Market Intelligence

Fed Members May Move Sentiment This Week

Tuesday, February 20, 2018, 12:15 PM, EST

  • NASDAQ Composite +0.76% Dow -0.22% S&P 500 +0.07% Russell 2000 +0.12% S&P MID 400 +0.13%
  • NASDAQ Decliners: 965
  • Today’s Nasdaq Volume (100 day avg.) +11%

Stocks are coming off their best trading week since early 2013, but unable to hold onto to their upside momentum this morning, dragged lower by Consumer Staples (-2.2%). US Treasury yields moved to multiyear high today, ahead of a flood US Government notes up for sale this week (~$250 billion). The Nasdaq Composite has been the best performing major index during the recovery rally, erasing 80% of its decline and posting marginal higher this morning. 75% of the large-cap Information Technology (+0.6%) stocks are posting gains this morning, led higher by Semiconductor (+2%) names.

  • Several Fed members will be speaking throughout the week and may move equity sentiment, while all signals indicate for a March 21st rate hike. The committee will release their January meeting minutes later this afternoon, as investors looking for clues on inflation outlook, stagnate wage growth and if the recent market volatility has shifted their plan.
  • In corporate news…WalMart is down nearly 10% and is the largest contributor to the decline in the Dow after missing on earnings and issuing downside guidance for F19. Brazilian steakhouse Fogo de Chao soars 25% after agreeing to a buyout by PE firm Rhône Capital. NXP Semiconductors gains 6.2% after Qualcomm sweetens their takeover bid by 16%. Home Depot (+2%) reported results that beat expectations, and management believes the housing surge and tax reform will help the company’s bottom line, which encouraged the company to raise its quarterly dividend by 15%.

Technical take: In a Red Tape, the General is Leading Higher

The S&P 500 rallied more than 220 points from last Friday’s lows to the highs of this past Friday before stalling right at the clustering 61.8% Fibonacci retracement and 20-day sma. After the three day holiday weekend, early risers on the East Coast woke up to see SPX futures off more than 25 points. One possibility we highlighted last week was that a new downtrend could be emerging making up the last leg, wave C, of an ABC correction that could take the SPX towards the 2,400 level, if A = C. This bear case scenario would imply an overall 17% correction from the January highs, an extreme possibility indeed. Yet by the time of today’s opening bell, the cash market opened down just nine points and at the intraday high was off just a ¼ of a point. While the index has already reversed lower again, seemingly healthy volatility welcomed by traders, it is worth noting the performance of the semiconductors. The Philadelphia Semiconductor Index (SOX) is one of the top performing industry groups and was up as much as 1.8% at today’s highs. Over the prior two years of this bull market, conductors have been THE market leader with the SOX Index gaining 39% and 41% in 2016 and 2017. In a sense they have been the General leading the troops across the battlefield. And right now the general is charging higher which may be one of the clearest signals yet this uptrend is for real and the troops will soon follow.

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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