Day Traders Diary


The stock market began the new week on a mixed note despite showing early strength. Weakness among small-cap names resulted in the underperformance of the Russell 2000 (-0.6%) and the Nasdaq Composite (-0.03%), while the S&P 500 settled higher by 0.3%.
Equity indices climbed out of the gate, emboldened by M&A activity in the heavily-weighted health care sector (+0.6%). The third-largest group served as an early leader with help from Pfizer (PFE 32.04, +1.29), which jumped 4.2% after confirming its interest in AstraZeneca (AZN 77.01, +8.35). Also of note, Forest Laboratories (FRX 89.50, -0.34) agreed to acquire Furiex Pharmaceuticals (FURX 103.05, +22.90) for $1.1 billion.
Even though the health care sector rallied at the open, the broader market was unable to build on the strength as weakness in momentum namesincluding biotechnologyoutweighed the early optimism. The iShares Nasdaq Biotechnology ETF (IBB 223.06, -0.90) spent the entire session between its 20- and 200-day moving averages before settling just above the 200-day average.
Elsewhere, other momentum names that have been volatile throughout April, remained unable to stage a rebound, which suggests the retreat in early April may not have fully run its course. For example, (AMZN 296.58, -7.25), Facebook (FB 56.14, -1.57), LinkedIn (LNKD 148.06, -10.11), and Yelp (YELP 55.55, -2.08) all lost between 2.4% and 6.4%. Interestingly, the losses in high-beta tech names did not scare investors away from large caps. Apple (AAPL 594.09, +22.15), IBM (IBM 193.14, +3.51), and Microsoft (MSFT 40.87, +0.96) advanced between 1.9% and 3.9%.
The relative strength of large cap issues was on display within the Dow Jones Industrial Average (+0.5%), which outperformed throughout the session as 22 of 30 components posted gains.
However, not all large caps displayed comparable strength as the financial sector (-0.6%) lagged throughout the session. Bank of America (BAC 14.95, -1.00) fell 6.3% after announcing an adjustment to its estimated regulatory capital ratios, which will require the bank to submit a new capital plan to the Fed. The stock ended near its session low, while the financial sector was able to reclaim the bulk of its losses during the afternoon as equity indices rallied off their lows.
Treasuries spent the entire session in the red, ending near their lows. The 10-yr note lost ten ticks, pushing its yield up to 2.70%.
Participation was above average as 804 million shares changed hands at the NYSE floor.
Economic data was limited to the Pending Home Sales report for March, which increased 3.4% while the consensus expected an increase of 1.0%. Today's reading followed last month's revised decrease of 0.5% (from -0.8%).
Tomorrow, the Case-Shiller 20-city Index ( consensus +13.0%) will be released at 9:00 ET, while the Consumer Confidence survey for April (consensus 83.6) will be reported at 10:00 ET.

S&P 500 +1.1% YTD
Dow Jones Industrial Average -0.8% YTD
Nasdaq Composite -2.5% YTD
Russell 2000 -3.8% YTD

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