Day Traders Diary


The major averages ended the Thursday session on a flat note despite showing broad-based weakness in the early going. The S&P 500 ended unchanged with four sectors in the green.
Equity indices started the day near their flat lines, but commenced their retreat once European Central Bank President Mario Draghi concluded his press conference without providing much detail about the central bank's ABS purchases. Furthermore, Mr. Draghi did not hint at plans for sovereign bond purchases, which had been the subject of conversation in recent weeks. To that point, diminished prospects of a full-scale QE program weighed on markets in Italy (-3.9%) and Spain (-3.1%) with bank shares leading the retreat.
As for the U.S., equities slumped across the board in the morning, but staged an impressive reversal after reaching short-term oversold conditions just ahead of 12:00 ET. At that time, the S&P 500 hit its session low of 1925.93 and the TICK reading at the NYSE neared -1500a level typically associated with excessive selling.
The major averages spent the afternoon in a steady rally back to their flat lines, but could not extend their advance past the unchanged mark. The discretionary sector (+0.4%) resisted the renewed pressure amid strength in apparel retailers and homebuilders. Heavyweight Nike (NKE 89.30, +1.60) jumped 1.8%, while the broader SPDR S&P Retail ETF (XRT 85.43, +1.10) rose 1.3%. As for homebuilders, the group rallied broadly with the iShares Dow Jones US Home Construction ETF (ITB 22.47, +0.20) climbing 0.9%.
Elsewhere among cyclical groups, the financial sector (+0.2%) outperformed throughout the session, while technology (+0.04%) displayed strength in the afternoon. Large cap names like Apple (AAPL 99.90, +0.72), Oracle (ORCL 38.27, +0.18), and Facebook (FB 77.08, +0.53) fueled the modest advance in tech, while chipmakers refused to take part. The PHLX Semiconductor Index lost 0.6%.
Similarly, the high-beta biotechnology group lagged with the iShares Nasdaq Biotechnology ETF (IBB 268.59, -0.84) sliding 0.3%. This pressured the health care sector (-0.2%), while the remaining countercyclical groups ended closer to their flat lines.
Treasuries slumped overnight, but tried turning positive during the morning retreat in stocks. However, the flat line served as resistance, resulting in new lows into the close. The 10-yr note fell 14 ticks, raising its yield five basis points to 2.44%.
Today's participation was ahead of recent averages with more than 780 million shares changing hands at the NYSE.
Economic data included initial claims, factory orders, and the Challenger Job Cuts report:

The weekly initial claims level fell to 287,000 from an upwardly revised 295,000 (from 293,000), while the consensus expected an increase to 297,000

According to the Department of Labor, there were no special factors impacting the initial claims

Over the past several weeks, the claims level has clearly moved from a 310,000 -- 320,000 trend to a sub-300,000 trend. These levels are typically associated with an economy at, or near, full employment, which would imply monthly payroll gains above 250,000

Factory orders fell 10.1% in August after increasing an unrevised 10.5% in July, while the consensus expected a decline of 9.3%

Led by strong demand for Boeing (BA 124.17, -0.50) aircraft, transportation orders increased 73.3% in July. Those gains were not sustainable and orders fell 42.2% in August, which brought orders back in-line with June levels. These severe up-and-down moves caused the biggest one-month increase and the biggest subsequent one-month decrease in overall manufacturing orders since data started being collected

Excluding transportation, factory orders declined a much more modest 0.1% in August, which was an improvement from a 0.7% decline in July

The September Challenger Job Cuts report revealed a 24.0% year-over-year drop to follow the previous reading of -20.7%

Tomorrow, the Nonfarm Payrolls report for September ( consensus 210K) and the Trade Balance for August (consensus -$40.90 billion) will be released at 8:30 ET, while ISM Services for September (consensus 58.9) will cross the wires at 10:00 ET.

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