US stocks are lower by 1% this morning, erasing all of yesterday’s gains, and dropping to a 3 week low. For the 2nd consecutive day crude oil trades down by more than 2.5%, making the energy sector (-2.3%) today’s worst performer. All 10 sectors are in the red.
- Will they or won’t they (continued). Though a non-voting member, Atlanta Fed President Dennis Lockhart was quoted this morning as saying “” and that markets should put more probability on June being a “real option.” The gap the market is contending with is that the median survey estimate among 61 economists is for a 25bp rate hike in June, while the market-based implied probability for such a move based on CME FedWatch is only 13%.
- Today is light on economic news but tomorrow will be a robust day of data. ADP Employment (est. 195k), Trade Balance (est. $-41.1 billion), Factory Orders (est. +0.6%) and Durable Goods (est. +0.8%) are all due out tomorrow and any sign of growth improvement might get the “pro-hike” betters off the sidelines.
- , with Healthcare and Consumer Discretionary companies the shining stars, reporting better than expected growth (EPS and Sales). Priceline Group and Time Warner will be reporting results tomorrow morning, likely grabbing the headlines.
Yesterday’s rally did not fool too many for too long it appears with stocks down better than 1% across the major indices as of 11 AM EST. Pay attention to the Yen and USD, both of which could be experiencing the start of a reversal today. Too early to tell if today is “the day”, but it’s the most important trade to watch right now. We mention this given our belief that the reflation of stocks, precious metals, base metals, oil and high yield bonds (risk assets) has been largely due to the Yen carry trade encouraged by the BOJ’s Negative Interest Rate Policy (NIRP). On the charts the Yen and USD are both extended and overdone directionally, set for a mean reversion. Should the risk appetite for market participants wane, we would expect these associated ‘risk-on’ carry trades begin to unwind, potentially swiftly given the speed and magnitude of gains from February lows.
- The will not be able to confirm its close above 2080 resistance yesterday unless it has a dramatic reversal through the rest of today. 2050 /2040 is the next level of importance followed by the more critical 2020. The bearish signals we have highlighted over the last several weeks regarding a loss of momentum appear to be taking hold. We continue to watch closely to understand if we are more likely to see a turn sooner or a more serious fall.
- On the , it continues to underperform in relative terms, making the risk-off stance more pronounced. 4735 is on deck as the next support of value, which represents the 3/24 pivot low. A break there would open the door to the downside per the chart below where some traders may use Fibonacci levels as a guide measured from the February low to April highs with 4680 being the first stop.
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.
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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
