Day Traders Diary


It was a tough start to the day, but an otherwise smooth end as the major indices overcame large losses early to end the session little changed but in positive territory.

A 3% decline in the Nikkei set the tone for a negative beginning, as did a series of mixed earnings reports that featured notable misses from (AMZN 312.01, +8.61) and Expedia (EXPE 47.20, -17.80), and a positive earnings surprise from Starbucks (SBUX 73.36, +5.19).

At their lows of the morning, the Dow, Nasdaq, and S&P 500 were down 150, 24, and 14 points, respectively. Those lows were established shortly after a headline crossed saying the IMF felt the interest rate volatility in the US could have an adverse global effect and that economic risks remain tilted to the downside. Sellers kept control of things through the first 90 minutes of trading, but then ceded their guiding hand just as suddenly to buyers for the rest of the day as the major averages trended higher for the remainder of the session.

There wasn't a specific news catalyst for the turnaround. Buyers simply stepped up to stop the bleeding. Their resolve was on full display in, which came storming back from opening losses to end the day 2.8% higher.

Amazon's about-face seemed to breathe new life into the market, which also keyed off the relative strength of the Dow Jones Transportation Average (+0.5%). The transport stocks had come under fire of late, so when they turned, it prompted some additional buy-the-dip action in other areas.

The recovery off the lows wasn't necessarily fueled by a single sector that was undeniably strong. Rather, it was paced by every sector getting stronger after an initial bout of weakness. The health care sector (+0.7%) took the honors as the best-performing sector in the S&P 500 today while the materials sector (-0.4%) brought up the rear.

The biggest moves of the day were reserved largely for story stocks of note like the ones mentioned above, as well as others like Activision (ATVI 17.46, +2.28), which issued positive earnings guidance and said it would be buying back 429 mln shares from majority shareholder Vivendi. That move, it said, would make Activision an independent company again. Similarly, momentum favorite Tesla (TSLA 129.39, +5.32) caught a bid on reports that Deutsche Bank upgraded the stock to Buy from Hold.

There was a single economic release today and it was the final reading for the University of Michigan Consumer Sentiment report for July. It was revised up to 85.1 from 83.9. That was better than the consensus estimate of 84.1, although the headline at the time did not help the market, which moved to new session lows 35 minutes after the release.

Notwithstanding the decent-sized trading range today, participation was on the light side with just 597 mln shares traded at the NYSE. The lack of participation was understandable considering next week promises to be an event-filled week with the release of over 100 earnings reports from S&P 500 companies, the advance estimate for Q2 GDP, the FOMC meeting, the ECB meeting, and the July employment report. 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.