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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

1/17/13

The major averages opened today's session on a strong note after weekly initial claims and housing starts were reported ahead of expectations. Meanwhile, a disappointing Philadelphia Fed Survey was not enough to cool optimism. Key indices spent the duration of the day in a steady upward climb, and the S&P 500 made its biggest advance in more than a week to end higher by 0.6%.

The market saw notable support from homebuilders after December housing starts data indicated the demand for fresh construction projects remains strong. Among individual builders, PulteGroup (PHM 20.37, +1.03) and Lennar (LEN 41.94, +1.42) saw respective gains of 5.3% and 3.5%. Meanwhile, the SPDR Homebuilders ETF (XHB 28.15, +0.51) settled higher by 1.9%.

While builder shares registered broad gains, Hovnanian Enterprises (HOV 5.95, -0.05) shed 0.8%, and was a notable laggard. In addition, the stock has seen heavy option activity with February $6.00 puts garnering interest.

The strength in homebuilders helped discretionary stocks outperform the remaining S&P 500 sectors. On the downside, financials lagged after Bank of America (BAC 11.28, -0.50) and Citigroup (C 41.24, -1.24) reported earnings which did not please the market. The two lost 4.2% and 2.9% as a result. Though most sector components have already delivered their quarterly results, a handful of names have yet to report. Following today's close, American Express (AXP 60.74, +0.12) will announce its fourth quarter earnings. In addition, the market will receive Morgan Stanley's (MS 20.75, +0.21) report ahead of tomorrow's open.

A familiar storyline was revisited today when morning reports indicated that European authorities along with the Federal Aviation Administration have ordered all Boeing (BA 75.26, +0.26) 787 flights to be halted. Boeing shares sold off on the news, but turned higher after Bloomberg reported that faulty batteries may have been the cause of electrical issues aboard the Dreamliner.

While the market displayed strength all around, Apple (AAPL 502.68, -3.41) did not participate in the rally. The largest tech stock shed 0.7% after yesterday's comments from technical analyst Tom Demark sent the stock higher by 3.0%.

In acquisition news, K-Swiss (KSWS 4.71, +1.52) soared 47.7% after the footwear manufacturer agreed to be acquired by E.Land World for $4.75 per share. The transaction price represents a 49.0% premium to K-Swiss' Wednesday closing price.

Crude oil rose by 1.1% and settled above $95.00 after a hostage situation in Algeria fueled supply concerns.

Another item of note lied in the CBOE Volatility Index (VIX 13.67, +0.25), which added 1.9%. The volatility measure spent the majority of the session in the red before crossing into positive territory during the last hour of trade as the S&P 500 slipped off its highs.

Today's NYSE floor volume was just north of 700 million shares, which lied in-line with its 100-day average.

Tomorrow's economic data will be limited to the January Michigan Sentiment, which is scheduled for a 9:55 ET release. Among notable earnings, General Electric (GE 21.30, +0.18) and Schlumberger (SLB 73.37, +0.15) will report their quarterly results prior to the opening bell.

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.