Day Traders Diary


After losing 3.4% last week, the restless stock market began the holiday-shortened week with a broad-based surge. The Nasdaq Composite led the way, spiking 2.7% while the S&P 500 jumped 2.5% with the bulk of the advance taking place at the opening bell.


The buying surge at the start reflected a build-up of strength in the futures market that took root yesterday as U.S. futures labored their way higher alongside European equities. Once the Tuesday session began in Asia, China's Shanghai Composite rallied 2.9% with speculation of continued state support for equities overshadowing mediocre trade data (trade balance $60.24 billion; expected $48.20 billion) that showed a 5.5% year-over- year decline in exports (expected -6.0%) and a 13.8% drop in imports (expected -8.2%; prior -8.1%).


The late-afternoon gains in China stirred up overall risk tolerance, leading to more gains in the U.S. futures market while European equities enjoyed an opening surge. Better than expected economic data highlighted the European session as eurozone Q2 GDP was unexpectedly revised up to 0.4% quarter-over-quarter from 0.3%.


Once the U.S. cash market opened, equity indices spiked, hovering not far below their highs into the afternoon. All ten sectors contributed to the opening move higher, but daylong strength in heavily-weighted groups like technology (+2.8%), industrials (+2.8%), financials (+2.6%), and health care (+2.8%) kept the market from drifting too far away from its early high. The strength in those areas proved supportive in the late afternoon as the market charged to a fresh high during the last two hours of the session.


Despite the big push higher, today's trading volume was a bit below recent averages. That said, a final buying surge brought the NYSE floor total up to 898.5 million shares versus the 20-day average of 984 million.


The top-weighted technology sector was a clear outperformer at the start and the group remained among the leaders into the close. High-beta chipmakers rallied broadly with the PHLX Semiconductor Index surging 4.4% back to levels seen in mid-August. All 30 index components posted solid gains, but the spotlight was on Microchip (MCHP 44.86, +3.86), which spiked 9.4% after the company raised its guidance.


Similar to chipmakers, the high-beta biotechnology group enjoyed all-around strength, sending the iShares Nasdaq Biotechnology ETF (IBB 351.77, +14.67) higher by 4.4%. The biotech ETF climbed above its 200-day moving average (345.04) and helped the Nasdaq stay ahead of the broader market throughout the session.


With more than 2400 NYSE-listed issues ending the day with gains versus 650 decliners, green hues dominated most stock screens. Even the energy sector (+1.5%) was able to end the day well above its flat line even as crude oil futures shed 0.3%, slipping to $45.94/bbl.


Today's advance in equities lured some money out of the Treasury market as the 10-yr note retreated into the afternoon, settling near its low with the benchmark yield up seven basis points at 2.19%.


Investors received just one economic report today, which was met with little fanfare. The Consumer Credit report for July showed an increase of $19.10 billion, which was higher than the consensus estimate of $18.00 billion. The prior month's credit growth was revised to $27.00 billion from $20.70 billion.


Tomorrow's economic data will be limited to the 7:00 ET release of the weekly MBA Mortgage Index and the July Job Openings and Labor Turnover Survey, which will be reported at 10:00 ET.


Nasdaq Composite +1.6% YTD

Russell 2000 -3.5% YTD

S&P 500 -4.4% YTD

Dow Jones Industrial Average -7.5% YTD

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