Stocks Begin a Busy Week Higher

Market Movers 

• Stocks quiet as we begin a busy news week
• No key economic releases today except for the budget statement later
• Earnings season begins this week with large bank releases
• A U.S.-China trade deal is also expected to be signed on Wednesday

Mike’s Commentary

Stocks closed last week in the green and have risen in 12 of the past 14 weeks on trade optimism, Fed help and hopes that 2020 could see improving global growth. Even with higher valuations, sentiment seems positive in what might be termed a "growth on" market.  

So with momentum at our back, we look ahead to a number of important developments this week. On Wednesday, a "Phase One" trade deal is expected to be signed by the U.S. and China. You might say this is a fairly modest deal and you'd be right but the market likes that the escalating trade threats have receded, taking some risks out of buying stocks. Earnings season (I know, already?) begins unofficially tomorrow with the release of earnings from JP Morgan, Wells Fargo and CItigroup with Blackrock on Wednesday and Bank of NY and Morgan Stanley on Thursday, among others. The JP Morgan Healthcare conference is also occurring as we write, so watch for developments in this space as this highly watched conference is often a news driver. And finally, we expect a few IPOs this week as Wall Street returns to normal post-holiday footing.

Today, stocks are flat as a pancake with the Dow, S&P 500 and Nasdaq Composite all showing modest gains to begin the day. The market narrative has not changed much over the weekend, Iran could always pop as a concern again but nothing negative enough to upset stocks occurred over the weekend. Bloomberg noted that German Bund yields (at about -20 basis points) are the least negative they've been since July, which is further evidence that global economic sentiment is improving. The MSCI All-Country World Index rose today to 571.04, the highest on record.  

Crude Oil prices continue to retreat from last week's highs and are currently at about $58.50 as geopolitical concerns recede and an inventory report last week pressures the commodity. Gold continues to hover near $1550 per oz as the dollar and bond yields tick higher.

Sector Recap

 

Brian’s Technical Take

One of last year’s top performing industries is continuing its blistering pace so far in 2020. The Invesco Solar ETF (TAN) gained 66% in 2019 which beat out other high flyers including semiconductors (+63%), homebuilders (49%), and gold miners (+40%). 

We last covered the TAN ETF in the November 18th MIDDAY Update which then stood +48% year-to-date, and compared it to the semiconductor ETF (SMH, +54%) and the homebuilder ETF (ITB, +52%). At the time the SMH and ITB stood within 1% and 2% of 5-week highs, but the TAN had already retraced 15% from its 52-week highs which partly explained why we favored it as the most attractive of the three over the near to intermediate term. It was also then retesting the prior breakout line at the ~$27 level which made it an expected support level. 

Circling back to the present  the TAN has a total return of 21% vs. the SMH +9% and ITB +0.4%. Momentum is extreme with the daily and weekly RSI’s at 80 and 72. Today alone the TAN ETF is +2.9% and is “breaking out” above its 2019 highs at $32.36.

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Nasdaq's Market Intelligence Desk (MID) Team includes:

Charles Brown is Associate Vice President on The Market Intelligence Desk with over 20 years of equity capital markets experience. Charlie has extensive knowledge of equity trading on both floor and screen-based marketplaces. Charlie assists with the management of The Market Intelligence Desk and works with Nasdaq listed companies providing them with insightful objective trading analysis.

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.

Brian Joyce, CMT is a Managing 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).

Michael Sokoll, CFA is Associate Vice President 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.

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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