Market Intelligence

Equity Market Insight from Nasdaq MID - July 15, 2016

The markets are drifting a little lower at midday after a higher open, that despite the terrible news out of France. The S&P is up for the past five sessions, setting record highs along the way, so a little profit-taking this afternoon might come into play. This is a monthly options expiration day so expect volume will increase toward the close. Materials and Health Care are the best performing sectors up nearly 0.3% each. Overall, 5 out of the 10 sectors are in the green with Financials the worst underperformer.

  • Show me the Money! There has been some back and forth about the recent rally and whether its justified. Regardless of the academic debates investors are spending. Bloomberg data reflects thus far in July, most going into large cap ETFs, and that compares to just $6.3 billion for all of the second quarter. Lipper data shows mutual fund inflows of $7.8 billion for the past week while the previous four weeks saw outflows.
  • came in strong with top line of 0.6%, the third monthly advance, while analyst was expecting a paltry 0.1%. Ex-autos and gas increased by 0.7% versus an expected 0.4%. The Commerce Department reports that sales increased in 11 of the 13 major groups with building materials jumping 3.9%. Non-store retailers continued pulling ahead with a 1.1% increase while department store saw just 0.7% and restaurants declined 0.3%.

Following two years of steep declines, the energy sector is the 2nd best performing sector in 2016, +16% YTD, due primarily to the near 100% rally in WTI oil off the February lows. Looking at . This year’s rebound off the February lows stalled out in late-April around the 38.2% Fibonacci retracement of the 2014 – 2016 decline, and has since been consolidating sideways. The price action throughout this bottoming process resembles a common price pattern known as the “cup and handle”, where price has a rounded bottom shape known as the “cup”, followed by a sideways consolidation representing the “handle”. The neckline of this pattern coincides with the 38.2% retracement level at the 515 price level.

Despite WTI oil being relatively flat this week, the energy index is breaking out of the consolidation pattern, +3.7% over the last five sessions, and is now on pace to make its first weekly close in 12-months above the 515 resistance. As long as the index can hold the breakout line at 515, the ensuing move could be meaningfully higher given the size of the pattern the index is emerging from.

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.

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.

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.

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.

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.

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.