Day Traders Diary

09/17/15

 The stock market ended the week on a broadly lower note. The S&P 500 lost 1.6%, surrendering 0.2% for the week, while the Nasdaq (-1.4%) outperformed, finishing the week higher by 0.1%.

Equity indices spent the entire Friday session in the red after heavy selling in the futures market ensured a lower start. The overnight weakness in futures was accompanied by a retreat in Europe as investors shied away from risk assets amid the persistent uncertainty. On one hand, Greece will vote for a new parliament on Sunday and it is unclear whether the potential transition of power will upset the bailout agreement with eurozone creditors. On the other hand, yesterday's FOMC decision to hold the policy line has re-invited the rate-hike uncertainty that had pressured equity markets going into the September meeting. The uncertainty remains in place because Fed Chair Yellen, in her press conference, maintained that FOMC members are still looking to raise rates before the year ends.

Today's retreat in stocks was accompanied by a rally in the Treasury market. The 10-yr note climbed throughout the day, pressuring its yield nine basis points to a two-week low of 2.13%.

All ten sectors ended in the red with cyclical groups leading the decline. The energy sector (-2.7%) spent the day well behind its peers as crude oil surrendered its weekly gain, ending today's pit session lower by 4.7% at $44.68/bbl.

Elsewhere, heavily-weighted financials (-1.9%) and industrials (-2.2%) also underperformed throughout the day, limiting the market's brief rebound attempt in the late morning. The likes of Citigroup (C 50.29, -1.36) and JPMorgan Chase (JPM 60.94, -1.71) both lost near 2.7%, responding to the prospect of lower rates for longer.

All things considered, the S&P 500 could have suffered a larger decline, but the top-weighted technology sector (-1.3%) showed some slight relative strength, thanks to Apple (AAPL 113.45, -0.47), which shed 0.4%. Another tech sector member, Adobe Systems (ADBE 81.25, +0.94), also fared better than the broader market, climbing 1.2% after reporting a bottom line beat and issuing cautious guidance.

With overall uncertainty running high, volatility protection was in demand, evidenced by a two-point spike in the CBOE Volatility Index (VIX 22.84, +1.70). Today's participation was well above average, largely thanks to quadruple witching. As a result, more than 2.1 billion shares changed hands at the NYSE floor.

Economic data was limited to the Leading Indicators report, which increased 0.1% in August after an upward revision made the growth rate flat (from -0.2%) in July. The Briefing.com Consensus expected the index to increase 0.2%.

On Monday, the Existing Home Sales report for August will be released at 10:00 ET (Briefing.com consensus 5.50 million).

Nasdaq Composite +1.9% YTD

Russell 2000 -3.3% YTD

S&P 500 -4.9% YTD

Dow Jones Industrial Average -8.1% YTD