Market Intelligence

Equity Market Insight from Nasdaq MID - October 6, 2016

Thursday, October 6, 2016, 12:11 PM, EST

  • NASDAQ Composite -0.07% Dow -0.08% S&P 500 +0.06% Russell 2000 -0.82%
  • NASDAQ Advancers: 590 / Decliners: 1547
  • Today’s Volume: +3%

US markets open in the red in a generally quiet session ahead of tomorrow’s employment data. Sector performance is mixed, with Financial (-0.3%) at the bottom and Real Estate and Utilities fractionally lower. Treasuries are lower in the longest slide since due to a steepening yield curve. Gold is off about 1% for its fifth consecutive decline and threatens to break its 200-day moving average. Looking ahead to tomorrow’s non-farm payrolls, analysts expect 172k new positions were added, up from 151k in August. The data will have a direct impact on rate expectations, which currently stands at nearly 64% chance of a hike in December.

  • Economic calendar is light with initial unemployment claims coming in at 249k, down from last week’s 254k and the lowest reading since April’s 248k. Initial claims have been under the 300k level for 83 consecutive weeks, the longest such streak since 1972 – 1974. Continuing claims stand at 2,058k, the lowest since mid-April 2000.
  • In Europe the British pound set another 31-year low against the US dollar on downbeat comments from Goldman and Alliance Bernstein. With details of the Brexit coming into focus the firms see both sides hardening their respective stance. Alliance sees the pound potentially dropping another 17%. “Investors fear the U.K. economy may move into recession post-Brexit,” says Neil Jones of Mizuho Bank in London.
  • Nasdaq celebrates three IPOs this morning. Coupa Software priced 7.4 million shares at @18 and opens with a 104% gain; Obalon Therapeutics priced 5 million shares at $15 and opened with a 5% gain; Alliance MMA priced 3.33 million shares at $4.50.
  • Crude Oil is once again up (+0.9%) and Nasdaq’s Tamar Essner, senior director of energy and utilities, recently stated to CNBC, “The Saudis have grown more creative in managing oil markets and putting a floor under. They demonstrated this first by talking up a deal to freeze output that they later scuttled at a special meeting in April, and just last week by delivering an agreement to cut production that was short on details but nevertheless helped prop up crude futures.”

Technical Take:

Following up last week’s production cut announcement by OPEC, crude oil is showing impressive follow-through this week first by breaking above the August high, $48.75, and then today breaking above the psychologically important $50 price level. Over the last seven sessions crude has gained 12.6%, despite the US dollar’s breakout to 2-month highs. The next key resistance level from here is just above at the $50.92 - $51.67 range which represents the highs from October 2015 and June 2016, as seen in the below weekly period price chart. With the daily RSI already up at the 65 level, it should be difficult for crude to break through this range on its initial test as previous buyers underwater for the last 3-4 months look to get out near flat and short term traders enter sell orders at “obvious” pivots that provide attractive risk/reward entries. Thus near term upside may be limited from here. Over the longer term time frame however, crude oil could be carving out a large inverse head & shoulders bottoming pattern which on a breakout above the neckline has an upside projection of $75.

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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