Market Intelligence

Equity Market Insight from Nasdaq MID - February 14, 2017

Monday, February 14, 2017, 12:38 PM, EST

  • NASDAQ Composite +0.03% Dow +0.09% S&P 500 -0.06% Russell 2000 -0.07%
  • NASDAQ Advancers: 1051 / Decliners: 1130
  • Today’s Volume (100day avg): +7%

Equites are taking a breather, while Treasuries and Currencies are seeing the most activity today. Janet Yellen is currently testifying to the Senate and scheduled to speak to House members tomorrow. The Financial and Consumer Staple sectors are advancing this morning, while Utilities and Real Estate are off by more than 1%. OPEC nations appear to be sticking to their production cuts, and the initial numbers have been larger than expected, which has spurred a rally in the price per barrel over the past 5 days (+5%).

  • The Chairwoman’s testimony has been more hawkish than expected, pushing the US Dollar index to its highest level since 1/19. A rate hike in March still seems unlikely (34% probability), but Yellen believes more interest rate hikes are appropriate if the economy continues to meet the Fed’s expectation. If the committee waits too long for a rate hike, it would be “unwise” she stated.
  • Apple is once again higher and within $0.20 of its all-time (134.54), and on pace (currently +12%) for its 3rd consecutive month of significant gains (>4.5%).
  • The US Dollar weakened overnight in response Michael Flynn’s resignation, signaling another wave of Trump administration uncertainty.

Technical Take:

The US Dollar Index (DXY) is recording a modest 0.2% pullback ahead of Janet Yellen’s semi-annual testimony before Congress, marking her first Congressional appearance since Trump was sworn into office. Markets will be laser-focused on the Chair’s commentary, if any, regarding the new Administration’s fiscal policy and tax cuts and how they may impact the Fed’s path of future rate hikes. Adding uncertainty to the marketplace is the resignation of Trump’s national security adviser. After the Fed raised its benchmark rate at the December 14 meeting, the greenback recorded a 52-week high in the very next session at 103.56 but never was been able to close above that level. Soon after the DXY declined five out of six weeks into early February where it bottomed at 99.23 which equaled the 38.2% retracement of the uptrend from May’16 through January’17 (highlighted in yellow). The ensuing rally recorded a streak of nine consecutive gains, on pace to end today, over which time it formed a bullish engulfing candlestick (weekly period). Importantly this bottoming pattern occurred along the key 100.39 price level which previously marked a 20-month resistance and reinforcing the adage “resistance turned support”. Yesterday’s high, 101.11, is itself nearly identical to the 38.2% retracement of the 2017 downtrend. If today’s weakness sees any downside follow through, the February low at 99.23 is the critical support level for the DXY to hold above. A retest of this low sets up the double bottom pattern. Conversely the near-term resistance levels reside above at the 50% and 61.8% retracement levels of the 2017 decline, 101.53 and 102.07. With the plethora of crosscurrents impacting FX, the longer term picture is normally the best viewpoint in filtering out the daily noise. The below weekly period chart illustrates a Q4’16 breakout above a clearly defined 20-month resistance, followed by a retest of the breakout in Q1 culminating in a classic bottoming pattern along a key Fibonacci retracement, and now potentially a resumption of the prior uptrend originating in 2014-2015.

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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