Equity Market Insight from Nasdaq MID - July 29, 2016

Friday, July 29, 2016, 1:10 PM, EST

  • Dow -0.02% S&P 500 +0.25% NASDAQ Composite +0.34% Russell 2000 +0.29%
  • NASDAQ Advancers: 1173/Decliners: 1006
  • Today’s Volume: -2.7%

In impressive fashion, equity markets are holding up despite disappointing US economic data as well as an announcement from the Bank of Japan on a stimulus package which appears to have fallen short of the market’s expectations.

  • On the data front the US economy expanded less than forecast with Q2 GDP +1.2%, well below consensus expectations of +2.5%. In addition Q1 GDP was revised down to 0.8% from 1.1%. Immediately following the results both rates and the US Dollar declined as markets anticipate a lower for longer policy from the Federal Reserve.
  • The US Dollar Index is down 1.37%, its third largest decline in 2016 while the 10-year UST yield is back below 1.50%, last 1.475%. Crude oil which is down 20% from its June highs started today’s session in the red but found support at the 200-day simple moving average and is now green. WTI oil last traded at $41.48, +$0.34 from yesterday’s close.
  • Congratulations to Talend SA for going public today, and currently trading higher by ~40%! Nice Work and welcome to the Nasdaq family of listed companies!

Technical Take:

The USDJPY currency pair is down 2.5% so far in today’s session following the Bank of Japan’s decision on monetary policy which appears to have fallen short of market expectations. The yen is widely viewed as a barometer of risk and often moves in sync with equities. The below chart illustrates the relatively strong correlation between the USDJPY (white line) and the S&P 500 (yellow line) over the prior four years, however a divergence has been emerging since early March when equities rebounded but the USDJPY trended lower. Even with today’s strength in the yen, the S&P500 is near flat compared to yesterday’s close, just ten points away from all-time highs. While the divergence between the two asset classes can continue, equity investors should be aware that August is a notoriously poor month for stocks. In fact August ranks as the worst performing month over the prior five and twenty years, and the 2nd worst performing month going all the way back to 1951. Is the yen the canary in the coal mine?

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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