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Market Intelligence

Equity Market Insights: January 3, 2018

Thursday, January 3, 2018, 11:01 AM, EST

  • NASDAQ Composite +0.61% Dow +0.20% S&P 500 +0.39% Russell 2000 +0.14%
  • NASDAQ Advancers: 1320 Decliners: 1073
  • Today’s Volume (100 day avg) +27.97%

Heading into the New Year, technology was the unloved sector, as investors appeared to fade the group, and move into equites that would benefit from the new tax codes (Materials and Industrials). Yesterday’s price action may have caught the markets by surprise, as Information Technology (+1.4%) and Semiconductors (+2.8%) surged higher and the driving force behind the Nasdaq more than tripling the performance from the Dow and closing above 7000 for the first time. Tension in Iran has Crude Oil up 0.5% and approaching $61/barrel.

  • Stocks in Europe are on pace to break a 6 day losing streak , while the EU markets have seen a smooth MiFID II transition so far. Regulators initiated the program to promote transparency and reduce the likelihood of 2008 financial crisis. Market experts have been weighing which firms might benefit or suffer from the new policies, as it may take upwards of several years before they see clear evidence. Some critics, however, are asking if the changes will unnecessarily complicate and fragment the market. The impact to the sell-side, buy side and public companies is still to be determined.
  • The Nasdaq Composite closed above 7,000 yesterday for the 1st time. The Composite has risen faster than any other major index in 2017, boasting a 28% gain for, while the S&P 500 climbed 19.5% and the Dow Jones increased 25%. Led by mega-cap companies such as AAPL, GOOG, MSFT, AMZN and FB, one wonders how far this index can run in 2018.
  • December ISM-Manufacturing hit its highest level in three months with a 59.7 reading versus 58.2 expected. The gauge of new orders rose to 69.4, a 14-year high and production hit 65.8, the highest since 2010. Readings above 50.0 are generally considered to reflect growth and the data suggests growth will continued at a robust pace through early 2018.
  • The minutes from the December FOMC meeting will be released at 2pm today. Given that the 25bp interest rate increase was widely expected and there were only a few changes to the accompanying statement, it’s likely the release will not cause a significant market reaction.

Technical Take:

Crude oil (WTI) is continuing last year’s remarkable 2H rally, and with today’s gains it has rebounded nearly 46% from its June lows to its last sale of $61.30. In November its daily RSI reached an 11 year high, 80, before crude entered a healthy corrective period over 4 weeks’ time which reset the RSI to 48 in mid-December. It is now embarking on its third consecutive week of gains and both the daily and weekly RSI’s are back into overbought territory with equal 72 readings. Certainly bullish price action, however crude’s “overbought” momentum readings come as it is now within 2% of the ~$62.58 resistance level. This represents a three year high made back in May 2015 when crude saw a temporary relief rally within a larger multi-year downtrend (read crash) from 2014 – 2016. With overbought momentum readings on both the daily and weekly frames, combined with a clearly defined resistance line just above, crude may soon be entering another period of healthy consolidation.

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 is a Director on the Market Intelligence Desk (MID) at Nasdaq. Before joining Nasdaq Brian spent 16 years as an institutional trader executing equity and options orders for both the buy side and sell side. He also provided trading ideas and wrote technical analysis commentary for an institutional research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Transportation companies, among others, understand the trading in their stock. Brian is a Chartered Market Technician (CMT).

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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