Market Intelligence

MID - Equity Market Insight December 15, 2015

The markets are looking more positive today with crude oil bouncing off six-year lows and high-yield funds moving higher for the first time in four days. Nothing much changed overnight which suggests today’s action might be an oversold bounce. Time will tell whether we are seeing short covering or whether we have in fact seen the lows in the commodity and high-yield debt prices that drove the equity market decline. With an uncertain market reaction to tomorrow’s FOMC announcement, it probably does not make sense to be either too short or long. All ten major sectors are in the green with energy (+2.5%), financials (1.9%) and healthcare (+1.3%) the top performers. The Russell 2000 has underperformed the other major indices over the past six-months and lags again today.

Are the key to gauging a robust holiday shopping season? According to the WSJ, “if people were willing to spring for a nice Christmas tree, or wreaths and garlands, they probably were ready to spend more on presents.” Evercore ISI has been surveying regional Christmas tree associations, farmers and retailers since 2003. And they note that, “The good news is that sales have been strong this year. In the first week of the survey—the one including Thanksgiving and the Black Friday shopping weekend—they rose 10% from a year earlier, and in the second week they were up 12%.” Today, the Retail Economist/Goldman Sachs released U.S. chain store sales for w/e 12/12 which came in at +4.0% vs a negative -6.3% print last week. And U.S. Redbook retail sales were down -0.8% so far for the month of Dec vs Nov. Sales grew by +1.5% for w/e 12/12 vs the same time period last year.

Crude prices rebounded after WTI broke the $35 level early yesterday. Coinciding with the price reversal a former OPEC president commented yesterday that if prices continue lower a ‘majority’ of OPEC members may try and force an emergency meeting if prices don’t soon recover. Although not impacting prices today, Citigroup predicts crude oil could call into the $20s as storage facilities reach capacity in the first half of 2016. It seems likely that everything will stay on the same trajectory until someone blinks.

November Consumer Price Index shows 0.0% change as expected for the month. Year over year it ticked up to 0.5%, slightly above expectations and the highest since last December but still well below the Fed’s 2% inflation target.

Fed fund futures reflect a 78% expectation that the Fed will raise rates tomorrow afternoon. Stay tuned…

. One may be tempted to make the case, especially in light of seasonal factors which typically show the middle of December as the lows, combined with today’s high volume advance as a signal that markets are out of the danger zone. However, we believe that until at least the 12/1 highs are overtaken which continues to firmly reside in a bear market. The continued, pronounced lag of small cap stocks also provides reason for pause.

  • As suggested yesterday, . During the session we saw the S&P 500 Index (SPX) move almost exactly to that number before staging a late day rally. . This of course in the face of a well-telegraphed but still potentially binary event from the FOMC tomorrow, so clearly anything can happen should the FED say/do the unexpected.
  • Similarly for the NASDAQ Composite Index (CCMP), Yesterday’s session also provides some promise for a short term rally in the form of a hammer pattern, typically seen after sharp declines where sellers are washed out and overtaken by buyers on the same day.
MID Chart 15 December 2015

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.

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.

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.

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.

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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