Day Traders Diary


The major averages ended the midweek session on a lower note with Tuesday's leaderRussell 2000pacing the retreat. The small-cap index lost 1.1% while the S&P 500 surrendered 0.2% with seven sectors finishing in the red.

The benchmark index slumped at the start due to notable losses among several heavily-weighted sectors. However, the S&P 500 was able to pull away from its late-morning low thanks to relative strength in consumer discretionary (+0.5%), consumer staples (+0.4%), and energy (+0.6%).

Although the trio helped the S&P 500 recover from its low, the index could not complete its comeback as industrials (-0.3%), technology (-0.6%), and health care (-0.5%) weighed. The index was able to briefly kiss the flat line after minutes from the October FOMC meeting crossed the wires, but that move was retraced as the dust settled and it became clear the minutes did not introduce anything new into the discussion. Instead, the minutes reminded investors for the umpteenth time that the central bank intends to remain data-dependent when deciding the appropriate timing for the first rate hike.

Treasuries followed a similar intraday pattern. The 10-yr note spiked to highs immediately after the release, but returned to lows shortly thereafter. As a result, the benchmark 10-yr yield rose four basis points to 2.36%.

As mentioned earlier, only three sectors managed to spend the bulk of the session in the green. Energy (+0.6%) ended in the lead even as crude oil remained volatile during the day. WTI crude ended the pit session lower by 0.2% at $74.48/bbl.

Elsewhere, the two consumer sectors were underpinned by retailers after Staples (SPLS 13.92, +1.16), Target (TGT 72.48, +4.97), and Lowe's (LOW 62.26, +3.73) reported one-cent beats. The three soared between 6.4% and 9.1% while the SPDR S&P Retail ETF (XRT 91.04, +0.67) added 0.7%.

Retail names notwithstanding, finding areas of relative strength proved challenging. The top-weighted technology sector (-0.6%) ended among the laggards due to broad-based losses. Chipmakers settled in-line with the sector as the relative weakness among small caps weighed on sentiment in other high-beta areas.

Also of note, biotechnology tried to resists the pressure, but the iShares Nasdaq Biotechnology ETF (IBB 294.21, -1.04) slipped to lows by the close. The ETF settled lower by 0.4% after being up near 0.6% intraday. As for health care, the top-weighted countercyclical group never took the biotech bait and spent the day near its low.

Participation was in-line with long-term trends with roughly 720 million shares changing hands at the NYSE floor.

Economic data was limited to MBA Mortgage Index and Housing Starts/Building Permits:

Housing starts declined 2.8% in October from an upwardly revised 1.038 million (from 1.017 million) to 1.009 million while the consensus pegged the reading at 1.025 million
Since June, housing starts have followed a sawtooth pattern, which has continued with the October decline
Despite the headline miss, single-family construction, which generally follows stable trends, increased 4.2% to 696,000, which was the highest reading since November 2013
Building permits slipped to a seasonally adjusted annualized rate of 1.08 million in October from an unrevised 1.031 million for September, while the consensus expected permits to come in at 1.04 million.
The weekly MBA Mortgage Index jumped 4.9% to follow the previous decline of 0.9%
Tomorrow, weekly Initial Claims ( consensus 285K) and October CPI (expected -0.1%) will be released at 8:30 ET while October Existing Home Sales (consensus 5.17 million), October Leading Indicators (expected 0.6%), and the Philadelphia Fed Survey for November (consensus 18.0) will all be reported at 10:00 ET.

Nasdaq Composite +12.0% YTD
S&P 500 +10.8% YTD
Dow Jones Industrial Average +6.7% YTD
Russell 2000 -0.5% YTD

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