Day Traders Diary


Major stock market averages started the day on a mixed and uneventful note and that's pretty much how they traded the rest of the day. There were plenty of storylines, which we will introduce shortly, but there just wasn't any conviction on the part of buyers or sellers outside of some individual stock stories.

The broader market's languor has been a familiar site this week. Including today's action, the S&P 500 is basically unchanged since last Friday. That's actually not a bad sign considering the S&P 500 had surged 3.2% in the first two weeks of trading. The sideways action, therefore, is being deemed a consolidation phase by technical analysts and perhaps just a boring phase by the rest of us.

On Wednesday, the S&P 500 traded in a six-point range that was skewed mostly to the downside, the bulk of which was seen shortly after the market opened. Some early storylines that triggered the initial downside move included the following:

--Weakness in Boeing (BA 74.34, -2.60) after two Japanese carriers suspended their Dreamliner flights due to safety concerns
--News that the World Bank cut its 2013 global GDP growth forecast to 2.4% from 3.0%; and
--The muted response to a blowout earnings report from Goldman Sachs (GS 141.09, +5.50), which topped the Capital IQ consensus estimate by $1.96, and a better-than-expected earnings report from JPMorgan Chase (JPM 46.82, +0.47), which topped the Capital IQ consensus estimate by twenty cents.

The market soon found its footing, however, when Apple (AAPL 506.09, +20.17) got going in the wake of a bullish call from technical analyst Tom Demark who accurately called the slide in Apple back in September when Apple was trading at $700. Demark's call on CNBC last night was that Apple has bottomed and should run to the $600 area in the next couple of weeks.

Apple's strength was a staying factor for the broader market and triggered the outperformance of the Nasdaq versus the other major averages. Still, in a broader context, everything unfolded in moderation today as the Nasdaq gained just 0.2% while the Dow Jones Industrial Average slipped just 0.2%.

In a certain respect, market participants were in deliberation mode, showing little reaction to reports of a terrorist attack on a natural gas facility in Algeria that resulted in 41 hostages being taken, including several Americans.

Oil prices increased 1.0% to $94.19 per barrel, garnering added support from an EIA inventory report that showed a draw of 950,000 barrels from last week. Commodities overall traded somewhat mixed, although there was broad-based weakness in the industrial metals that coincided with the World Bank's tempered growth outlook.

Notably, the CBOE Volatility Index (VIX 13.40, -0.15) continued its slide, reflecting an ongoing sense that the market isn't going to experience any dramatic moves up or down in the next 30 days. Many observers, though, see the low level of the VIX as a sign of complacency that could be a harbinger of more concerted selling interest for the cash market.

For today, there wasn't much concerted selling interest outside of individual stocks like Chipotle Mexican Grill (CMG 280.94, -16.38), which issued a fourth quarter earnings warning, or much concerted buying interest for that matter. Volume at the NYSE totalled 600 mln shares with the last hour producing a good chunk of today's trading volume.

The technology sector (+0.7%) led today's gainers and was followed by the energy (+0.3%) and financial (+0.1%) sectors. On the flip side, the telecom services sector (-1.2%) brought up the rear along with the low-weighted materials (-0.6%) and utilities (-0.5%) sectors.

Treasuries held a bid throughout the day, but ended off their highs. The 10-year note finished up six ticks and its yield dipped to 1.82%.

Today's economic data featured the CPI, Industrial Production, and NAHB Housing Market Index reports. None produced any major surprises, so they were largely overlooked as trading catalysts. The same can be said for the Fed's Beige Book report, which noted all 12 districts are experiencing modest to moderate growth and that fiscal cliff uncertainties were delaying hiring decisions in a number of areas.

Tomorrow's economic lineup includes the Initial Claims, Housing Starts, and Philadelphia Fed Index reports. On the earnings front, financial names will again be in focus with Bank of America (BAC 11.78, +0.23) and Citigroup (C 42.48, -0.09) headlining the reporting activity.

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.