Tuesday, March 14, 2017, 11:33 AM, EST
- NASDAQ Composite -0.60% Dow -0.30% S&P 500 -0.50% Russell 2000 -0.85%
- NASDAQ Advancers: 489 / Decliners: 1669
- Today’s Volume (100day avg.): -4.7%
The market opened modestly lower this morning ahead of the Fed meeting tomorrow. Investors may be cautious with falling oil prices, expected rate increases in the US, Brexit negotiations in the UK, BOJ/BOE meetings and US politics all in the mix for a net negative.
- Crude oil markets get rattled as Saudi Arabia announced this morning that it increased production in February by more than 10M bpd. Recall the Kingdom cut output more than required under the OPEC agreement, and with the increase the country is still meeting its OPEC obligations. The OPEC agreement ends in June so we will likely see more jockeying for market position through then. WTI crude was seeing a slight rebound this morning after falling nine of the past ten sessions, but now down 2.1% and below $48.
- February Producer Price Index came in at 0.3% well ahead of an expected 0.1%, and same for core PPI, +0.3% v 0.2% consensus. Energy prices rose +0.6%, food costs +0.3%, and travel accommodations +4.3%.
- Reflation trades to continue? This may not just be a US thing. The WSJ says that Fed, BOJ and BOE meetings this week are set to indicate an improving global backdrop. This would mean the long era of near-zero interest rates and bond-buying programs is over. The trick of course for bulls is seeing growth support the market.
- Buttressing the above is a Manpower Q2 employment outlook survey which sees global hiring improving around the world. Forecasts have employers in 39 of 43 countries and territories expecting to add to their workforces over the next three months, with hiring prospects strengthening q/q in 17 countries and territories, and declining q/q in 15.
- Also in the Journal: Sanford Bernstein Research noted sentiment towards value stocks has reached levels rarely seen before, with analysts upgrading value names faster than they have ever done in past 30 years. This might be another crowded trade.
Technical Take:
The large cap DJIA and SPX indices are modestly lower today, yet still remain within 1.6% of all-time highs. Underneath the hood however there is carnage going on specifically in the energy market. Despite seasonal trends WTI oil is down another (2.2%) today after Saudi Arabia announced a production increase. In March alone Crude is off (12.3%) while breaking through a number of key support levels including its 12-month rising support line as well as the 40-week sma (yellow line). Long term momentum has quickly turned bearish reflected by the weekly RSI dropping from the low 60’s to the low 40’s in the month of March and is now at 12-month lows. Coming into the month the weekly COT reports showed speculators with their largest long positioning on record, so this month’s price action is putting the hurt on many. Despite all that there is intermediate support around the $46 level from the trend line connecting the lows of August and November (blue, dotted line). Holding there would continue the trend of higher lows that’s been in place since bottoming in Q1’16. If that breaks however than the November and August lows at $43 and $41 are the next downside targets. At the moment there are no bottoming patterns in play and so the path of least resistance appears lower.
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.
