Day Traders Diary

12/29/14

It was a full day of trading on Monday, yet the stock market acted like it was still on vacation. Volume was light and the major indices held to narrow trading ranges that bracketed the unchanged line for much of the session.

The S&P 500 managed to eke out its seventh gain in the last eight sessions. In doing so, it established another record closing high that pulled it ever closer to the 2100 level.

Most of today's action happened away from the U.S. stock market. To that end, European bourses had a roller-coaster session, riding a wave of Greek politics that included a third failed vote for the prime minister's preferred presidential candidate, the subsequent announcement that parliament would be dissolved, and news that snap elections would be held on January 25.

The Greek stock market ended Monday down 3.9%, yet that was a vast improvement over the 10% decline it suffered at one point following the failed vote. The turmoil was attributed to a growing sense of angst that the anti-austerity Syriza party will win the snap elections, cancel the austerity measures implemented as a condition for the country's bailout program, and potentially lead a Greece exit from the eurozone.

That uncertainty, along with the renewed weakness in the Russian ruble against the dollar, prompted some safe-haven positioning in major sovereign bond markets. Arguably, it also contributed to a 5.4% jump in the CBOE Volatility Index (VIX 15.28, +0.78) as market participants aimed to hedge portfolios for near-term volatility risk.

The German bund yield fell five basis points to 0.54% while the 10-yr Treasury note yield slipped four basis points to 2.21%.

A reversal in oil prices also provided some support for longer-dated Treasuries. Earlier this morning, WTI crude futures bumped up to $55.60/bbl amid concerns about the unrest in Libya. They soon fell out of favor, though, and traded below $53.00/bbl, marking a 5 � year low, before settling down 2.1% at $53.61/bbl.

The gyration in oil prices led to some commensurate gyration in the S&P 500 energy sector, but the latter ultimately found its footing and advanced 0.3% on some bottom-fishing interest. The big mover in the stock market, though, was the rate-sensitive utilities sector. It jumped 1.1%, leaving it up 16.8% for the quarter and 29.3% for the year.

That certainly helped the S&P 500 move ahead, yet it was the outperformance of the consumer discretionary (+0.7%), financial (+0.4%), energy (+0.3%), and health care (+0.3%) sectors that made the winning difference.

Gains in those heavily-weighted sectors helped offset the relative weakness of the information technology (-0.5%) and consumer staples (-0.4%) sectors.

Within the Dow Jones Industrial Average, IBM (IBM 160.52, -1.82) and Visa (V 265.36, -1.26) were the two biggest losers while Home Depot (104.55, +0.80) and Goldman Sachs (GS 196.13, +0.68) were the two biggest gainers.

There wasn't any economic data out of the U.S. on Monday. Tuesday's lineup will feature the Case-Shiller Home Price Index for October (Briefing.com consensus +4.4%) and the Consumer Confidence report for December (Briefing.com consensus 94.4).

A total of 538 mln shares changed hands at the NYSE, which was far below the 50-day simple moving average of 802 million shares.

Nasdaq Composite +15.1% YTD
S&P 500 +13.1% YTD
Dow Jones Industrial Average +8.8% YTD
Russell 2000 +4.8% YTD