Equity Market Insight from Nasdaq MID -- September 28, 2016

Wednesday, September 28, 2016, 11:14 AM, EST

  • NASDAQ Composite -0.4% Dow -0.2% S&P 500 -0.3% Russell 2000 -0.18%
  • NASDAQ Advancers: 1163/Decliners: 844
  • Today’s Volume: +3%

US stocks staged a strong rally yesterday and finished around session highs after opening the trading period in negative territory. Oil prices are rebounding today ahead of OPEC producers gathering in Algiers and helping Energy stocks move higher for the 1st time in 4 days. All 11 S&P sectors are in the red, as the markets appear to be pressured by the comments by Janet Yellen that the majority of the FOMC expect a rate a hike in 2016.

  • Crude Oil was weaker by 2.7% on Tuesday after Goldman Sachs lowered their price per barrel expectations for the 4th quarter ($43). The firm believes the balance of supply/demand might be weaker than previously estimated, despite the possibility of output reduction deal struck by OPEC members.
  • On the economic front, Durable Goods was flat in August, but then expanded for the first time since April. Weak foreign demand will continue to be a leading hurdle for a business recovery, but the monthly figure should be considered a positive signal the sector will start to make contributions to the economic growth in the US.
  • The Russell 2000 is more than doubling the performance of the S&P 500 today, up ~0.5%. The Small Cap index is still more than 3% away from its all-time high (1295.99), which it touched in June 2015, while the S&P 500 is ~1.4% from its high. Equity analyst Steven DeSanctis recently stated that small cap stocks are the best investment right now stating "Large companies need to buy growth. And where are you going to find companies that can grow their earnings? It's down in small and mid-cap, and Small-cap, I think, is the most interesting area of the market."

Technical Take:

European markets are higher across the board today following reports Deutsche Bank sold its UK insurance business for $1.2B in an effort to improve the bank’s low capital ratios. Shares of the German Bank have come under increasing pressure two weeks ago when the US DoJ proposed a $14B settlement related to legacy MBS infractions, followed by weekend comments by Chancellor Merkel that the German bank will not receive state aid. While today’s announcement will improve the bank’s capital ratios, it is unlikely enough to put the market at ease. The systemic concern is that along with $1.9T of assets on its balance sheet, Deutsche Bank reportedly has one of the largest derivative books in the world which creates massive counterparty risk. While shares of Deutsche Bank are +3.5% in today’s session, the stock is far from out of the woods. The below daily chart shows today’s rally has not even recovered the €11 - €11.20 resistance zone, it’s very first test of resistance since making new all-time lows yesterday. And the 20-day moving average, a simple retracement line, is more than 11% higher at the €12.29 level. With the stock down 51% YTD, Deutsche Bank has more to prove before the onslaught eases.

For an expanded view of this chart, please scroll to the bottom of this article and click on the chart to view in modal.

emptyNasdaq'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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