Day Traders Diary


The stock market pretty much ran in circles on Monday, having closed the session close to where it began. Its indecisive nature was attributed to some worrisome-sounding headlines on the geopolitical front, yet the market action suggested it may have been owed more to a case of wait-and-see in front of Wednesday's FOMC meeting when a new policy directive will be issued along with updated economic and fed funds rate projections.

To the latter point, oil prices were little changed despite the news that the militant group, Islamic State of Iraq and Syria, took over yet another city in northern Iraq. The 10-yr note, gold prices, and the US Dollar Index, meanwhile, were also little changed, signalling that there wasn't a flight to safety on those headlines or the news that Russia cut off its gas supply to Ukraine after the two countries failed to agree on pricing.

In turn, a batch of better-than-expected economic data and another round of M&A activity highlighted by Medtronic's (MDT 60.03, -0.67) $42.9 bln acquisition of Covidien (COV 86.75, +14.73) failed to stir any concerted buying interest.

Market internals reflected an overall mixed disposition. The advance-decline line was roughly even at the NYSE and Nasdaq, volume was light at 591 mln shares, and there wasn't a single sector that ended the day up, or down, more than 1.0%. For good measure, only two Dow components -- Visa (V 210.24, -1.05) and Chevron (CVX 128.54, +1.28) -- closed more than a point away from where they ended on Friday.

The financial sector (-0.4%) underperformed all day while the utilities sector (+0.7%) outperformed all day. The former finished off its low while the latter finished off its high

Today's trading action in the S&P 500 was bounded between 1931 on the downside and 1941 on the upside. A little wave of buying interest in the closing minutes left it closer to the top end of that range than the bottom end when the closing bell rang.

The performance edge among the major indices went to the Nasdaq (+0.2%) and Russell 2000 (+0.3%), which benefited from some relative strength in Apple (AAPL 92.20, +0.92) and the biotech stocks, evidenced by the iShares Nasdaq Biotechnology ETF (IBB 248.49, +0.90).

In terms of today's economic reports, the Empire Manufacturing Survey for June, the Industrial Production report for May, and the NAHB Housing Market Index all exceeded the consensus estimates and overshadowed the IMF lowering its 2014 growth outlook for the US to 2.0% from 2.8%:
"Empire Manufacturing Survey 19.3 ( consensus 12.8; prior 19.0)
"Industrial Production +0.6% ( consensus +0.5%; prior -0.3%)
"NAHB Housing Market Index 49 ( consensus 46; prior 45)

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