Day Traders Diary

1/20/15

The stock market kicked off the holiday-shortened week with a shaky Tuesday session. The S&P 500 settled higher by 0.2% after finding intraday support near its 100-day moving average (2007/2008). The tech-heavy Nasdaq outperformed, climbing 0.4%.

Equity indices started the day with modest gains, but continued weakness in crude oil weighed on the overall risk tolerance and contributed to an early retreat. However, a handful of influential sectors were able to withstand the selling pressure, which in turn became a supportive factor during afternoon action.

As for crude, the energy component retreated after The International Monetary Fund cut its 2015 global growth outlook to 3.0% from 3.5%, and continued sliding throughout the session. WTI crude ended lower by 4.1% at $46.51/bbl while the energy sector (+0.1%) settled near its flat line. On the earnings front, Baker Hughes (BHI 57.26, +0.70) and Halliburton (HAL 39.83, +0.70) posted respective gains of 1.2% and 1.8% in reaction to better than expected results.

Similar to energy, consumer discretionary (-0.6%) and financials (-0.4%) trailed the broader market throughout the day. The financial sector lagged following disappointing results from Morgan Stanley (MS 34.75, -0.14) while discretionary shares were pressured by homebuilders and retailers. The iShares Dow Jones US Home Construction ETF (ITB 24.48, -0.62) and SPDR S&P Retail ETF (XRT 92.23, -1.21) lost 2.5% and 1.3%, respectively. On the upside, Netflix (NFLX 348.80, +11.46) gained 3.4% ahead of its quarterly report.

Elsewhere among influential sectors, health care (-0.1%) pressured the market in the early going following a revenue miss from Johnson & Johnson (JNJ 101.29, -2.75). However, the sector was lifted off its low by the relative strength in the biotech space. The iShares Nasdaq Biotechnology ETF (IBB 323.23, +5.41) gained 1.7% and settled at a fresh record high.

The biotech group also bolstered the Nasdaq and helped the index settle ahead of the broader market. To be sure, the Nasdaq received another measure of support from its top-weighted components, including Apple (AAPL 108.78, +2.79), which spiked 2.6%.

Treasuries notched their highs around 11:00 ET before spending the remainder of the session in a steady retreat. The 10-yr yield ended lower by five basis points at 1.79%.

Participation was a bit above average with more than 840 million shares changing hands at the NYSE floor.

Economic data was limited to the NAHB Housing Market Index for January, which slipped to 57 from a revised 58 (from 57) while the Briefing.com consensus expected the reading to hold at 58.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while December Housing Starts (Briefing.com consensus 1.04 million) and Building Permits (consensus 1.06 million) will be reported at 8:30 ET.

Dow Jones Industrial Average -1.7% YTD

Nasdaq Composite -1.7% YTD

S&P 500 -1.8% YTD

Russell 2000 -2.8% YTD