Abstract tech pattern
US Markets

Stocks Little Changed, But Poised for Weekly Gains

At midday, the major indices are hovering around unchanged with the Nasdaq and R2K slightly positive. 

  • NASDAQ Composite +0.24% Dow -0.15% S&P 500 +0.05% Russell 2000 +0.21%
  • NASDAQ Advancers: 1293 Decliners: 1001
  • WTI Crude -1.0%, Gold +0.2%, 10yr Treasury 1.905%          
  • Market Volume (First Hour): -12.1%

Market Movers

  • A US-China trade deal remains influx with the removal of all tariffs in doubt
  • Consumer Sentiment rose from 95.5 to 95.7 in November
  • Wholesale Inventories fell 0.4% in September, more than expected

Steve’s Commentary

Trade optimism is kind of like water left outside on a hot summer day – it tends to evaporate. That’s exactly what happened yesterday as the day started off with China stating that both sides agree to the removal of tariffs as part of any deal. Strangely that wasn’t confirmed by the US until shortly before noon, and that sent the markets to session highs. Then a few hours later a Reuters article noted that a number of officials within the Trump administration were adamantly opposed to removing all tariffs, and those earlier gains started evaporating. The market still closed in the green and the Dow and S&P set new records, but the major indices were well off the earlier highs. Today it is still not completely clear how the tariff rollbacks would get structured or precisely what a phase-one deal entails. Trade advisor Peter Navarro said last night there is no agreement to roll back tariffs yet this morning he says the US is willing to postpone the looming December tariffs. Then at 10 AM today, a blurb crossed the wires indicating Trump himself has not agreed to rollback tariffs.  

Trump’s comment sent the market to session lows, but that was short lived and at midday the major indices are hovering around unchanged with the Nasdaq and R2K slightly positive. No matter, barring a late sell-off the S&P will close higher for a fifth consecutive week for the first time since February. For the week the Dow is shaping up as the top performer with a 1% gain while the Nasdaq, S&P and R2K advanced about 0.45% each. European markets closed in the red and Asia was also mostly lower. Overnight China released data for October indicating exports fell 0.9%, better that the 3.9% drop expected. Exports to the US are down about 11.3% y/y, so the smaller decline in overall exports suggest China’s trade with other Asia partners and Europe is holding up. Imports were also lower, a little better than expected but still suggesting weaker domestic demand. 

Consumer sentiment ticked a little higher in November according to the University of Michigan. Overall sentiment moved from 95.5 to 95.7, the current conditions gauge dropped from 113.2 to 110.9, while the future expectation gauge rose from 84.2 to 85.9. The data reflects that more consumers expect the economy to expand over the next five years rather than decline. 

The sectors are mixed with Communications and Healthcare leading with gains of 0.5% and 0.4% respectively, but Energy is giving back yesterday gain with a 1.4% drop. For the week, Financials are shaping up as the top sector with a 2.1% advance followed by Materials (+1.6%), Industrials (+1.5%) and Energy (+1.3%). REITs and Utilities took it on chin this week with declines of 3.24% and 4% respectively. In the commodity pits, crude oil slips 1% on trade concerns and reports indicating that OPEC+ members are unlikely to reduce output. Gold is up about 0.1%. The dollar index is up 0.2% today and about 1.1% for the week and treasuries are firmer.

Sector Recap

MID Chart 1 110819

Brian’s Technical Take 

In a short term tactical piece on Wednesday of this week, we said to “mind the gap” in regards to the S&P 500 and the 3,067 price level. Gaps are notorious for acting as future levels of support/resistance, and at the very least provide a clearly defined price level to measure risk. Sure enough price bottomed within a point of that level on an intraday basis, “good enough for government work” as a former colleague would say, before reversing higher with upside follow-through yesterday. Context and time frame are key and the 3,067 price level is a minor support level which could still be broken before you return from refilling your second cup of morning joe. 

Bitcoin has its own price gap at the 8,784 level which was created early last week on the second day of 15% and 10% gains. Over the ensuing two weeks bitcoin has been coiling along the declining trend line from those June highs. On a side note, the initial 15% liftoff took place at the 7,350 level which represents the 61.8% Fibonacci Retracement of the five month uptrend, +315%, spanning February through June. And that June high itself is a 61.8% retracement of the larger 84% decline spanning Q4’17 into Q14’18. 

Today is bitcoin’s first test of the 8,784 price gap which is on watch to see if it acts as reliable support. If not, all is not lost as the next support lines come in at the 200-day moving average (yellow line, now 7,752), followed by the October lows 7,354. Those downside support levels may be far away in absolute terms, but not so much on a relative basis. Bitcoin’s Average True Range, ATR (5), a measure which experienced day and swing traders will often use in order to calculate risk and position size, is 415 points which is another way of saying “Adult Swim Only.”

Whether or not bitcoin can hold the gap support is not the end all, be all. In fact this week’s candlestick pattern is not very favorable with price at the lows of the range. The more important hurdle I am watching is whether or not it can “break out” above the declining trend line and get above its June highs. If so, we could see some serious momentum kick in.

MID Chart 2 110819

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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