Day Traders Diary


U.S. futures suggest little change at the open as traders await today's highly anticipated FOMC decision. Most participants believe an announcement of Fed tapering is a foregone conclusion, but are unsure as to the size and whether or not it will occur in Treasuries, MBS, or both. Yesterday's advance ran the S&P 500 higher for the ninth time in eleven September sessions, and produced a close just a handful of points below the all-time high (1710) set back in early August.

Overnight, markets were mixed across Asia. Japan's Nikkei (+1.4%) was buoyed by headlines suggesting the government is loosening its opposition to lowering corporate tax rates in an effort to offset any harm caused by the proposed increase in the sales tax. Elsewhere, China's Shanghai Composite (+0.3%) gained on the back of housing data which showed prices rose in 66 of 70 cities while posting an 8.3% YoY increase. Hong Kong's Hang Seng (-0.3%) slipped amid a quiet trade.

In Europe, markets are higher across the board despite a lack of any meaningful news or data out of the region. Peripheral bourses are slightly outperforming as both Italy's MIB and Spain's IBEX hold gains of 0.6%. Investors in Germany are celebrating all-time highs after the DAX hit a record 8645.90. Elsewhere, Britain's FTSE (+0.1%) is lagging behind after the latest Bank of England MPC Asset Purchase Facility and Official Bank Rate votes were unanimous at 9-0, in favor of keeping policy unchanged. The decision is weighing heavily on Gilts as the 10-yr yield is higher by 6 bps at 2.821%.

Treasuries have given up their modest overnight gains, and now trade on session lows after the housing starts (891K actual v. 910K expected) and building permits (918K actual v. 943K expected) misses. The benchmark 10-yr yield is up more than 1 bp near 2.865%. Meanwhile, The Dollar Index has erased its small losses as action hovers flat near 81.15. Notable is the greenback's weakness against the British pound (GBPUSD +55 pips @ 1.5960), which is higher for the 11th time in 13 September sessions following today's MPC votes.

Asia: Nikkei +1.4%, Hang Seng -0.3%, Shanghai +0.3%

In regional economic data:

China's house prices increased 8.3% month-over-month (7.5% last).

Australia's CB Leading Index came in at 0.3% (-1.1% prior) while the MI Leading Index rose 0.6% (0.0% previous).

New Zealand's trade deficit widened to NZD1.25 billion from NZD0.66 billion (-NZD1.80 billion expected).

Looking at news:

Japan's Nikkei outperformed amid indications members of the cabinet have softened their opposition to lowering corporate tax rates to counterbalance the effects of the planned sales tax increase.

Standard & Poor's has cut Western Australia's credit rating to 'AA+' from 'AAA.'Europe:

Europe: FTSE +0.1%, CAC +0.5%, DAX +0.5%, MIB +0.6%, IBEX +0.6%

Economic data was limited:

Spanish industrial new orders climbed 1.8% year-over-year (-3.3% expected, -8.1% prior).

Swiss ZEW Expectations improved to 16.3 from 7.2 (20.0 expected).

In news:

The minutes from the latest Bank of England policy meeting revealed a unanimous vote to leave the key interest rate and the purchasing program unchanged at their respective 0.5% and GBP375 billion.

AAPL's new IOS 7 gets released today, according to reports

APA to sell selected Canadian oil and gas assets for $112 mln in two transactions

BA 787-9 has concluded its first flight successfully, according to reports

CHK to continue layoffs for another 6 weeks, according to reports

DLTR adopts $2 bln share repurchase authorizationEA names Andrew Wilson next CEO

FDX will increase shipping rates by an average of 3.9% for U.S. domestic, U.S. export and U.S. import services effective January 6, 2014.

MHFI's S&P seeing increased bond deals following news that it will relax ratings criteria, according to reports

Earnings/guidance of interest:

ADBE is +6% despite missing Q3 ests and guiding Q4 below consensus; co reported paid Creative Cloud subs grew 47% QoQ to 1.03 mln; above estimates

AFOP is +13% after raising Q3 rev guidance

FDX is +2% after reporting EPS just above consensus on in-line rev; co reaffirms FY14 EPS guidance 7-13% and announced a FedEx Express rate increase

GIS is slightly higher after reporting Q1 EPS in-line on higher than expected rev; co reaffirmed FY14 guidance

MANU reported a roughly in-line Q4 report; co guided FY14 below consensus.

Select analyst actions of interest:

Upgrades: FI initiated with an Overweight at Barclays, initiated with a Buy at UBS, NOK upgraded to Outperform from Neutral at Credit Suisse, AON initiated with a Buy at Guggenheim, VIPS upgraded to Buy from Hold at Deutsche Bank, ARUN initiated with an Overweight at Piper Jaffray, CL upgraded to Overweight from Equal Weight at Barclays, CTSH upgraded to Overweight from Equal Weight at Barclays

Downgrades: VPHM downgraded to Neutral from Buy at BofA/Merrill, JOY downgraded to Neutral at Robert W. Baird, INTU downgraded to Underweight from Equal-Weight at Morgan Stanley, PG downgraded to Equal Weight from Overweight at Barclays, NRG downgraded to Neutral from Buy at Goldman; removed from Conviction Buy list, CLX downgraded to Underweight from Equal Weight at Barclays, CAT downgraded to Neutral at Robert W. Baird

Technical factors: The S&P accomplished little after the first hour retest of the 1704/1705 resistance zone but it finished higher for the third day in a row the the 10th out of the last 11 leaving it just a few points shy of its all time intraday/close highs from early Aug at 1709. This type of advance has created an extended posture but there has been no selling interest despite this sprint into the Fed meeting tomorrow. The quarterly expiration this week and the Fed statement will led to a pickup in volatility/intraday price swings. Initial resistance above the Aug high is in the 1712 area. Supports are at 1701/1700 and 1696/1695.

Looking ahead: The highly anticipated FOMC decision and economic projections will cross the wires at 2 pm ET, and will be followed by Fed Chairman Ben Bernanke's press conference at 2:30 pm ET. APOG, CLC, MLHR, ORCL, SCS will release their quarterly results following today's closing bell while CAG, IHS, MCS, PIR, RAD, SCHL will report ahead of tomorrow's open. 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.