Market Intelligence

Equity Market Insight from Nasdaq MID - May 9, 2017

Tuesday, May 9, 2017, 11:40 AM, EST

  • NASDAQ Composite +0.35% Dow +0.03% S&P 500 +0.03% Russell 2000 +0.05%
  • NASDAQ Advancers: 1185 / Decliners: 947
  • Today’s Volume (100day avg): +11%

Earnings will attempt to push equities to another all-time high, while fighting declining oil prices and potentially an overbought condition for US stocks. We’re in the final 3rd of earnings season; with results continue to outpace expectations and better the same quarter last year. The US Dollar Index is trending towards its best two day rally since early March.

  • The Value vs Growth trade has widening significantly in 2017, favoring Growth stocks. The Russell 1000 Growth is higher by more than 12% YTD, while the Russell 1000 Value is up 2.5%. Michael Block from Rhino Trading believes its time to take the other side of the trade. “The gradual rate hike environment should provide a tail wind for value at some point, although I do feel like I’m in a Beckett play at times as I watch that trade. But its time is coming. I’m starting to move that way with the financials and stock selection within other sectors long and short.”
  • Several Fed members will speak this week and we anticipating more hawkish commentary as the markets have hit nearly 100% certainty the committee will hike rates at the June meeting.

  • On the economic front, U.S. Wholesale Inventories climbed by 0.2% in March, higher than the expected 0.1% decline. Separately, the NFIB Small Business Optimism Index jumped to its highest level in 12 years in late 2016, and the monthly figure has sustained its elevated level supported by a robust jobs market and the urgency for tax reform by President Trump.

Technical Take:

Energy continues to be this year’s worst performing sector with a YTD performance of negative (10%). Last week the S&P Financials Index made its fourth consecutive weekly decline to fresh YTD lows, however it did manage to rally back near the week’s opening price and in doing so carved out a bullish hammer candlestick pattern (weekly period). The location of this candlestick took place along the 38.2% Fibonacci Retracement of the 2016 uptrend, which arguably increases its chances as a reliable support level. That said this same pattern has already been seen on more than one occasion in 2017 before failing and rolling over to new lows the following week. Confirmation of this potential reversal is crucial and requires a green candlestick at this week’s closing price. Last week’s low of 484.82 is now the key support line. Momentum is not favorable as the daily and weekly MACD remain in negative territory, and the weekly RSI has broken below the low end of the bullish 40-50 support range. Dip buyers beware.

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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