Day Traders Diary

6/13/16

 The stock market began its week on a lower note as investors weighed ambiguities in the global economic outlook. Furthermore, participants showed a lack of buying conviction ahead of this week's policy meetings at the Federal Reserve and Bank of Japan. Focal points for today's trade included a bid in safe havens, weakening in the U.S. dollar, a violation of technical support at the 2081/2082 price level, and relative weakness from the technology (-1.1%) and industrial (-1.1%) sectors. The Nasdaq Composite (-0.9%) finished behind the S&P 500 (-0.8%) and the Dow Jones Industrial Average (-0.7%).

Equities gapped lower to begin the Monday affair as a negative bias in global indices weighed on domestic stocks. The health of the global economy remained in focus as a mass shooting in the United States, steep losses in Asia, and defensive positioning in Europe each contributed to weakness overseas. Furthermore, tepid economic readings from China and bearish commentary from the IMF regarding China's corporate debt levels also unnerved participants.

The major averages pared some of their opening losses as oil attempted to gain on a softening dollar. However, the reversal in oil would prove to be short lived. WTI crude ended its day lower by 0.4% ($48.88/bbl; -$0.18). The S&P 500 (-0.8%) ebbed lower through afternoon trade, breaking support at the 2084/2085 and finally the 2081/2082 levels. The benchmark index finished near its low as all ten sectors ended in the red with materials (-1.3%), technology (-1.1%), and industrials (-0.7%) showing the largest losses.

The influential technology sector (-0.9%) underperformed as large cap component Apple (AAPL 97.34, -1.49) declined by 1.5%. The stock remained pressured after Nikkei reported that iPhone sales may fall in 2016. Elsewhere, Microsoft (MSFT 50.14, -1.34) finished lower by 2.6% after announcing that it would acquire LinkedIn (LNKD 192.21, +61.13) for $196 per share. Facebook (FB 113.95, -2.67) lost 2.3% after Andrew Left of Citron indicated that he has shorted the stock.

The Dow Jones Transportation Average (-1.1%) ended behind the broader market as weakness in airlines pressured the index and the broader industrial sector (-1.1%). The U.S. Global Jets ETF (JETS 22.37, -0.70) ended lower by 3.0%. On the flipside, Kansas City Southern (KSU 89.36, +0.62) outperformed among rail names.

The CBOE Volatility Index (VIX 20.99, +3.96) jumped 23.3% as investors look forward to the potential macroeconomic implications of the coming weeks. The Federal Reserve will meet tomorrow and Wednesday while the Bank of Japan will meet June 15 and 16. Furthermore, voting in the "Brexit" referendum will conclude on June 23.

The U.S. Dollar Index (94.34, -0.23) ended off its low as the euro and yen each finished with gains against the greenback. The euro/dollar pair ended higher by 0.4% (1.1295) while the dollar lost 0.8% (106.20) against the safe haven yen. Separately, the pound/dollar pair ended lower by 0.1% (1.4237) as investors attempted to account for a shift in "Brexit" polling.

The Treasury complex settled higher as the yield on the 10-yr Note slid three basis points to 1.61%.

Today's participation was below the recent average as fewer than 843 million shares changed hands on the NYSE floor.

Investors did not receive any economic data today.

Tomorrow's economic data will include Import and Export Prices for May and May Retail Sales (Briefing.com consensus 0.3%), which will each cross the wires at 8:30 ET. Separately, Business Inventories for April (Briefing.com consensus 0.2%) will be released at 10:00 ET.

Russell 2000: +1.9% YTD

Dow Jones +1.8% YTD

S&P 500 +1.7% YTD

Nasdaq -3.2% YTD