Trade Developments Dominate to the Downside
- NASDAQ Composite -1.21% Dow -1.54% S&P 500 -1.12% Russell 2000 -0.77%
- NASDAQ Advancers: 599 Decliners: 1697
- Today’s Volume (vs. Monday) +14.31%
- Crude -0.23%, Gold +1.03%
Market Movers
- Stocks lower today as Trump makes comments about trade
- Cleveland Cliffs Inc. has agreed to buy AK Steel Holding Corporation for $1.1 billion
- Cyber Monday spending online soared 20% year-over-year to $9.4 billion, making it the biggest US online shopping day in history, according to Adobe Analytics data
- Brazil’s GDP grew by 0.6% vs the 0.4% estimate as expansion led by private investments and agriculture made up for the reduction in government spending.
Charlie’s Commentary
Disappointing factory data and continued concern over global trade risk kept markets in the red yesterday as traditionally one of the strongest market performing months of the year got off to a sluggish start. The Dow slipped -0.96% while the S&P 500 dropped -0.86% and Nasdaq faded by -1.12%. REITs, industrials and tech were among the laggards while energy and consumer staples were the only sectors higher. The mood on Wall Street was not as negative as the losses would have suggested though. As Chris pointed out yesterday we had a great month of November and year so far, so the selling probably was exacerbated by some profit-taking interest.
Trade is taking center stage once again this morning on some early comments from President Trump who is in London celebrating the 70th anniversary of NATO. Addressing reporters the President stated “a China trade deal is dependent on one thing — do I want to make it. I have no deadline. In some ways, I think it’s better to wait until after the election if you want to know the truth. But I’m not going to say that, I just think that.” It remains to be seen if this is simply a negotiating tool or he really means it. It is widely though by political pundits that he needs some concrete sign of progress towards a deal with China before the November elections.
These comments come after Monday when the President lashed out at France for a digital service tax that he said unfairly discriminates against U.S. tech companies. "I'm not going to let people take advantage of American companies because if anyone's going to take advantage of the American companies it's going to be us. It's not going to be France.” Robert Lighthizer, the chief U.S. trade representative has recommended the U.S. respond with $2.4 billion in new tariffs on French cheese, wine and other products. Can’t we all just get along? Needless to say theses are the driving forces behind the negative bias in the market today and gives traders a reason to book profits in the face of uncertainty.
The is relatively light today with only November vehicle sales being released periodically during the day. Early data is in from yesterday’s Cyber Monday. According to Adobe Analytics, spending reached $9.4 billion which was a 20% increase over last year, making it the biggest US online shopping day in history. To put it in perspective during peak hours shoppers were spending approximately $11 million every minute. Indicative of how shopping patterns have changed, $3 billion of online sales were purchased via smartphone. Top sellers this year were air fryers, airpods, nerf products and Frozen 2 toys to name a few.
In the commodity space, oil, after rallying Monday on expectations that OPEC and its allies will provide some support at its meetings in Vienna on Thursday and Friday is struggling for direction today after the President said he had no deadline to complete the long running U.S.-China trade deal. Gold on the other hand is understandably catching a bid today, rising to its highest level in more than a week as the US increases trade tensions with China, France, Argentina and Brazil, pushing investors to safe haven instruments.
Looking at the sector performance today, nine of eleven sectors are trading in the red. Real Estate leads (+0.69%), followed by Utilities (+0.47%) and Consumer Staples (-0.63%). Weaker performers are Financials (--1.80%), Energy (-1.58%) and technology (-1.44%).
Sector Recap
Brian’s Technical Take
Equities are in deep risk off mode and accordingly cyclicals are leading to the downside while safe havens are outperforming. The long yield has reversed all of yesterday’s gains and is back below its 50-day simple moving average which we have identified as a key support level.
Spot gold and silver are higher which is good for the miners. The VanEck Vectors Gold Miners ETF (ticker GDX) gained as much as 2.8% in the early morning session while “breaking out” above a cluster of resistance representing (1) a 10-week declining trend line, and (2) its 50-day sma.
At its June highs the GDX was +47% YTD but now stands at 31% following the corrective price action over the last three months. Today’s breakout has the potential to be a resumption of the prior steep uptrend, however it must hold above its 50-day sma which some momentum chasers may use as a clearly defined risk level for new long positions.
Already last sale is in the lower end of today’s high-low range, and the daily RSI remains range bound between 40 and 57, so this setup has plenty left to prove.
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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