patterns. This support was initially a major pivot low in January 2015 before turning into resistance over twelve months from November 2015 to November 2016. It has flipped once again to support, reinforcing common technical price action of support turned resistance, and vice versa. Note the December highs took place with the weekly RSI above the “overbought” 70 level. It has now reverted back to a more neutral 55 reading which is well above RSI’s bullish support range of 40-50. Next week’s price action will be key as a green candlestick would confirm this week’s reversal and signal the group is in the early stages of resuming 2016’s uptrend. Finally from a relative strength perspective, the ratio of the XLE to the S&P 500 peaked in December at a major pivot from Q4 2015. It has since retraced to the rising support line connecting the lows from 1H’16 suggesting it could be ready to reverse higher and resume its outperformance versus the broader market.
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.