Day Traders Diary


The stock market had its issues on Monday, mostly because of what was happening outside the stock market. To that end, the dollar hit a seven-year high against the yen, crude futures slumped below $80/bbl, and economic reports from around the globe were mixed at best. On top of that, market participants were staring straight ahead at political issues wrapped up in election day for the U.S. on Tuesday.

Those items were reason enough not to expect the stock market to do all that well on Monday, never mind that it also had to contend with the thought that it was overbought following a 10.8% gain off the October 15 low and due for a period of consolidation.

That's pretty much what happened, too. The major indices went into a consolidation mode, holding to narrow trading ranges for most of the session and not distancing themselves all that far from the unchanged mark.

The technology (+0.4%) and financial (+0.3%) sectors exhibited relative strength throughout the session and provided an influential measure of support that helped the market avoid steep losses. However, it was the weakness in the energy sector (-1.7%) that collared the market and kept it from running away to the upside.

That weakness was limited for most of the session, yet it grew more pronounced in the afternoon session when oil prices failed to respond enthusiastically to the seemingly bullish news that Saudi Arabia will be raising December crude prices for Asia and Europe. In conjunction with that report, it was also noted that crude prices will be decreased for U.S. customers.

Crude futures pushed above $80.50/bbl following the aforementioned report, but just as quickly rolled over. When they did, weak-handed bulls bailed out and created an air pocket that sucked prices below $80.00/bbl and then $79.00/bbl in a fast retreat. Crude settled the session down $2.20 at $78.34/bbl.

That weakness pulled down the energy sector, which declined 1.7% for the session after being up as much as 0.8% when the Saudi Arabia headline first hit.

The energy sector was the only sector to make a move greater than 1.0% for the session. That was a big reason, along with the relative strength of the financial and technology sectors, why the broader market didn't trade down in a more noticeable manner. The utilities sector (+0.7%) was actually the biggest percentage gainer on Monday, yet its small weight didn't make as much difference as the heavy weight of the financial and technology sectors did.

To that end, a 1.3% gain in Apple (AAPL 109.40, +1.40) was a big driver of the broader market's resilience along with gains in Dow components American Express (AXP 90.85, +0.90), Goldman Sachs (GS 190.83, +0.84), and JPMorgan Chase (JPM 60.88, +0.40) that helped offset weakness in Caterpillar (CAT 100.22, -1.19) and Home Depot (HD 96.09, -1.43).

Home Depot was downgraded by Raymond James to Market perform from Outperform.

The S&P 500 set a new all-time high earlier in the day at 2024.54, but slipped back from that record-setting level in afternoon trading.

Consistent with the overall mixed tone of Monday's trading, key economic releases were mixed. The ISM Index for October hit a three-year high at 59.0 while final October PMI readings for China, Germany, and the eurozone were revised slightly lower.

The Construction Spending report for September revealed a disappointing 0.4% decline and pointed to the prospect of a downward revision to the third quarter GDP report as the results for July were revised sharply lower from the original report (to +0.3% from +1.2%).

Tuesday's economic calendar will feature the Trade Balance report for September ( consensus -$40.2 bln) and the Factory Orders report for September ( consensus -0.5%).
"Dow Jones Industrial Average +4.8% YTD
"Nasdaq Composite +11.1% YTD
"S&P 500 +9.2% YTD
"Russell 2000 +0.4% YTD

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.