Day Traders Diary

8/9/13

The major averages ended a down week on a lower note as the S&P 500 shed 0.4% to widen this week's loss to 1.1%. Shortly after opening in the red, the benchmark index briefly turned positive, but just like yesterday, it was unable to make a sustained move above the 1,700 level. The S&P notched its low as the European session ended before erasing about half of its losses over the course of the afternoon.

Nine of ten sectors ended in the red while materials outperformed with a gain of 0.6% after China's industrial production report surpassed estimates (9.7% actual, 9.0% forecast). Steelmakers and miners rallied broadly, but Molycorp (MCP 6.69, -0.72) headed in the opposite direction after missing on earnings and revenue. The materials sector was the only group that registered a gain this week, rising 0.8%.

Other commodity-linked sectors did not fare as well. Energy underperformed with a loss of 0.5% even as crude oil advanced 2.5% to $106.02 per barrel. Meanwhile, the industrial sector (-0.3%) ended slightly ahead of the S&P, but transportation companies underperformed as the Dow Jones Transportation Average shed 0.6%.

Meanwhile, the remaining cyclical groups ended in mixed fashion. Technology (-0.4%) underperformed while financials (-0.3%) and discretionary shares (-0.3%) settled ahead of the broader market. The discretionary sector received some support from Priceline.com (PCLN 969.89, +36.14) after the company beat on earnings and revenue.

With regard to countercyclical groups, health care (-0.4%) and consumer staples (-0.4%) did not deviate from the S&P while rate sensitive utilities (-0.7%) and telecom services (-1.0%) lagged.

Treasuries were very quiet today and the benchmark 10-yr yield slipped one basis point to 2.58% after spending the day in a three point range.

Light volume persisted throughout the week and today was no different as less than 650 million shares changed hands on the floor of the New York Stock Exchange.

Today's economic data was limited to wholesale inventories, which fell 0.2% in June after declining a downwardly revised 0.6% (from -0.5%) in May. That was the third consecutive monthly decline and the fourth monthly drop so far in 2013. The Briefing.com consensus expected wholesale inventories to increase 0.4%.

The Bureau of Economic Analysis assumed that wholesale inventories were flat in June in the advance estimate for second quarter GDP growth. The downward surprise will add a minor negative contribution to the revisions in the second estimate.

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