Day Traders Diary


It was a good start for the stock market today and that was about it. The major indices hit their best levels of the session within fifteen minutes of the opening bell and then spent the rest of the morning retracing those gains. The afternoon session produced a half-hearted rebound try, yet the major indices couldn't stake a position on positive ground when the closing bell rang.

Overall losses were modest in scope, which isn't bad given the scope of Friday's gains. However, with the presumed buying catalyst of a weakening dollar in place, more M&A activity, and a surprise announcement from Hewlett-Packard (HPQ 36.87, +1.67) that it is going to split into two companies in an effort to bolster shareholder value, there was likely some disappointment that the stock market didn't do any better than it did.

The quick inclination to sell into the opening strength left buyers on guard that the de-risking move seen at the end of the third quarter may not have yet run its course.

The latter consideration along with technical resistance for the S&P 500 at the 1980 level, a stunning bankruptcy protection filing from GT Advanced Technologies (GTAT 0.80, -10.25), which supplies sapphire glass to Apple (AAPL 99.62, unch), and the underperformance once again of the Russell 2000 (-0.9%) helped keep buying interest in check.

The main pockets of weakness in the market were found in the biotech, transport, and semiconductor spaces. Word from Sunesis Pharmaceuticals (SNSS 1.46, -5.18) that a Phase 3 trial it was conducting failed to meet its primary endpoint sucked the momentum out of the biotech space; Ebola concerns once again weighed on the transports; and a 4.0% drop in Micron (MU 32.57, -1.37) after reports said Samsung is planning to invest close to $15 billion in a new semiconductor plant pressured the Philadelphia Semiconductor Index (-0.8%).

Separately, the energy sector (+0.1%) had a roller-coaster day of trading, vacillating with oil prices, which dipped below $89/bbl before finishing the day at $90.57/bbl.

The rebound in oil prices coincided with a break lower in the U.S. Dollar Index (85.71, -0.98) in afternoon trading. The greenback was weak throughout the session, yet its losses accelerated in the afternoon action on what was considered to be a profit-taking move following a huge run in the third quarter.

Stock sector moves were pretty limited in scope to both the upside and the downside. The biggest winner was the telecom services sector (+0.4%) while the biggest loser was the consumer discretionary sector (-0.6%). The limited moves fit the standing of the S&P 500 at the closing bell.

There wasn't any economic data out of the U.S. today, but resonating in the background was a report that the World Bank cut its 2014 and 2015 GDP views for China and news that German factory orders declined 5.7% in August.

Notwithstanding the limited change in the S&P 500, the CBOE Volatility Index (VIX 15.29, +0.74) jumped 5.1% on Monday.

Nasdaq Composite +6.7% YTD
S&P 500 +6.3% YTD
Dow Jones Industrial Average +2.5% YTD
Russell 2000 -5.9% YTD

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