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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

11/21/11

The S&P 500 settled higher by 0.8%, snapping its three-day losing streak. The tech-heavy Nasdaq outperformed with an advance of 1.2% while the Dow Jones Industrial Average (+0.7%) registered its first close above the 16,000 level.
Stocks climbed throughout the session with the Nasdaq bolstered by some of its recent laggards. Momentum names like Facebook (FB 46.70, +0.27), LinkedIn (LNKD 220.61, +4.42), Priceline.com (PCLN 1159.11, +12.02), and Micron (MU 19.99, +1.19) gained between 0.6% and 6.3%. Micron led the group, breaking out to an 11-year high, after activist investor David Einhorn made a bullish case for the stock.
Biotechnology also provided the Nasdaq with a measure of support as the iShares Nasdaq Biotechnology ETF (IBB 214.21, +3.14) jumped 1.5%. On a related note, the health care sector outperformed in morning trade, but ended behind the broader market with a gain of 0.5%.
Other countercyclical groups also lagged, but only the telecom services sector (-0.3%) ended in the red. Meanwhile, consumer staples (+0.2%) and utilities (+0.3%) posted modest gains. Notably, the staples sector was pressured by Target (TGT 64.19, -2.30) as the stock fell 3.5% after reporting disappointing results.
Target was not the only retailer pressured by below-consensus earnings. Over on the discretionary side, Dollar Tree (DLTR 56.28, -2.64), Game Stop (GME 48.80, -3.64), and Sears Holdings (SHLD 59.93, -1.77) lost between 2.9% and 6.9% in reaction to disappointing earnings and/or guidance. It should be noted many retailers have offered cautious comments regarding their expectations for the holiday quarter. However, the SPDR S&P Retail ETF (XRT 87.55, +0.68) managed to outperform with a gain of 0.8%. Moreover, the consumer discretionary sector (+0.9%) ended among the leaders.
Speaking of leaders, financials (+1.5%) spent the entire session ahead of the remaining sectors. The group received broad support from its top components and Bank of America (BAC 15.59, +0.45) was the best performer among the majors.
Elsewhere, the energy sector (+0.8%) ended in-line with the broader market while crude oil spiked 1.6% to $95.34 per barrel. The other commodity-linked spacematerials (+0.8%)also kept pace with the broader market even as miners weighed. The Market Vectors Gold Miners ETF (GDX 22.53, -0.32) fell 1.4% while gold futures slid 1.1% to $1243.70 per troy ounce.
Treasuries ended mixed with the 10-yr yield slipping one basis point to 2.79%. Also of note, the 30-yr yield hit its highest level (3.938%) since August 2011 before ending at 3.883%. A fractional loss in the 5-yr note caused its yield to tick up to 1.363%.
Participation was on the light side as 669 million shares changed hands on the floor of the NYSE.
On the economic front, weekly initial claims dropped by 21,000 to 323,000 (Briefing.com consensus 333,000). The Department of Labor acknowledged, however, that the seasonal adjustments from the Veterans Day holiday may have played a role in the sharp decline, so we'll have to put an asterisk next to the encouraging headline.
Separately, producer prices declined 0.2% (consensus -0.2%) in October due to lower energy prices while core PPI, which excludes food and energy, increased 0.2% (consensus 0.1%). Over the last 12 months, PPI is up just 0.3% while core PPI has risen a tame 1.4%.
Lastly, manufacturing activity softened in November as the Philadelphia Fed's Business Outlook dropped to 6.5 from 19.8 in October. The Briefing.com consensus expected the index to fall to 11.9. Employment levels deteriorated notably as the Number of Employees Index fell to 1.1 from 15.4.
There is no notable economic data on tomorrow's schedule.

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