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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

12/29/17

 

The trading day is done and the year is too. The former wasn't too special, but the latter was. The major indices closed today with losses ranging from 0.5% to 0.9%, unable to live up to the bullish bias that prevailed in pre-market trading.

Today's losses, though, won't ruffle too many feathers considering the major indices registered gains this year ranging from 13.1% (Russell 2000) to 28.2% (Nasdaq Composite).

Friday's action was over early for the bulls as opening gains quickly evaporated and the indices settled back into negative territory not too far from where they closed Thursday's session.

Range-bound and featureless action predominated throughout the day as a lack of concerted leadership, a lack of corporate news, and a lack of economic data succeeded in keeping market participants disinterested for most of the session.

There was some excitement in the final hour of trading, though, which has become commonplace for this stock market. 

Unlike Thursday, the final hour featured a wave of broad-based selling interest over the last 30 minutes that knocked the indices out of their range-bound stupor and left them at their worst levels of the day when the final bell of 2017 rang.

The losses were led by the health care (-0.7%), financial (-0.7%), consumer discretionary (-0.7%), and information technology (-0.6%) sectors, all of which were among the market's best-performing sectors for 2017.

There wasn't a news catalyst for the selling, which is apt to be construed as a defensive, profit-taking move in front of the three-day weekend.  There is apt to be some chatter, too, that it could reflect a little defensive posturing heading into the first week of the new year when it is thought investors might be inclined to secure long-term capital gains after deferring them at the end of 2017 as the tax bill was being worked out.

We'll know soon enough, but a little selling late today won't spoil an excellent year.  The S&P 500, which was up 20% for the year around 3:20 p.m. ET today, closed 2017 up 19.4% (before dividends).

  • Nasdaq Composite: +28.2% YTD
  • Dow Jones Industrial Average: +25.2% YTD
  • S&P 500: +19.4% YTD
  • S&P Midcap 400 Index: +14.5% YTD
  • Russell 2000: +13.1% YTD

Week in Review: Not Missing Much

After four days and 26 total hours of trading, the S&P 500 settled the holiday-shortened week down 0.4% -- and only because of a sell-off in the last 30 minutes of trading on Friday.

The remarkable thing is that there was a 19-point variance between the high and low for the week, both of which were logged on Friday.  In other words, it was an extremely range-bound market that lacked conviction on the part of buyers and sellers -- until the last 30 minutes on Friday.

That lack of conviction was plain to see in the volume totals at the NYSE, which were among the lightest all year.

It was no surprise as this is a popular vacation week, and with the stock market having done so well already in 2017, many participants undoubtedly felt comfortable following pursuits that didn't include buying or selling stocks.

It is fair to say they didn't miss much.

The corporate news was very limited. The headline item for the week in that respect included Apple (AAPL), which declined 3.3% and closed just below its 50-day simple moving average during a week when many other stocks didn't move much.

Apple's difficulties stemmed from press reports on Tuesday which highlighted some analysts' concerns about iPhone X demand possibly being weaker than expected in the company's fiscal first quarter. Separately, Apple had some PR issues to deal with, which subsequently led to an apology from the company pertaining to the battery performance of its older iPhone models.

It would be remiss not to add that AAPL had a great 2017, increasing 46%, so it isn't unreasonable to think it might have been subjected to some profit taking at year end anyway. The aforementioned headlines, though, helped in that regard.

The livelier trading action took place outside the stock market.

Bitcoin was the picture of volatility; the 10-yr Treasury yield came in eight basis points to 2.41%; oil prices increased 3.1% to $60.27 per barrel, marking their highest close since 2015; gold prices jumped 2.4% to $1309.20/troy oz.; and the U.S. Dollar Index slumped 1.1% to 92.30.

Economic data was limited and on the mixed side, yet the Chicago Purchasing Managers Index for December created some fanfare on Thursday with its best print (67.6) since March 2011, led by a three-and-a-half year high for the New Orders Index and a 34-year high for the Production Index.

Within the stock market, the lightly-weighted real estate sector topped the list of winners with a 1.3% gain for the week. Price returns for the remaining ten sectors ranged from -1.0% (information technology) to 0.3% (utilities).

As a reminder, the stock and bond markets will be closed on Monday for the New Year's Day holiday and will re-open on Tuesday.

Happy New Year!

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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.