Day Traders Diary


Just like the geopolitical environment, things could have been better today for the stock market and they could have been worse. They were worse in the early going as the major indices backpedaled quickly at the start of trading. The ostensible catalysts for the opening retreat were geopolitical concerns over Israel's ground assault in Gaza and the troublesome diplomatic dealings in the wake of Malaysian Air flight MH17 being shot down over eastern Ukraine last week.

At their lows of the morning, the Dow, Nasdaq, and S&P 500 were down 126, 28, and 12 points, respectively. They would eventually battle back, though, to pare their losses, aided by the following factors:
"Technical support holding at 1966 for the S&P 500
"A small sense of relief that remarks from President Obama today did not include the imposition of any new sanctions against Russia
"There is some underlying concern that new economic sanctions will lead to deleterious economic developments more broadly and for the European Union in particular
"Relative strength in the technology and energy sectors
"The inability to sustain larger losses, which prompted some buy-the-dip activity
Overall, it was a subdued start to the week for the stock market, which was also cognizant that a flood of earnings results will pour in starting on Tuesday. To that end, today's session could be characterized as a period of wait-and-see on both the geopolitical and earnings fronts.

That mentality manifested itself in the low volume at the NYSE where only 530 mln shares traded hands versus a recent average of 658 mln shares.

Notwithstanding today's leading headlines, there wasn't a strong flight-to-safety trade. The 10-yr note ended up two ticks, gold prices rose a modest 0.3%, the health care (-0.4%), utilities (-0.1%), consumer staples (-0.4%), and telecom services (-0.3%) sectors all finished lower, and the CBOE Volatility Index (VIX 12.49, +0.43) was ultimately reined in after an opening burst of buying interest took it up as much as 13%.

At the same time, the Russell 2000, which fell as much as 1.0% early in the day, recouped a good portion of its losses and ended the session down 0.4%.

There wasn't a lot of absolute strength in the stock market today, but pockets of strength in the large-cap universe helped limit today's losses. To that end, the likes of Intel (INTC 34.06, +0.36), Boeing (BA 128.30, +0.66), Microsoft (MSFT 44.84, +0.15), Goldman Sachs (GS 171.72, +0.25), Chevron (CVX 131.29, +0.90), and ExxonMobil (XOM 103.08, +0.35) provided some cover for a beleaguered broader market.

Every sector ended down today with the exception of the energy sector (+0.2%). It followed crude prices higher ($104.89, +$1.75) and benefited from the outperformance of its sector heavyweights in the integrated oil group. Losses for the remaining nine sectors ranged from 0.1% to 0.5%.

There wasn't any economic data today, but that will change on Tuesday with the release of the CPI ( consensus +0.3%) and Existing Home Sales ( consensus 5.00 mln) reports. That data will be processed alongside a bevy of earnings reports that will include results from six Dow components: Coca-Cola (KO 42.40, -0.03), DuPont (DD 65.54, -0.01), McDonald's (MCD 97.55, -1.44), Travelers (TRV 95.26, -0.08), United Technologies (UTX 112.98, -0.59), and Verizon (VZ 50.70, -0.05).
"S&P 500 +6.8% YTD
"Dow Jones Industrial Average +2.9% YTD
"Nasdaq Composite +5.9% YTD
"Russell 2000 -1.5% YTD

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