Day Traders Diary


The stock market began the new week on a defensive note despite showing some intraday strength. The S&P 500 lost 1.7% with all ten sectors ending in the red while the Russell 2000 (-0.4%) held up a bit better.

Equity indices slumped in the early going amid weakness in groups that pressured the market last week. However, the same areas showed some intraday strength, leading to a rebound that placed the S&P 500 back above its 200-day moving average (1905). The slim gains faded in the afternoon, which caused the S&P 500 to slide to a fresh low.

All ten sectors ended lower with energy (-2.9%) registering the biggest decline. Once again, the growth-sensitive group lagged from the start with crude oil contributing to the weakness. Interestingly, the sector slid to new lows into the close while crude climbed to narrow its decline to 0.2% at $85.67/bbl.

Although energy pressured the market from the get go, the top-weighted sectortechnologyshowed some signs of strength. Specifically, chipmakers endured a volatile session with the PHLX Semiconductor Index ending lower by 2.1% after showing a solid intraday gain of more than 1.0%. For its part, the tech sector (-1.3%) ended ahead of the broader market.

Outside of technology, the financial sector (-0.9%) also tried to withstand the broad pressure. The sector displayed relative strength with earnings from Citigroup (C 49.90, -0.21), JPMorgan Chase (JPM 58.16, -0.36), and Wells Fargo (WFC 50.20, -0.44) set to be released ahead of tomorrow's opening bell.

Elsewhere, the industrial sector (-1.6%) settled just ahead of the S&P 500, but transport stocks were pressured by airlines after the CDC confirmed one of the people treating Thomas Eric Duncan, the Ebola patient who died last week at Texas Presbyterian Hospital, has contracted Ebola as well. United Continental (UAL 40.55, -3.19) dove 7.3% while the broader Dow Jones Transportation Average lost 2.2%. A small pocket of strength could be found among railroads with CSX (CSX 31.70, +1.76) spiking 5.9% in reaction to reports indicating the company has been approached by Canadian Pacific (CP 184.97, -4.40) about a potential merger.

On the countercyclical side, the utilities sector (-0.1%) ended near its flat line while health care (-2.4%) finished among the laggards. Similarly, the iShares Nasdaq Biotechnology ETF (IBB 257.12, -5.22) ended lower by 2.0% despite showing intraday strength.

The afternoon weakness caused participants to scramble for volatility protection, sending the CBOE Volatility Index (VIX 24.34, +3.10) to its highest level since mid-2012. Furthermore, VIX futures went into backwardation, meaning options traders showed increased concern for near-term volatility. As a result, October contracts (22.05%) climbed above longer-dated ones, including May 2015 contracts (20.50%).

The bond market was closed in observance of Columbus Day, but trading volume was ahead of average with more than 880 million shares changing hands at the NYSE floor.

There was no economic data of note released today and tomorrow's session will also be quiet on the economic front.

S&P 500 +1.4% YTD
Nasdaq Composite +0.9% YTD
Dow Jones Industrial Average -1.5% YTD
Russell 2000 -9.8% YTD

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