Day Traders Diary

1/26/15

The stock market began the new week on a quiet note with the Dow (unch), Nasdaq (+0.3%), and S&P 500 (+0.3%) settling near their flat lines. The small-cap Russell 2000 (+1.0%) outperformed, but the action took place against the backdrop of anemic trading volume as the East Coast braced for Winter Storm Juno.

Because of the incoming storm, a State of Emergency was already declared in Connecticut, New York, New Jersey, and Massachusetts, while the New York Stock Exchange announced plans to open and operate as usual on Tuesday. The NYSE operated as usual today, but that did not stop some participants from sitting the session out. Intraday volume was light, but a surge in late-afternoon activity brought the final tally (780 million) relatively close to the 50-day average (803 million).

The intraday lack of trading activity masked the fact that the weekend featured an important election in Greece. As expected, the anti-bailout Syriza party came away victorious, and despite failing to secure absolute majority, the party was able to form a coalition with Independent Greeks—a party that also opposes EU bailouts. So far, Syriza officials have been very careful when discussing the future of Greece with Yanis Varoufakis, who is expected to be named finance minister, saying a euro exit is not in the plans and that talks of a 'Grexit' should not be sensationalized.

Equity futures retreated at the Sunday open while the euro tested the 1.1100 level before bouncing into the 1.1250 area where it spent the bulk of the day. Similarly, equity futures erased the bulk of their losses ahead of the cash open.

The S&P 500 dipped below its 50-day moving average (2,047) in the early going, but the index found itself back above that level shortly thereafter. The S&P 500 returned to its flat line by 11:00 ET and traded within six points of that level for the remainder of the session.

Five of ten sectors registered gains with energy (+1.4%) holding the lead throughout the day. The sector narrowed its January decline to 1.8% while crude oil fell 1.0% to $45.12/bbl. Crude traded higher intraday after OPEC secretary general said prices could reach $200/bbl if producers choose not to increase supply, but selling into the pit close pressured the energy component into negative territory.

Elsewhere among cyclical sectors, financials (+0.5%) and consumer discretionary (+0.6%) outperformed while technology (-0.4%) struggled throughout the day. Notably, the discretionary sector received support from homebuilders after D.R. Horton (DHI 24.38, +1.28) reported better than expected results. The stock surged 5.5% while the iShares Dow Jones US Home Construction ETF (ITB 25.34, +0.52) gained 2.1%.

It wasn't all sunshine for discretionary shares as Mattel (MAT 26.64, -1.40) lost 5.0% after issuing cautious guidance and announcing the resignation of its Chief Executive Officer.

Also of note, the technology sector spent the day behind other groups due to relative weakness among heavily-weighted components like Google (GOOGL 536.72, -5.23), Oracle (ORCL 43.90, -0.29), Intel (INTC 35.80, -0.64), and Microsoft (MSFT 47.01, -0.17).

Over on the countercyclical side, health care (+0.5%) ended in the green while consumer staples (unch), telecom services (-0.4%), and utilities (unch) lagged throughout the session.

Treasuries registered modest losses with the 10-yr yield climbing two basis points to 1.82%.

Tomorrow, Durable Orders for December (Briefing.com consensus 0.5%) will be reported at 8:30 ET while the November Case-Shiller 20-city Index (consensus 4.3%) will be released at 9:00 ET. The Consumer Confidence report for January (consensus 96.0) will cross at 10:00 ET, alongside New Home Sales for December (consensus 450,000).

Nasdaq Composite +0.8% YTD

S&P 500 -0.1% YTD

Russell 2000 -0.3% YTD

Dow Jones Industrial Average -0.8% YTD