Day Traders Diary


The major averages spent the entire session in a steady downtrend, but despite persistent selling pressure, today's losses were limited in scope. The Dow, S&P 500, and Nasdaq shed between 0.2% and 0.3% while the Russell 2000 lagged, falling 0.9%.
The underperformance of the Russell 2000 was likely owed in part to tax-loss selling, which tends to pick up this time of year. Small-caps often feel that pinch in a stronger fashion than large-cap issues since individual retail investors factor more prominently in the behavior of small-cap stocks. Large-cap stocks, on the other hand, have a stronger institutional shareholder base that may be less sensitive to the timing of tax-loss harvesting at year-end due to being tax exempt or having different taxable years.
U.S. equities began the session with modest losses, tracking the performance of their European counterparts. An early bid lifted the Nasdaq and S&P 500 briefly into positive territory, but a second round of selling into the European close pushed the indices back into the red where they spent the remainder of the session.
Countercyclical sectors lagged throughout the day with consumer staples and health care falling 0.9% and 0.4%, respectively. The health care space was pressured by biotechnology as the iShares Nasdaq Biotechnology ETF (IBB 219.64, -1.85) lost 0.8%. Meanwhile, the other two defensively-geared sectorstelecom services (-0.8%) and utilities (-1.0%)ended at the bottom of the leaderboard.
Things looked a bit different on the cyclical side where all six groups finished in-line or ahead of the broader market. However, only materials (+0.3%) and discretionary shares (+0.1%) were able to register gains.
The materials sector received significant support from miners. The Market Vectors Gold Miners ETF (GDX 22.03, +0.82) jumped 3.9% as gold futures advanced 2.3% to $1262.00 per troy ounce.
Elsewhere, the discretionary space drew strength from momentum names as (AMZN 387.78, +2.89), eBay (EBAY 51.92, +0.23), and Netflix (NFLX 363.10, +7.43) gained between 0.4% and 2.1%.
Also of note, financials settled in-line with the broader market even as Goldman Sachs (GS 169.73, +2.06) outperformed with a gain of 1.2%. It is worth mentioning that the Volcker Rule received clearance from all five regulatory agencies today, but CFTC Commissioner Bart Chilton said the Rule is unlikely to be implemented before 2015.
Treasuries climbed throughout the day with the 10-yr yield falling five basis points to 2.80%.
Trading volume was well below average as only 619 million shares changed hands on the floor of the New York Stock Exchange.
In today's economic data, wholesale inventories increased 1.4% in October after increasing an upwardly revised 0.5% (from 0.4%) in September. The consensus expected wholesale inventories to increase 0.3%. The increase in inventories followed a sizable gain in overall inventories in the third quarter. It was expected that inventory growth would slow considerably throughout the fourth quarter.
Durable inventories increased 0.4% in October. Big gains in autos (2.7%) and furniture (1.3%) offset declines in computer (-5.7%) and professional (-1.4%) equipment. Meanwhile, nondurable inventories increased 3.0% in October, up from a 1.4% September gain. Almost two-thirds of the increase in nondurable goods inventories was the result of a 17.0% increase in farm product inventories.
Separately, the Job Openings and Labor Turnover Survey came in at 3.925 million, which follows the prior reading of 3.913 million.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET and the November Treasury Budget will cross the wires at 14:00 ET.

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