Market Intelligence

Equity Market Insight from Nasdaq MID - February 13, 2017

Monday, February 13, 2017, 12:31 PM, EST

  • NASDAQ Composite +0.5% Dow +0.64% S&P 500 +0.43% Russell 2000 +0.42%
  • NASDAQ Advancers: 1322 / Decliners: 896
  • Today’s Volume (100day avg): +7%

All major indices are trading all-time highs, and the Russell 2000 seems to be breaking out from its recent tight trading range. Bank stocks (KBW Index +1.4%, and KRE Index +1.5%) are leading the markets higher this morning ahead of the Trump’s pro-growth plan, which is expected this week. Treasury yields (10 year yield +1.48%) are advancing for the 3 consecutive day, attempting to gain some traction off its support (2.30).

  • On the M&A front, Allergan announced it will be acquire Zeltiq Aesthetics for ~$2.5 billion to improve their cosmetic surgery business. Analysts are expecting to see a flurry of large deals this year as the Trump’s administration looks to lighten regulations for US companies which may make it easier for consolidation.
  • According to a Fed survey, the expected U.S. consumer inflation (+2.9) for the next 3 years has climbed to its highest level since mid-2015. The Trump plan is still in the speculative stage, but there’s belief amongst the policy makers that we’ll see increasing inflation, which would support interest rate hikes this year. Janet Yellen will testify in D.C. this week in front of the Senate and House and she’ll likely reiterate the central bank’s commitment to gradual hikes this year. The chairwoman might be forced to voice her opinion on the new administration’s possible policies and how they may benefit the economy.
  • Amazon is advancing this morning (+1.9%) after unconfirmed reports the company will be developing a paid-for channel to possible compete with HBO and Showtime.

Technical Take:

After 6-7 weeks of mostly sideways price action for equity indices, animal spirits returned last week with the major averages all breaking out to new 52-week and all-time highs. The small cap Russell 2000 squeaked out its new closing high by less than a point vs. the prior high made eight weeks ago on December 9th, and today it is seeing healthy upside follow-through. Some are accrediting the markets newfound strength to a number of Trump-related actions including: details for the new corporate tax plan are expected to be released in a few weeks’ time, Trump’s phone call w China’s Xi where he acknowledged the one-China policy, and Friday’s meeting w Japan’s Abe where trump largely left alone the topic of currency manipulation. In addition Fed Governor Tarullo, a noted dove, indicated his plans to resign in Q2’16. With two open seats already, and the Chair and vice-Chairman’s seats due to open up in early and mid-2017, Trump can shape the future of the Federal Reserve through appointment. Along with a potentially more hawkish Fed, the current expectation for an easing regulatory environment becomes more and more a reality. Although the bottom line benefits to corporate earnings remain a future event, equities are not standing by. The small cap Russell 2000, which is widely viewed as a barometer of risk sentiment, is now breaking out from elevated trading ranges following a robust Q4 and FY 2016.

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.

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