Equity Market Insight from Nasdaq MID - December 29 2017

Friday, December 29, 2017, 11:57 AM, EST

• NASDAQ Composite -0.23% Dow -0.05% S&P 500 -0.07% Russell 2000 -0.15%
• NASDAQ Advancers: 986 Decliners: 1244
• Today's Volume (100 day avg) -28.5%

Stocks opened little changed on the final trading session of 2017 but have now drifted slightly into the red. Consumer Staples (+0.5%) and Industrials (+0.1%) are the leading sectors but seven others are down. WTI crude oil is up 0.3% and above the $60 level for the first time since June 2015, and that adds a lift to the Bloomberg Commodity Index that has achieved gains in each of the past 12 sessions, breaking a record going back to 1991. Copper is off about 0.6%, breaking a string of sixteen consecutive gains; still the commodity is in the midst of its best run in about 30 years. Gold however is up about 0.6% and will close the year with its second annual advance. The dollar is off about 0.4% and is set to close the year with a near 10% decline, its first since 2012 while the euro is having its best year since 2003.

With half a session to go in 2017, some of the best and worst performing sectors and industries are as follows:

Leaders

• GICS Sectors: Technology +37.6%, Consumer Discretionary +22%, Materials 21.5%
• Industry ETF's: Homebuilders (ITB)+59.5%, Social Media (SOCL) +53%, Solar (TAN) +52.4%

• GICS Sectors (ex Telecom & REIT's): Energy -3.7%, Utilities 8.2%, Staples +11%
• Industry ETF's: Oil Services (OIH) -22.9%, Exploration & Production (XOP) -9.6%, Shipping (SEA) +1.2%

Technical Take: Novus Ordo Seclorum

One of the standout performances in 2017 was the US Dollar and mainly because so many forecasters got it wrong. At the start of 2017 many pundits expected the dollar index (DXY) to continue its multi-year bull market after gaining 7% in Q4'16 and a positive annual gain for the seventh time in nine years. Yet with half a session left in 2017, the DXY has declined (9.8%) YTD for its worst annual performance in 13 years. The dollar did see a relief rally in early September beginning with the lifting of the debt ceiling, however it is again rolling over and heading towards the September lows. Over the last two sessions the DXY has broken through the 92.75 minor support line which represents the neckline of a small head & shoulder pattern. This is a smaller fractal of the larger H&S pattern that formed over Q4'16 and Q1'17. The downside measured move carries a price target of 90.42, not far below the 2017 low of 91.01 which should be viewed as a support level. If so then the DXY could be in the early-to-mid stages of a sideways consolidation between ~90.50 and the recent highs at 95.15. It would actually seem to make sense for the dollar to enter a period of consolidation after experiencing its worst decline in 13 years. And a relatively stable dollar at these weak levels could be welcome news for equities, as well as commodities, in 2018.

Please see Nasdaq Revitalize page, where we make recommendations about improvements to the capital markets to promote growth, innovation, job formation and wealth creation. We welcome your feedback on our proposals to reduce burdens on companies with proxy reform, short sale disclosure, and tax, litigation & disclosure reform.

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).

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