Market Intelligence

Equity Market Insight from Nasdaq MID - February 17, 2017

Friday, February 17, 2017, 12:10 AM, EST

  • NASDAQ Composite -0.01% Dow -0.3% S&P 500 -0.19% Russell 2000 -0.3%
  • NASDAQ Advancers: 1035 / Decliners: 1146
  • Today’s Volume (100day avg): +6%

US stocks ended their recent winning streak yesterday, and they are ticking lower once again this morning. Despite the pull back over the past two sessions all the major indices are on pace for the 4th consecutive day of gains. Consumer staples are the lone sector in the green, while Energy, Telecom and Financials are all off by more the 0.5%. The Bloomberg Commodity Index is off by more than 1.5% this week (steepest weekly decline since early November).

  • Kraft Heinz(+8%) made a preliminary offer to acquire Unilever for $143b, which was quickly declined by Unilever. There was speculation that Kraft would attempt Mondelez back to its portfolio, but today’s announcement has investors believing the company might be heading towards a new objective. Unilever believes the initial offer undervalues its company and at this time, sees no need for further discussions.
  • We’ve been monitoring the probability of a rate hike at the March Fed meeting, which jumped to 44% on Wednesday and pushed the Dollar index (DXY) to its highest level in over a month. The lack clarity behind Trump tax/spending plans has injected some uncertainty in the market and added volatility to treasuries and currencies. Speaking of volatility, the CBOE VIX Index is going to post its largest weekly gain of 2017.
  • On the earnings front, Arista Networks (+18%), Sunpower (+11%) and Cognex (+10%) are the three best performers on the Russell 1000 after reporting strong results and outlook.

Technical Take:

Emerging markets have been as hot as US markets this year with the emerging markets etf (EEM) in the green in seven out of the last eight weeks for a YTD gain of 9.3%. In the beginning of this week the EEM broke out to new 52-week highs, made previously in September 2016, and peaked at $38.73. The prior two sessions, however, have formed a bearish “dark could” topping pattern where yesterday’s gap higher marked the top of the session and then closed at the midpoint of the prior large green candlestick. Today this bearish pattern is seeing strong confirmation with today’s gap lower. Momentum is now coming off from extreme levels as the daily RSI reached a 4-year high 76 reading on Wednesday to 65 today. On the weekly time frame the price action has formed a “gravestone doji” topping pattern which importantly has developed along the prior 52-week high at $38.32. Although the longer term structure remains constructive since “emerging” from seven-year lows in Q1’16, near term the EEM may be in for a period of consolidation as it continues working off overbought technical readings.

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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