Equity Market Insights: January 16, 2018

Tuesday, January 16, 2018, 10:30 AM, EST

• NASDAQ Composite +0.80% Dow +0.95% S&P 500 +0.66% Russell 2000 +0.6% S&P MID 400 +0.46%
• NASDAQ Advancers: 1555 Decliners: 704
• Today's Volume (100 day avg) +30%

US stocks kick off the holiday-shortened trading week in the green across the board, making another all-time high for all major indices. Crude Oil Futures (Feb) stalled at $65/barrel, lower for the first time in the past 6 days. Large-cap financials will be the quarterly earnings focus this week, and the belief amongst the group is that tax reform will significantly increase profits in 2018.

• Milestone Monday: The Dow crossed the 26,000 level for the first time only eight trading days after passing 25,000. S&P 500 is now above 2,800 for the first time with the Nasdaq composite also at a record over 7,300.
• The cryptocurrency market is under significant pressure this morning on the likelihood of stronger regulation which might rein in the industry. South Korea's Finance Minister made headlines overnight and some investors interpret his comments that he's considering make a push to shut down the crypto trading. Currently, Bitcoin -15.5%, Ripple -22.7%, Ethereum -16%, and Litecoin -16.2%
• Having gained over 6% in the last two weeks crude takes a breather and trades 0.3% lower this morning. Reuters reports US production should surpass 10 million barrels a day this year, the highest since 1970, and should continue even higher in 2019. In a separate article the WSJ notes that global demand is rising much faster than anticipated, and because of that increased US share production is not yet curtailing higher crude prices.
• On the earnings front, Citigroup is up 3% on the heels of the company's strong quarterly profit and recording a $22b charge related to a deferred tax asset write off. Several analyst upgrades this morning are giving some large cap names a boost, including Gilead (Wells Fargo- Outperform), Applied Materials (Susquehanna- Positive), and Lam Research (Susquehanna- Outperform).
• We mentioned on Friday the historic Relative Strength Index for all the major benchmarks and this morning's surge higher continues to move equities into "overbought" territory. According to Jonathan Krinsky at MKM Partners, there are several well-followed indicators that suggest "stocks are ripe for a pullback."

Technical Take: Dollar Reversal Along Key Support

Yesterday US equity markets were closed for the Martin Luther King holiday, however FX markets were open and the price action could prove to be significant for the US Dollar over the short-to-intermediate term. The dollar index (DXY) made a convincing break of the $91.011 support, the prior 52-week low made in early September, and reached an intraday low at 90.279. In doing so it fulfilled the minimum measured move, 90.42, of the head & shoulder pattern that formed throughout Q4 Read DXY Comments "Novus Ordo Seclorum" from 12/29 . By the end of the session the DXY recovered all of the day's losses and closed above where it opened to form a bullish hammerstick pattern. The potential reversal pattern along a prior pivot level suggests a near term bottom may have just been made. Yesterday's low, 90.279, is now the key pivot level for traders to measure risk against. While the DXY is down today, it is trading above its opening price. A move back above the 91.011 level would provide stronger confirmation the dollar weakness is on hold and a period of consolidation is ready to ensue.

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 is a 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).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.