Day Traders Diary


Equities began the day on a negative note after the World Bank cut its growth projections for the Asian region. Lacking an additional catalyst, the key indices spent the majority of the session trading near their opening levels. A late-day buying surge briefly lifted the S&P 500 and Dow to their session highs, but the bulk of the move was promptly retraced. As a result, the S&P 500 shed 0.3% and the Nasdaq ended with a loss of 0.8%.

Energy stocks led the broader market. Within the sector, Marathon Petroleum (MPC 57.85, +2.98) advanced 5.4% after announcing the purchase of BP's Texas City Refinery, related logistics, and marketing assets. The base purchase price is said to be $598 million while inventories are estimated at $1.2 billion. Note that today's buying lifted MPC to an all-time high.

Coal stocks were broadly stronger as demonstrated by the Market Vectors Coal ETF (KOL 23.97, +0.18), which added 0.8%. Among individual names, Alpha Natural Resources (ANR 6.78, +0.20) gained 3.0%, while Arch Coal (ACI 6.63, +0.03) and Peabody Energy (BTU 22.63, +0.25) closed higher by 0.5% and 1.1%, respectively.

The technology sector trailed the broader market and the biggest tech component, Apple (AAPL 638.17, -14.42), settled lower by 2.2%. The weakness stemmed from reports which indicated that Apple's supplier, Foxconn is facing labor strikes at its manufacturing plant in China.

As the earnings season nears, guidance cuts continue to put pressure on technology stocks. The latest victim of slumping demand, Oclaro (OCLR 2.38, -0.25), slid 9.5% after lowering its first quarter revenue expectations below consensus. Peers, Finisar (FNSR 13.28, -0.24) and JDS Uniphase (JDSU 10.88, -0.48) lost between 1.8% and 4.2% in sympathy.

Semiconductor producers continued to show weakness ahead of the upcoming earnings season. Earlier, ISI Group downgraded four stocks from 'buy' to 'hold.' Of the affected names, Power Integrations (POWI 29.75, -1.34) shed 4.3% while Analog Devices (ADI 39.29, -0.43), Linear Technology (LLTC 32.93, -0.30), and Texas Instruments (TXN 27.99, -0.17) all slid between 0.6% and 1.1%.

Elsewhere in tech, Progress Software (PRGS 18.52, -2.96) fell 13.8% after announcing that its Chief Executive Officer Jay Bhatt will step down, effective December 7, 2012.

The Dow Jones Transportation Average continued to build on its recent strength. After trailing the broader market for an extended period of time, the gap between the bellwether group and the broader market continues to narrow. Today, the complex added 0.2% as Alaska Air (ALK 36.99, +0.47) led transportation stocks with a 1.3% gain. Railroads also showed relative strength as CSX (CSX 21.61, +0.19) and Norfolk Southern (NSC 67.29, +0.39) settled higher by 0.9% and 0.6%, respectively.

Two gun makers rallied on the back of supportive analyst comments. Earlier, the Benchmark Company said that last week's sell-off in Smith & Wesson (SWHC 10.46, +0.24) and Sturm, Ruger & Co (RGR 45.20, +0.55) may have been overdone. The weakness resulted from a slight slowdown in National Instant Criminal Background Checks during the month of September. However, the Benchmark Company notes that handgun background checks were up 23.0%, and that handguns represent the vast majority of sales for both gunsmiths. As a result, the two stocks added between 1.2% and 2.4%.

There is no economic data scheduled to be released tomorrow.

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.