Credit: Shutterstock photoMonday, August 27, 2018, 10:41 AM, EST
- NASDAQ Composite +0.85% Dow +0.81% S&P 500 +0.64% Russell 2000 +0.51%
- NASDAQ Advancers: 1577 Decliners: 607
- Today's Volume (First Hour) +9.5%
The positive sentiment from late last week continues and combined with an absence of bad news, the markets open the last week of August at record levels. Although the Dow is still about 600 points shy of its record, this morning the Nasdaq Composite crossed above the 8,000 level for the first time. Markets in Europe and Asia are also in the green with China up nearly 2%. Trade talks are showing mixed results with word that the US and Mexico have reached an agreement on NAFTA, but talks with China seem deadlocked. In the meantime the Chinese yuan appears to have stabilized and the dollar is off its August 15 high. With the exception small declines in both Utilities and REITs, all sectors are higher with Tech (+1.2%) and Industrials (+1.1%) leading. Treasury yields are higher, the dollar off 0.2% and gold is up 0.1%.
- While Fed Chairman Powell's remarks on Friday did not change market expectations for further monetary tightening, they were interpreted as "Dovish" in nature, which pushed gold to its biggest one-day gain since May of 2017. This morning the dollar index is trading lower. While Gold is holding relatively flat this morning still above the $1,200 level, a weaker dollar makes gold cheaper for holders of other currencies ultimately boosting demand and prices.
- Just off its first weekly gain since June 29, crude oil is up about 0.2% this morning. However Bloomberg reports that net-long positions in WTI have fallen to the lowest level in about two months despite the rig count falling by the most in over two years. As for energy stocks, Cornerstone's market technician Carter Worth is underweight the sector, saying "what we found is uninspiring." He noted the S&P Energy Index as repeatedly failed to get above resistance and hasn't made any new highs since May.
Technical Take:
Equities are broadly higher today following Fed Chairman Powell's speech at Jackson Hole where he stated there was good reason to believe the US economy will sustain its current strength and thus the gradual process of rate hikes remains the appropriate course of action. The 2-Year Treasury Yield finished near the high of last week's range while the longer 10-year Yield closed at the lows of the range. As a result the spread (10yr-2yr) dipped below 20 bps for the first time this cycle. As concern increases due to the near inversion of the curve, history shows the negative correlation to stocks usually occurs after the curve goes from negative to positive.
The Nasdaq Composite is leading all major indices with a gain of 0.9% and has achieved another milestone by moving above the 8,000 level for the first time ever. With no obvious resistance levels to point to based on price, it is worth putting on the radar the long term measures of momentum. The monthly RSI has yet to make a higher high vs its cyclical peak in January of this year. That higher high may come in the not too distant future, however the MACD (moving average convergence divergence) is itself approaching its prior all-time high made at the Dotcom bubble peak in March 2000. While this near record reading in momentum is an obvious reflection of the current robust performance of the Composite, it may also suggest that it is close to peaking as it approaches prior all-time high.
Assuming long term momentum is already at or near peaking, price can and often still does continue higher over the short to intermediate time frame due in part to rotation among growth and value stocks within different cyclical and defensive sectors.
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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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
