Market Intelligence

Market Intelligence Desk - Equity Market Insight December 11, 2015

Friday, December 11, 2015, 1:45 PM, EST

Stocks are once again sinking this today, with Emerging markets concerns and further declines in oil weighing on equities. Over 90% of the S&P 500 companies are trading in the red today, as utility stocks (dividend paying) are declining the least in a flight to safety. The large-cap index is on pace for its worst weekly decline (-3.4%) in a month.

  • There's 80% probability rate that the Fed will raise its rates next week but this week's volatility has given the committee one last piece of information to possibly hold out until 2016 for rate change. The precipitous declines we witnessed in emerging markets at the end of the summer were one of the leading reasons why the committee didn't act earlier. Still, the expectation is that the Fed is almost obligated to do this rate hike in December and then would be expected to stand pat for a while.
  • Consumers in the United States appear to be comfortable with their household finances, as the December consumer confidence to its highest level in four months. Cheaper gasoline and optimistic employment figures have Americans opening their wallets during the holiday season. Also, retail sales that don't include gas station transactions, climbed by 0.3% in November vs. last month’s reading (+1.0%). Today's reading is the first indication that we've seen the money Americans have been saving at the gas pumps is being put to work.
  • Adobe Systems is a fourth best performer (+2.7%) on S&P 500 after the company reported profits that beat expectations helped by a surge in cloud related tools. First Solar is also finding gains today (+2.0%), which is looking to bounce back after yesterday's 7.5% decline.

Technical Take

As of 11:15 AM EDT

  • Nasdaq Composite:
  • Advancers: 406
  • Decliners: 1876
  • Advance Volume: 18MM shares
  • Decline Volume: 115MM shares
  • New 52 week Highs (prior close): 29
  • New 52 week Lows (prior close): 118

Yesterday’s action was indicative of a failure to regain momentum which is spilling over and accelerating to the downside as the major indices opened last sessions at their lows, tried to push higher then reverted back toward opening levels. With Oil failing to stabilize yesterday, it is weakening further today, taking stocks with it; a dynamic we highlighted early this week. On top of this, the market’s grappling with the concept of the start to a rate hike cycle which is supposed to begin next Wednesday. Is this a last minute tantrum by global equity markets to dissuade the FOMC from finally starting down that path? Whatever the reason, a weekly close or set of daily closes below the November lows would be a negative technically and has potential to re-introduce ugliness not seen since late summer.

  • On the S&P 500 Index (SPX), yesterday marked the second consecutive close below both the 200 and 50 day moving averages but, once again a hold of near term 2045 support. Today however, barring an unexpected rally, we’re set to break that first support and targeting a possible close within reach of the important 2020 level congruent with several technically important moments since the August collapse, including last month’s lows. A weekly close below it could open the door to further weakness, likely below the 2000 mark. Just a historical side note, if the SPX closes down today it would represent the 27th straight session without a back to back gain, the longest streak since 1970. Just another measure of lack of conviction to the upside.
  • For the NASDAQ Composite Index (CCMP), today’s test will be to hold the 200 day moving average around 4975 with more critical support around 4900 for reasons depicted in today’s chart. We’d also highlight, in the lower panel of the chart, a small RSI divergence from the overbought 11/3 closing highs to the 12/1 closing highs, where despite the index achieving a new closing high, the RSI value was lower, acting as non-confirmation of momentum. This, combined with the MACD sell signal highlighted on 11/10, which is still valid, along with a well-reported narrowing of breadth, leaves the index vulnerable. The next several sessions should shed more clarity, as would decisive action at 4900.
MID Chart 11 December 2015

The 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.

Vincent Randazzo, CMT is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 13 years of experience in equity markets having served in equity research sales and desk analyst roles at major banks. Vincent’s specific expertise is in technical analysis and has been a Chartered Market Technician (CMT) since 2007.

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.

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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