Day Traders Diary

6/20/16

 The stock market began its week on a higher note as investors eyed a rally in global equities following a reversal in Brexit polls. However, the equity indices finished off their highs due to a sell off in the final hour. Focal points for today's trade included a bid in risk assets, softening in the dollar, a rebound in oil, and relative strength in the heavily-weighted industrial (+0.9%) and consumer discretionary (+0.9%) sectors. The Nasdaq Composite (+0.8%) finished ahead of the Dow Jones Industrial Average (+0.7%) and the benchmark index (+0.6%).

Global investors shed their risk-off posture overnight as participants eyed a shift towards the "Remain" camp in the latest round of Brexit polling. In response, the major U.S. indices gapped higher at the start of the session with the S&P 500 (+0.6%) rallying to the 2100 area within the first hour of trade. The benchmark index failed to clear resistance at that psychological level, and ticked lower through the remainder of the session. However, it is worth mentioning that the broader market lost momentum in the late morning, which corresponded with the close of European markets.

Equities continued to slip through the afternoon with the benchmark index failing to maintain support near the 2092/2093 price level. The fading conviction in the final hour of trade was likely related to concerns that there could be another shift in Brexit polling overnight, as well as the recognition that Fed Chair Yellen will be providing the first day of her semiannual monetary policy testimony on Tuesday in front of the Senate Banking Committee.

Nine sectors ended in the green with energy (+0.9%), industrials (+0.9%), and consumer discretionary, (+0.9%) leading the pack. On the flipside, the countercyclical utilities sector (-0.4%) ended with the only loss while telecom services (+0.2%) finished with the slimmest gain.

The Dow Jones Transportation Average (+1.1%) demonstrated relative strength as rail names and logistic companies outperformed. On that note, CSX (CSX 27.01, +0.26) and Kansas City Southern (KSU 89.33, +1.32) gained 1.0% and 1.5%, respectively. Airline names rebounded as the U.S. Global Jets ETF (JETS 21.83, +0.29) rebounded 1.4% after declining 6.6% last week.

Separately, Dow component Boeing (BA 132.75, +2.93) ended at the top of the price-weighted average.

The high-beta chipmakers outperformed in the technology sector (+0.5%), evidenced by the 1.2% gain in the PHLX Semiconductor Index. NVIDIA (NVDA 47.56, +0.84) gained 1.8% after announcing that it launched its latest graphics processor unit for data centers. On a side note, the name notched a new all-time high ($48.17) earlier in the session.

In the consumer discretionary space (+0.9%), travel companies outperformed after Expedia (EXPE 107.19) received an upgrade to "Buy" at Atlantic Equities. Priceline (PCLN 1341.96, +32.72) and TripAdvisor (TRIP 64.66, +1.58) gained 2.5% apiece.

The U.S Dollar Index (93.65, -0.56) ended lower by 0.6% as the euro, commodity currencies, and the pound sterling rebounded against the dollar. The euro/dollar pair ended higher by 0.3% (1.1308) while the pound rallied 2.3% against the buck (1.4685). Finally, the dollar lost 0.6% against the Canadian dollar (1.2811).  Oil prices benefited from the dollar's weakness and improved market sentiment, jumping 2.9% ($49.40/bbl; +$1.38) for the session.

The Treasury complex settled near its lows.  The yield on the 10-yr note rose six basis points to 1.67% as some of last week's safe-haven positioning trades were unwound.

There was no economic data of note released today.

Tomorrow's economic calendar is again noticeably light, but Fed Chair Yellen is scheduled to begin her biannual testimony before Congress at 10:00 ET.  Ms. Yellen will be addressing the Senate Banking Committee and the House Financial Services Committee on Tuesday and Wednesday, respectively.

Nasdaq Composite -3.4% YTD

S&P 500 +1.9% YTD

Russell 2000 +1.9% YTD

Dow Jones +2.2% YTD