Investors Watching For Potential Double Bottom In Equities

Friday, February 9, 2018, 10:38 AM, EST

  • NASDAQ Composite +0.85% Dow +0.56% S&P 500 +0.69% Russell 2000 +0.47%
  • NASDAQ Advancers: 1304 Decliners: 760
  • Today's Volume (from Thursday) -8%

After yesterday's rout stocks opened widely higher today with all sectors in the green. No specific reason for the better tone today and the gains can be attributed to an oversold bounce. Asian markets were down sharply last night and Europe is marginally down today; Bloomberg notes that $5 trillion in global market value has been wipe out since January. Financials (+1.7%) and Technology (+2.1) are the top performers but Crude oil continues lower, down about 1.5% at the open. Treasuries are mixed with the yield on the ten year near 2.86%, gold is off 0.2% and the dollar is flat.

  • President Trump signed a two-year budget deal this morning that will boost federal spending by nearly $300 billion and suspend the current debt ceiling for one year. Approved by both houses with mixed support from both parties, Speaker of the House Paul Ryan stated "neither side got everything it wanted in this agreement, but we reached a bipartisan compromise that puts the safety and well-being of the American people first…"
  • According to the FT, per Street Account, outflows from U.S. stock funds totaled $34B in the five trading days to Wednesday. It noted that funds holding stocks from developed European countries also faced significant withdrawals of $3.4B, while foreign investors pulled $7.7B from Asia Pacific funds, but emerging markets fared well this week drawing $2.1B in inflows. The data does not include Thursday when the S&P 500 ended the day down 3.8%.
  • The 2018 Winter Olympics Opening Ceremony marked the official beginning of the world's premier international sporting event with over 3,000 Olympiads from 92 countries participating in PyeongChang, South Korea. This year's event will feature Gold, Silver and Bronze medals for all 102 events, a new record. The American delegation of 244 athletes will be the largest ever sent by the U.S. with Olympian Erin Hamlin carrying Old Glory for the U.S.
  • Trading volumes have been good since the start of the year and this week consolidated volume across all U.S. exchanges will likely top 50 billion shares. That is the highest since the week of August 12, 2011 when over 71.5 billion shares changed hands.

Technical Take: Double Bottom for Equities?

Many technicians are watching for a potential "double bottom" pattern in the main equity indices including the S&P 500 (SPX). After yesterday's slightly lower low, the SPX has today rallied back above 2,593, the initial low made earlier this week. There is a possibility that yesterday's "lower low" was a false breakdown, a head fake, indicating the bottom is in and stocks are ready to resume their uptrend. In that scenario recent shorts get squeezed out while new momentum longs combine to propel the index sharply higher. The key is for the SPX to hold above the 2,580 - 2,593 support zone and bounce higher to Wednesdays high, 2,727. This is the major battleground above which triggers the double bottom pattern indicating a resumption of the prior uptrend.


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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.