Day Traders Diary

2/10/15

The major averages snapped their two-day losing streak with a Tuesday rally that allowed the S&P 500 (+1.1%) to settle at its best level of the year. The benchmark index finished ahead of the Dow (+0.8%) and Russell 2000 (+0.6%), but behind the Nasdaq Composite (+1.3%).

Market participants were greeted this morning with Greece-related headlines, which should have been expected considering the EU finance ministers meeting will take place tomorrow. The rumor mill was active from the early morning, starting with a Bloomberg report indicating the European Commission will propose a six-month extension for Greece. The report cited unnamed sources and was met with a swift denial from the European Commission spokeswoman, who said there is no formal proposal on the table at this time, but talks are "intensive." German Finance Minister Wolfgang Schaeuble also offered a denial, simply calling the report "wrong."

Lost in the whirlwind was the fact that the Bloomberg report took place not long after Greek Defense Minister Panos Kammenos entertained the possibility of looking for financial support elsewhere, naming the United States, Russia, and China as potential options.

The stock market rallied happily following the initial report and held its ground through the subsequent denials. The S&P 500 spent the bulk of the early afternoon in a narrow range, but powered to a fresh high ahead of the close. It is worth noting that market breadth did not turn positive until the final 90 minutes, meaning the number of advancers equaled that of decliners even as the market sported a solid gain at midday.

Nine of ten sectors registered gains with yesterday's laggards leading the way. To that effect, three of four countercyclical sectors finished ahead of the broader market with health care (+1.6%) and utilities (+2.1%) ending in the lead.

The health care space received support from biotechnology, evidenced by a 1.6% gain in the iShares Nasdaq Biotechnology ETF (IBB 318.26, +4.85). The high-beta biotech group gave a boost to the Nasdaq, and the tech-heavy index received another measure of support from chipmaker names. Qualcomm (QCOM 70.26, +3.15) raised its guidance after settling an anti-trust investigation in China for $975 million while Micron (MU 31.09, +2.74) announced an amendment to one of its supply agreements. The two names posted respective gains of 4.7% and 9.7% while the PHLX Semiconductor Index spiked 3.4%. As for the technology sector, the top-weighted group advanced 1.6%.

Elsewhere among cyclical sectors, the consumer discretionary space (+1.2%) settled ahead of the market while the other four groups underperformed.

Notably, the industrial sector (+0.6%) could not keep up with the market even as transport stocks displayed strength (Dow Jones Transportation Average +0.9%). Machinery stocks kept the sector among the laggards following cooler-than-expected inflation data from China. Dow component Caterpillar (CAT 83.90, -0.77) lost 0.9% while Joy Global (JOY 43.84, -0.94) fell 2.1%.

On the downside, the energy sector (-0.2%) spent the day in negative territory, but erased the bulk of its loss ahead of the close. The sector had to contend with a 5.5% plunge in crude oil ($50.06/bbl) while Halliburton (HAL 42.60, -0.91) lost 2.1% after Houston Business Journal reported the company will reduce its workforce by 6.5%-8.0%.

Treasuries spent some time on either side of their flat lines before locking in slim losses with the 10-yr yield higher by a basis point at 1.99%.

Participation was below average for the second consecutive day with roughly 770 million shares changing hands at the NYSE floor.

Economic data was limited to Wholesale Inventories and JOLTS:

Wholesale inventories increased 0.1% in December following an unrevised 0.8% increase in November while the Briefing.com consensus expected an increase of 0.2% 

The BEA estimated that wholesale inventories increased 0.6% in the advance Q4 2014 GDP report, which will likely result in negative revisions for fourth quarter GDP

Durable goods inventories increased 0.2% in December after increasing 0.9% in November

Petroleum inventories declined 6.2%, causing a 0.1% downtick in nondurable goods inventories

The Job Openings and Labor Turnover Survey showed that openings increased to 5.028 million from 4.847 million in December

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the Treasury Deficit for January (Briefing.com consensus $19.00 billion) will be reported at 14:00 ET.

Nasdaq Composite +1.1% YTD

S&P 500 +0.5% YTD

Dow Jones Industrial Average +0.3% YTD

Russell 2000 UNCH YTD