Market Intelligence

Equity Market Insights: January 8, 2018

Monday, January 8, 2018, 10:36 AM, EST

  • NASDAQ Composite +0.08% Dow -0.20% S&P 500 -0.07% Russell 2000 -0.57%
  • NASDAQ Advancers: 776 Decliners: 1435
  • Today’s Volume (100 day avg) +2.1%

Stocks opened lower for the first time in 2018 with the R2K off the most. Asian and European were higher but news flow is light leaving investors looking to inflation data and the beginning of earnings season, both later in the week. The sector view is mixed with Healthcare (-0.8%) underperforming on weakness in biotechs while Utilities (+0.4%) led on the upside and reclaim some of last week’s decline. Crude oil gave up earlier gains and trades 0.1% lower, treasuries are stronger, the dollar mixed and gold is off 0.2%.

  • The next bubble? The Federal Reserve Bank of New York reported on September 30th that U.S. credit card debt stood at $808 billion. That is $280 billion more than the previous peak hit in 2008, at the height of the financial crisis. Many retailers reported strong holiday sales growth with many consumers making purchases on plastic. Updated numbers from the NY Fed will come in late February. Analysts are forecasting an increase in consumer credit card debt. Jill Gonzalez, an analyst with WalletHub stated, "The scary number - $1 trillion - we'll definitely hit in 2018… it seems to say a lot of American consumers did not learn their lesson from the recession and are returning to living beyond their means." With 3 rate hikes forecast for 2018, how much debt can the average consumer handle?
  • The calendar for the week gets off to a slow start with some Fed Speakers and the usual t-bill auctions. November Consumer Credit ( consensus $18.0 billion), is set to be released today at 3:00 PM ET. On Thursday we get the Producer Price Index with top-line expectations calling for a 0.2% gain, and then on Friday comes the Consumer Price Index with a top-line gain of only 0.1% expected. Also on Friday we get a look at December retail sales.
  • Q4 earning season kicks off on Friday with JP Morgan, Blackrock, and Wells Fargo first up. Factset reports that earnings growth of 10.5% is expected for S&P-500 stocks with all sectors gaining, and through last Friday 75 SPX companies issued negative preannouncements while 35 issued positive guidance.
  • Conference season is upon us as a plethora of pre-announcements and guidance numbers are released this week. Healthcare names are in focus at the JP Morgan Conference in San Francisco while Consumer names are presenting at ICR in Orlando and at CES in Las Vegas.

Technical Take: Records and Milestones

Equities are off to an impressive start in 2018, to put it mildly. During the first week of the New Year, the major benchmarks all hit key milestones: Dow (25,000), S&P 500 (2,700) and the Nasdaq Composite (7,000). More impressive than milestones is performance and the Nasdaq 100 Index (NDX) did not disappoint with a gain of 3.95%, its best weekly performance since November 2015. Semiconductors continued their leadership role with the Philadelphia Sox Index (SOX) gaining 5.8%, its best weekly gain since February 2016. The returns have been broadly dispersed with five of the ten GICS sectors (ex Telecom’s) sporting daily RSI’s above the “overbought” 70 level, including two, consumer discretionary and industrials, above 80. The “laggard” in the group are the small caps with the Russell 2000 gaining 1.6% last week. After a strong start of 0.94% in its first session of 2018, the Russell then ran into resistance and spent the rest of the week consolidating at the 1,560 level, its prior all-time high made in early December. The Russell’s daily RSI is a moderate 58, well below the scorching 70+ readings for the Dow, SPX, Composite, and Midcap 400 indices. If the Russell can manage a breakout above the 1,560 minor resistance, it may be best positioned to lead the next charge higher and at the same time reaching its own milestone of 1,600, +3% from last sale.

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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