Day Traders Diary


Stocks began the final session of the week on a strong note as upbeat European trade supported U.S. equity futures. The positive sentiment across the old continent resulted from a strong German Ifo Business Climate Index, which beat expectations on both componentsbusiness expectations and the current assessment. Meanwhile, a disappointing preliminary GDP report out of the United Kingdom did little to cool investor optimism. The key averages climbed throughout the session and ended near their respective highs. The S&P 500 added 0.5%, and settled above the 1500 level for the first time since December 10, 2007.

The Nasdaq was the top performing index despite the relative weakness in the shares of Apple (AAPL 439.88, -10.62). The largest tech stock slipped 2.4% to extend yesterday's 12.4% decline, which followed a disappointing earnings report. Note that today's slide caused Apple to slip below Exxon Mobil's (XOM 91.73, +0.38) market cap. This occurred exactly one year after Apple surpassed Exxon Mobil to claim the title of most valuable company.

Sans Apple, the tech sector fared well thanks in part to strength among microprocessor manufacturers. KLA-Tencor (KLAC 56.34, +4.37) surged 8.4% after the company beat on earnings and revenue. Elsewhere, Cirrus Logic (CRUS 29.42, +2.71) soared 10.2% after investors welcomed its quarterly report. The two names contributed to the gains registered by the PHLX Semiconductor Index, which settled higher by 1.3%.

Several large cap technology stocks garnered interest as the recent slide in the shares of Apple caused some investors to look elsewhere. (AMZN 283.99, +10.37), eBay (EBAY 56.53, +1.34), and (PCLN 718.82, +39.27) all gained between 2.4% and 5.8%.

While and are both part of the Nasdaq, the two stocks are also a component of the S&P 500 consumer discretionary space. The sector was the day's top performer after gaining 1.0%.

Discretionary stocks saw general strength, and Starbucks (SBUX 56.81, +2.24) jumped 4.1% after its quarterly earnings indicated same store sales remain healthy. Elsewhere, Netflix (NFLX 169.56, +22.70) spiked 15.5% to follow yesterday's earnings-driven 42.2% jump. Since Tuesday, shares of Netflix have been on fire, gaining nearly 70%.

However, there was a pocket of weakness within the discretionary sector. Hasbro (HAS 37.31, -1.14) slipped 3.0% after warning that its fourth quarter revenue will come in below the Capital IQ consensus estimate. Peer Mattel (MAT 37.15, -0.89) lost 2.3% in sympathy.

The discretionary sector was closely followed by energy stocks, which climbed higher despite little change in crude oil. Halliburton (HAL 39.72, +1.91) was a notable gainer after the stock advanced 5.1% on the back of a strong quarterly report.

Looking at the relative performance of S&P 500 sectors, discretionary (+1.0%) stocks led while energy (+0.9%), and health care (+0.8%) followed closely. On the downside, technology (+0.1%), telecoms (+0.4%), and materials (+0.4%) lagged.

It should be noted that while the key indices ended near their highs, the CBOE Volatility Index (VIX 12.89, +0.20) settled in positive territory as well. The move indicates that despite today's advance, near-term downside protection received notable interest during the session.

Volume was slightly above its 20-day average with just under 700 million shares changing hands on the floor of the New York Stock Exchange.

Looking at today's economic data, the headline number for the December new home sales report was a disappointment. The Department of Housing and Urban Development indicated sales were at a seasonally adjusted annual rate of 369,000 units, while the consensus estimate was pegged at 385,000. In actuality, though, the report was better than expected when taking into account the upward revision to November.

Specifically, sales in November were revised up to 398,000 from 377,000. Combined with the sales in December, the average for the two-month period was 384,000 versus an average of 381,000 that was expected prior to the revision.

Three out of four regions saw new home sales slip in December. The Northeast led the decline with a 29.4% drop. The Midwest was the standout, enjoying a 21.3% jump in new home sales.

Median prices edged up 1.3% to $248,900. For 2012, the median sales price of a new home increased 7.2% from 2011 to $243,600.

At the current pace of sales, there is a 4.9 month supply of inventory, which is up from 4.5 months in November and the highest level since April 2012.

On Monday, December durable goods and durable goods ex-transportation will be reported at 8:30 ET. In addition, December pending home sales will be announced at 10:00 ET. Among notable earnings, Caterpillar (CAT 95.58, -1.02) is scheduled to announce its quarterly results ahead of the opening bell.

The U.S. Treasury will auction off $35 billion in 2-yr notes.

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.