Day Traders Diary

5/21/15

The major averages hold modest midday gains with the Nasdaq Composite (+0.4%) trading ahead of the S&P 500 (+0.3%).

True to recent form, the stock market has spent the first half of the session in a narrow range with the S&P 500 bouncing between 2,122 and 2,133. The benchmark index spent the first 30 minutes of the day near its flat line, but pulled away from that mark after two of three economic reports released at 10:00 ET came in below estimates (Existing Home Sales and Philadelphia Fed Survey). Coupled with a rally in Treasuries, the overall dynamic suggests participants expect the Federal Reserve to maintain its current dovish stance.

Eight sectors hold midday gains while the two decliners—health care and financials—hover just below their flat lines. Despite today's underperformance, the two groups are among this week's leaders with respective week-to-date gains of 1.1% and 0.6%.

On the flip side, the energy sector (+0.9%) is the top performer thanks to a sharp rally in crude oil. The energy component has jumped 3.0% to $60.77/bbl after the Energy Information Administration's storage report revealed the third consecutive weekly draw.

Similar to energy, four of the remaining five cyclical sectors hold gains. The industrial sector (+0.6%) outperforms thanks to a rebound among transport stocks. The Dow Jones Transportation Average is higher by 0.8% today, but remains down 1.3% for the week.

Elsewhere, the consumer discretionary sector (+0.5%) has also shown relative strength with the SPDR S&P Retail ETF (XRT 99.61, +0.61) trading higher by 0.6% after Best Buy (BBY 35.62, +1.84) and Williams-Sonoma (WSM 78.58, +0.69) reported better than expected results.

Treasuries hover near their highs with the 10-yr yield down four basis points at 2.21%.

Economic data included Initial Claims, Leading Indicators, Existing Home Sales, and Philadelphia Fed Survey:

The initial claims level increased to 274,000 for the week ending May 16 from an unrevised 264,000 while the Briefing.com consensus expected an increase to 270,000 

Despite this week's increase, the four-week moving average fell to 266,250 from 271,750, which is the lowest level since April 2000

The continuing claims level declined to 2.211 mln for the week ending May 9 from a downwardly revised 2.223 mln (from 2.229 mln) while the Briefing.com consensus expected an increase to 2.250 mln

The Leading Indicators report for April was up 0.7% while the Briefing.com consensus expected an increase of 0.3% 

The March reading was revised up to 0.4% from 0.2%

Existing home sales for April were reported to have decreased 3.3% from March to an annualized rate of 5.04 million units while the Briefing.com consensus expected a reading of 5.24 million

The Philadelphia Fed's Business Outlook Survey dropped to 6.7 in May from 7.5 in April while the Briefing.com consensus expected an increase to 8.0 

Despite the decrease, the general business production growth outlook actually strengthened 

Shipments exited a contraction as the related index increased to 1.0 in May from -1.8 in April