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Equity Market Insight from Nasdaq MID - August 4, 2016 .

Nasdaq’s Market Intelligence Desk (MID) is designed to provide critical touch-points for timely trading analysis and market information.

Equity Market Insight from Nasdaq MID - August 4, 2016

Thursday, August 4, 2016, 12:28 PM, EST
  • NASDAQ Composite +0.13% Dow +0.01% S&P 500 +0.04% Russell 2000 +0.14%
  • NASDAQ Advancers: 1107 / Decliners: 1081
  • Today’s Volume: +2%

The Bank of England cut interest rates to 0.5% to a new record low of 0.25%. The rate cut was widely expected but a quantitative easing program that will purchase as much as GBP10 billion in corporate bonds was not widely expected. As a result the GBP/USD fell sharply to about $1.31 per Pound, while European equities rallied on the news. Crude Oil is advancing again today, helping US stocks keep pace with the global gains. Consumer Staples and Information Tech are the best performers this morning, up 0.5% and 0.3%, respectively.

  • MID Stat: A tighter than normal trading pattern has gained attention recently, as we’ve seen cautious attempts to post new highs. Over the past 20 days, the S&P 500 has averaged a 0.6% daily trading range, which represents the smallest range since December 2014.
  • This morning’s news by the Bank of England was the first cut in 7 years, and there are market expectations for additional stimulus measures this year. The committee is preparing for UK’s economy to slow, reducing the 2017 growth forecast to 0.8%.
  • Trading volumes are slightly lower than normal, as investors might be targeting tomorrow’s Job’s data. Economists are expecting to see +180k Nonfarm Payroll in July and a slight decrease to 4.8% in the Unemployment rate.
  • First Hawaiian Bank when public today on the Nasdaq, raising $485 million and currently trading up 5%. Congrats!

Technical Take:

One of the top performing groups today, as well as YTD, are US Treasury bonds. The iShares 20+ year Treasury Bond ETF (ticker TLT) tracks the results of an index composed of US treasury bonds with remaining maturities of 20 years or more. It is one of the most popular Treasury bond etf’s and trades an average of 8.8 million shares per day. The YTD return in TLT is 16.11% vs. 5.95% for the S&P 500. Over the last three years including 2016, the TLT etf has an average annualized return of 11.83% vs. 5.54% for the S&P 500. The below chart illustrates TLT breaking above a 4-month resistance line in early June and then trended to an all-time high over the ensuing five weeks. It has since been correcting back in price, close to its rising support line which is now converging closely towards it declining resistance. The convergence of both support and resistance suggests a breakout, up or down, is likely to occur soon. With the Bank of England cutting its benchmark rate today, and the likelihood of more stimulus coming down the pipeline from the BoJ, Treasury bonds still appear to be attractive to global investors.

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

Michael Sokoll, CFA 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. 

Jeffrey LaRocque 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. 

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.

Annie O'Callaghan 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.

Brian Joyce, CMT has 16 years of trading desk experience. Prior to joining Nasdaq Brian executed equity orders and provided trading ideas to institutional clients. He also contributed technical analysis to a fundamental research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Airline companies among others understand the trading in their stock. Brian is a Chartered Market Technician.

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