Day Traders Diary

8/28/15

After enduring a whirlwind week, the major averages ranged near their flat lines throughout the Friday session, ending little changed. The S&P 500 (+0.1%) and Nasdaq Composite (+0.3%) eked out slim gains while the Dow Jones Industrial Average (-0.1%) underperformed throughout the day. Despite the sideways action on Friday, the rally on Wednesday and Thursday allowed the S&P 500 to end the week higher by 0.9% while the Nasdaq jumped 2.5% for the week.

With one more session remaining in August, the S&P 500 is on track to lose 5.8% for the month while the Nasdaq is down 6.2% since the end of July.

Equities began today's affair with losses in most sectors, but the energy space (+2.3%) was an early standout following yesterday's 10.0% spike in crude oil. The energy component wasn't done there, rallying 6.3% today to end the pit session at $45.22/bbl. For the week, WTI crude gained 10.6% after dipping below $38.00/bbl on Monday.

The early strength in the energy sector served as an encouraging factor and other sectors began climbing in sympathy shortly after the start. The advance briefly placed the S&P 500 above its flat line, but the index slid back into the red after Federal Reserve vice chair Stanley Fischer appeared on CNBC.

Mr. Fischer's appearance did not provide that much fresh insight as he indicated that a September rate hike remains a possibility and that it's still too early to make the call right now; however, that was enough for the jittery market to slide back into negative territory. That move coincided with a jump in the Dollar Index (96.12, +0.37) while Treasuries surrendered their intraday gains, ending the day unchanged with the 10-yr yield at 2.18%.

The slide from highs was fairly broad-based and it pulled the energy sector from its high. Still the group ended with a solid gain while other sectors joined energy in the green during the final hour thanks to a broad surge that lifted the market back into positive territory. For the week, the energy sector jumped 3.7%, ending ahead of the technology sector, which spiked 2.9% for the week. The top-weighted group saw a stunning reversal after being down 6.9% at its lowest point on Monday.

Although the volatility appeared to have subsided on Friday, the CBOE Volatility Index (VIX 26.16, +0.06) was up almost three points before a late unwind saw the gauge surrender its entire increase. That being said, the VIX remains elevated at 26.00%, indicating that investors remain on the lookout for large swings.

With the broad market stumbling about like an overserved sailor, stock-specific news had been largely ignored this week. However, investors did receive a few earnings reports since Thursday's closing bell. Retail names posted mixed results with Aeropostale (ARO 0.92, -0.34) and bebe stores (BEBE 1.35, -0.52) missing bottom-line estimates while Big Lots (BIG 48.58, +6.58), Gamestop (GME 42.49, -3.71), and Ulta Salon (ULTA 159.00, -1.24) reported bottom-line beats.

Once again, participation was well above average with more than a billion shares changing hands at the NYSE floor.

Economic data was limited to Personal Income/Spending data and Michigan Sentiment:

Personal income increased 0.4% for a fourth consecutive month in July while the Briefing.com Consensus expected an increase of 0.4%

Wages and salaries increased 0.5% in July after increasing 0.2% in June, which was slightly weaker than what was implied in the July employment report

Personal spending increased 0.3% for a second consecutive month in July, following an upward revision to June spending (from 0.2% to 0.3%) while the consensus expected an increase of 0.4%

Core PCE prices increased 0.1% for a fourth consecutive month in July

The University of Michigan Consumer Sentiment Index was revised down to 91.9 in the final July reading from a preliminary reading of 92.9 while the Briefing.com consensus expected a revision up to 93.0

The move in consumer sentiment was opposite of the trend in the Conference Board's Consumer Confidence Index, which spiked to 101.5, its highest level since January

Monday's data will be limited to the 9:45 ET release of the Chicago PMI for August (Briefing.com consensus 54.7).

Nasdaq Composite +1.9% YTD

S&P 500 -3.5% YTD

Russell 2000 -3.6% YTD

Dow Jones Industrial Average -7.1% YTD