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Equity Market Insight from Nasdaq MID - July 17, 2017 .

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 - July 17, 2017

Monday, July 17, 2017, 11:32 AM, EST
  • NASDAQ Composite +0.07% Dow +0.05% S&P 500 +0.05% Russell 2000 +0.26%
  • NASDAQ Advancers: 1153 Decliners: 956
  • Today’s Volume: -12.8%

Quarterly results will look to support the elevated stock prices, as all major indices hang around all-time highs. Equity trading volume in the US has been 18% lighter than normal in July. Crude Oil is flat today after rallying by more than 5% last week. Gold spot (1233) is back above the 200 day MA, and higher for the 5th time out of the past 6 sessions.

  • Financial sector earnings will be in focus this week with Blackrock today, Goldman Sachs & BoA tomorrow, and Morgan Stanley on Wednesday. Results from JPMorgan Chase, Wells Fargo, and Citigroup last week revealed that the outlook may not be so bright for the sector, despite good results. Blackrock is down by about 3% so far this morning, post results.
  • Double-digit earnings growth is expected for large-cap stocks in the 2nd quarter, and according to Burt White at LPL Financials. “Strong rebound in energy sector profits, and solid financial and technology sector earnings gains… Earnings estimates have been resilient and the ratio of positive to negative pre-announcements is as positive as it has been in three years.” 17 S&P 500 companies will report results over the next two days and outside of the banking stocks mentioned above, Netflix (Est EPS - 0.156), Johnson & Johnson (Est EPS – 1.79) and IBM (Est EPS. 2.47) are also slated to release.
  • Economic data out of China was better than anticipated, as the economy expanded by 6.9% in the 2nd quarter and now on pace to meet yearly expectations. Also a rebound in industrial output, +7.6% in June from a year earlier, far exceeded estimates. The report was subdued by China’s debt concern which remains a serious challenge. Investors will be watching to see if some deleveraging efforts won’t drastically affect the country’s continued expansion. The Shanghai Composite fell as much as 2.6% in response to the news, but rallied off the lows and finished the session off 1.4%.
  • Bloomberg reported that hedge funds are losing faith in gold and other precious metals as money managers prepare for policy tightening in the US and Europe (see “Technical Take” below).
  • Mario Draghi’s comments out of Thursday’s ECB meeting will likely be more on the hawkish tone, supporting the improving economic data. The committee’s decision to maintain current interest rates is probably set at this point, while a plan to exit its bond purchasing program may be the most critical talking point.
  • Investor Nelson Peltz has launched a fight for a board seat at Procter & Gamble, in an effort to jolt the consumer-products giant whose sales and profit growth stalled. Meanwhile, PG is launching Zevo, a trap to catch an indoor flying bugs, hoping to start another product category for a problems you did not know you had.

Technical Take:

Last week the USDJPY pair stalled at the 114.37 resistance which previously was a pivot high made two months ago in May. We noted then that there was a high risk for a reversal at the price level given the momentum indicator RSI was already at the overbought 73 level and buyer exhaustion could already be setting in. The USDJPY has now declined in four of five sessions reflecting a weakening dollar and strengthening yen. One of the strongest correlations to the USDJPY pair is its inverse relationship to gold and gold miners. Last week as the USDJPY reversed lower, the gold miners ETF (ticker GDX) formed a bullish engulfing candlestick along a proven support line, $20.89 - $21, which represents the lows of 2017 and which is reinforced by the 150-week sma, now $20.65. This bullish reversal pattern requires a positive gain this week for confirmation, ;and so far today it is off to a good start with the GDX currently up 1.6%. Despite this recent constructive price action, there are reasons to be cautious. After spiking 23% over the first six weeks of the year, the GDX gave back most of those gains and is currently up 5.9% YTD. Strong resistance is just above at the primary moving averages – 50, 100, and 200-day sma’s – which are clustering between $22.36 and $22.72. Meanwhile the daily and weekly MACD are each negative. The pattern throughout 2017 has formed a descending triangle of lower highs and horizontal support which is typically seen as bearish, but certainly not a given. The direction of the next trend, up or down, will likely be determined by which side of the triangle the GDX breaks out from.

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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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