- NASDAQ Composite +0.50% Dow +0.19% S&P 500 +0.21% Russell 2000 +0.08%
- NASDAQ Advancers: 1395 / Decliners: 904
- Today's Volume (100 day avg) +5.8%
- Crude $58.93 +0.30, Gold $1277.80 -$5.80, VIX 16.19 +0.35
- The Conference Board's Consumer Confidence Index increased to 134.1 in May, beating consensus of +130.00
- FHFA Housing Price Index for March increased by 0.1%, below consensus of +0.2%
- February revised higher to +0.4% from +0.3%
- S&P/Case-Shiller Home Price Index for March increased 2.68% beating consensus of +2.55%
All the major indexes posted declines last week and are on pace for steep monthly losses. Continued concerns over U.S. / China trade talks, or lack thereof weigh heavily on traders’ minds. The Dow closed lower for the 5th consecutive week, its longest losing stretch since 2011.
The markets opened higher today and are struggling to stay positive to start the holiday shortened trading week. Communications, Consumer Discretionary and Technology are the best performing sectors while Consumer Staples, Utilities and Energy are the worst decliners. Currently 5 of the 11 S&P 500 sectors are trading higher. Crude oil trades higher while Gold trades lower. The dollar moves higher while the yield on the 10-yr stands at 2.28%.
M&A news grabbing headlines coming out of the holiday weekend with Global Payments (GPN) agreed to buy Total Systems Services (TSS) an all-stock transaction valued at $21.5 billion. Also, Fiat Chrysler (FCAU) delivered a non-binding letter to the Board of Renault (RNLSY) proposing a combination of their respective businesses as a 50/50 merger. Renault’s board is currently reviewing the proposal. If Renault agrees, this deal with create the 3rd largest global automaker selling approximately 8.7 million vehicles annually. YTD, global M&A has top $2.1 trillion of announced or proposed deals which is down 18% from this time last year. In North America, we have seen only $1.1 trillion of deals so far.
Trading volumes are a continuous theme to validate market moves. The volume on the consolidated tape continues to trend lower, despite this market selling off. Friday’s consolidated volume was the lowest of the year and 23% lower than the yearly average, coming in at 5.5 billion shares. Last week’s trading average (6.4 billion shares a day) was well below the trailing yearly average of 7.2 billion shares by about 11%. We have discussed the importance of elevated trading volumes to validate a market move for stocks. Looking at the elevated trading volumes during the Christmas selloff and also the February, 2018 declines, trading volumes averaged 11 billion shares a day. Generally when the markets selloff, the volumes are elevated as it is a race to the bottom. Again, what this is telling us is that markets are adrift with a negative bias awaiting a tariff deal announcement out of Washington and Beijing.
May Consumer Confidence, a key metric of consumers’ willingness to keep spending, showed a nice uptick. The Conference Board’s Consumer Confidence Index jumped to 134.1, beating consensus of 130.00 and up significantly from April’s unadjusted report 129.2. “Consumer Confidence posted another gain in May and is now back to levels seen last fall when the Index was hovering near 18-year highs,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. While a booming market for jobs helped bolster the outlook, concerns over inflation do weigh on consumers’ minds. Ultimately, consumer confidence moves in-line with job prospects and wages. The proportion of those expecting more jobs in the near term, increased to 19.2% from 16.7%, while those expecting wage increases grew to 22.6% from 21.5%. Thus, the outlook for the consumer remains very positive.
|Tuesday||9:00 a.m.||FHFA House Price Index||March|
|Tuesday||9:00 a.m.||Case-Shiller Home Price Index||March|
|Tuesday||10:00 a.m.||Consumer Confidence||May|
|Wednesday||7:00 a.m.||MBA Mortgage Purchase Applications||May 24|
|Wednesday||7:45 a.m.||Retail Economist/Goldman Chain Store||May 26|
|Wednesday||8:55 a.m.||Redbook Chain Store||May 26|
|Wednesday||16:30 p.m.||API Crude Inventories||May 25|
|Thursday||8:30 a.m.||Initial Jobless Claims||May 25|
|Thursday||8:30 a.m.||Continuing Claims||May 18|
|Thursday||8:30 a.m.||GDP (first revision)||Q1|
|Thursday||8:30 a.m.||GDP Chain Price (first revision)||Q1|
|Thursday||8:30 a.m.||Wholesale Inventories||April|
|Thursday||9:45 a.m.||Bloomberg Consumer Comfort||May 26|
|Thursday||10:00 a.m.||Pending Home Sales||April|
|Thursday||10:30 a.m.||EIA Natural Gas Inventories||May 24|
|Thursday||11:00 a.m.||DOE Crude Inventories||May 25|
|Friday||8:30 a.m.||Personal Income||April|
|Friday||8:30 a.m.||Personal Spending||April|
|Friday||9:45 a.m.||Chicago PMI||May|
|Friday||10 a.m.||Michigan Consumer Sentiment (final)||May|
Brian’s Technical Take
As Chris noted above, Friday was the lightest trading volume of the year which indicates that many were lucky enough to get an early start to the long holiday weekend. I wasn’t as lucky but I have no complaints. The weekend weather in the New York City area was impeccable which made for a very nice 40th birthday weekend for my wife Lindsay. Yesterday we barbequed with the family and at 6pm I joined my three boys and their five cousins on the slip and slide. In the middle of the weekend my cell phone took its last breadth and for nearly two days I was without news and electronic communication. It was kind of nice actually, and I was pleasantly surprised to come into the office today and see bitcoin’s latest breakout.
While the U.S. financial markets were closed yesterday, bitcoin was up and running and it did not disappoint. Yesterday bitcoin broke out of a seven day consolidation along a prior pivot high (minor resistance) from July 2018 and gained 7.9%. The last time it gained this much in one session was …. (wait for it) … a week ago. Last Monday, 5/20, bitcoin gained 12.7%. When was the previous session in which bitcoin gained double digits, you ask? A week before that when on Monday 5/13 bitcoin gained 25%. In fact bitcoin has made double digit gains every week this month, up eleven out of the last twelve weeks, and if yesterday is any indication for the rest of the week, it should build on both streaks.
Yesterday’s high peaked just below the round 9,000 level (red dotted line) which made for a 185% gain off its December lows. The next hurdles above are at the 9,795 level (white line), followed then by the 11,784 level (blue line). The weekly RSI is already at an extreme 80 level which indicates a “healthy” consolidation is well overdue, however bitcoin has proven to be a beast and proves the adage “overbought can become more overbought.”
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.