Monday, April 9, 2018, 10:43 AM, EST
- NASDAQ Composite +1.57% Dow +1.23% S&P 500 +1.15% Russell 2000 +0.67% S&P MID 400 +0.63%
- NASDAQ Advancers: 1448 Decliners: 682
- Today's Volume (100 day avg.) -26.54%
Last week stocks saw wide intra-day ranges and fell over 2%, capped by a 572 Dow point decline on Friday that erased three days of gains. This was the third week in four that saw declines in equity prices. Much of the price action has been driven by discussions about trade and the potential impact of announced tariffs should they be implemented. Stocks moved higher this morning on hopes that some of the recent "trade war" talk will abate. Tech stocks are leading the gainers this morning with only the Staples and Telecom sectors in the red.
- Will they or won't they…. The Trump administration said last week it was considering an additional $100B in tariffs (following China's response that it would reciprocate the administration's initial $50B tariff proposal). Traders are trying to handicap whether the announced tariffs are negotiating leverage (less damaging for equities), or if they'll continue to escalate. While the administration is suggesting the former, the Chinese Commerce Ministry said on Friday that no negotiations have taken place. Chinese Premier XI is speaking tomorrow at the Boao Forum in Asia and traders today seem to be pinning their hopes that he will help dial back some of the rhetoric.
- If trade talk can resume its rightful place in the background of traders' minds, then earnings can return to the forefront. Earnings season will begin later this week with the release of JPM and Citigroup results. A strong performance has been baked into stock prices already. Still, with stock valuations well below year-end levels, investors are hoping for good results and guidance. The S&P 500 is expected to grow earnings 18% - 20%, according to Factset and Thomson Reuters. This compares to the long-term average yearly increase of about 7%.
- Something else to watch….According to Bloomberg, China is evaluating the potential impact of a gradual depreciation in the Yuan . A depreciation could be used as a tool in negations with the U.S. or could offset the impact of any trade deal with the U.S that slows exports. This analysis does not mean that China will actually devalue, but we recall two fairly recent surprise devaluations (August 2015 and January 2016) that caused significant dislocations to equities prices.
Technical Take :
After a period of Yaun weakening from mid-2015 throughout 2016, the Chinese have allowed the Yuan to appreciate, perhaps to demonstrate cooperation with the U.S. on trade matters. With the recent tariff talk, the Chinese have signaled they could once again allow the Yuan to depreciate. Daily moves in the Yuan are controlled by the government so technicals may carry less weight. Still the Yuan is as close to it's been to its 50-day moving average all year.
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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).