March upward

Now things are really getting interesting.

As a big quarterly expiration approaches, the US stock market is coming off an up week that saw the Nasdaq 100 index (NDX) push to a new record high, erasing its February correction and reaffirming tech’s market-leading status.

At the same time, the S&P 500 index (SPX) approached its late-February peak, setting up a potential test of the January all-time high if the bullish momentum continues.

Nasdaq 100 (NDX, top) and S&P 500 (SPX, bottom), 12/8/17 – 3/9/18

Source: OptionsHouse

The market had to wade through see-sawing updates on the White House tariff initiative, but stocks began the week with a rally on Monday and ended it with an even bigger one on Friday—thanks to some booming numbers from the monthly employment report—which produced the broad market’s second-strongest week of the year.

All the major indexes are now back in the black for 2018. Small-caps continued to show some of the relative strength they exhibited last week, and the NDX pushed its year-to-date gain to double digits. Here’s the breakdown for US indexes:

Index Comparison

Source: OptionsHouse

All major S&P 500 sectors were in the plus column last week, and it was a neck-and-neck battle among the leaders—the top performers were all separated by less than a tenth of a percent: Industrials (+4.2%), Financials (+4.1%), and Information Technology (+4.1%). The worst-performing sectors were Utilities (+0.5%), Consumer Staples (+1.4%), and Telecom Services (+1.4%).

Intel (INTC) was representative of many of the tech high-fliers last week, rallying 10% to its highest level in nearly 18 years.

On the other side of the ledger, Target (TGT) dropped more than 6% intraday on Tuesday after releasing earnings, and continued to wobble for the remainder of the week (approaching support around its February 6 low of $68.39).

For the second week in a row, last week’s economic numbers were mixed, but the big story was Friday’s employment report, which showed the economy added 313,000 jobs—an approximately 50% overshoot of the consensus estimate of 205,000.

This week’s calendar features the big quarterly expiration (equity options, stock index futures and options, single-stock futures) on Friday—a.k.a., “quadruple witching” day. But traders will also get some inflation and housing numbers to chew on:

Monday: T-bill and T-note auctions

Tuesday: Consumer Price Index (CPI)

Wednesday: Producer Price Index (PPI), Retail Sales, Atlanta Fed Business Inflation Expectations, Business Inventories

Thursday: Import and Export Prices, Housing Market Index

Friday: Quadruple Witching, Housing Starts, Industrial Production, Consumer Sentiment

Besides equity instruments, there are a few other futures contracts expiring this week:

Wednesday: March grains and oilseeds (wheat, corn, oats, rice, soybeans, soybean meal, soybean oil)

Thursday: March lumber (LBH8)

You can find a complete list of earnings and other market events at the E*TRADE market calendar (login required). Here’s are a few to watch for this week:

Monday: Coupa Software (COUP)

Tuesday: Dick's Sporting Goods (DKS), GDS Holdings (GDS), Intellia Therapeutics (NTLA), China Lodging (HTHT)

Wednesday: Ctrip (CTRP), Williams-Sonoma (WSM), Yirendai (YRD)

Thursday: Buckle (BKE), Dollar General (DG), The Children's Place (PLCE), Adobe Systems (ADBE), Broadcom (AVGO), Jabil (JBL), Ulta Beauty (ULTA)

Friday: Tiffany & Co (TIF), (OSTK)

Keep an eye on small caps this week: The Russell 2000 (RUT) is poised to be the next US index to recapture its pre-correction high—as of Friday, it was was less than 1% from its January 23 high close of 1610.71


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