Market Intelligence

Equity Market Insight from Nasdaq MID - October 28, 2016

Despite a better than expected Q3 GDP report, equity markets have started off relatively flat with the DJIA +4pts and the S&P500 down 1pt. Nine of eleven S&P sectors are in the green as REIT’s are leading with 0.8% gain. Healthcare is the laggard down (1.68%), and . Crude oil is seeing an inside day with a modest decline of 0.9%, as the US Dollar Index is relatively flat, off (0.19%). After a strong week, rates are beginning to fade. The UST 10-yr yield made fresh five months highs earlier in the session at 1.877%, but have now pulled back to 1.845%

  • U.S. GDP (the broadest measure of goods and services produced across the economy) grew more than previously forecast, coming in at +2.9% versus expectations of 2.6%. This is the strongest quarterly growth rate since December 2014 and on the surface supports the views of those Federal Reserve officials that say the economy is improving and a rate hike is warranted. Critics will point out that personal consumption came in at 2.1%, below the 2.6% consensus, and more than 50% down from Q2’s 4.3% number. Meanwhile the upward surprises were due partly to increased exports which will be tough to replicate in Q4 given the increasing strength of the US dollar.
  • The University of Michigan Sentiment measured 87.2 which is slightly below the 88.2 consensus estimate. The reading is a decline from 91.2 reported last month and is the lowest since the 87.2 sentiment number in September 2015.

The US Dollar Index (DXY) has gained 3.48% in October which is the strongest monthly performance since January 2015. Zooming out and viewing the long term picture we see DXY is less than 1.5% from major resistance at the 100 level. This is where DXY peaked in March 2015 following a phenomenal 25% gain from mid-2014 through Q1’15. DXY first tested this resistance nine months later in December 2015 but was swiftly rejected. Despite three strong, green weekly candlesticks beginning in October, there are signs DXY could fade before reaching the 100 level. This week’s price action has formed a spinning top candlestick pattern where the range between the open and close (i.e the body) is small and located in the middle of a wide high-low range for the week. After a prior steep uptrend this pattern reflects uncertainty and is often an indication a change in trend is taking place. In addition the daily RSI peaked at 75 this week, reflecting “overbought” technicals, and is now close to crossing down below the 70 level which can signal a pullback is in process.

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.

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