Day Traders Diary

7/18/16

 The stock market endured a sleepy start to the week as the S&P 500 (+0.2%) occupied a narrow nine-point range for the duration of today's session. Investors favored a wait-and-see approach today, adopting caution ahead of the plethora of quarterly reports that are scheduled to be released before the end of the week. Additional focal points impacting today's trade included softening in the dollar, weakness from the oil pit, and strong sector leadership from the heavyweight technology (+0.7%), financial (+0.4%), and consumer discretionary (+0.3%) sectors. The Nasdaq Composite (+0.5%) ended ahead of the S&P 500 (+0.2%) and the Dow Jones Industrial Average (+0.1%).

The major averages began the session on a choppy note as mixed performances from global markets and a downturn in crude oil elicited modest selling pressure. European bourses consolidated overnight, pausing as investors eyed an unsuccessful coup in Turkey. Members of the Turkish military attempted to oust President Recep Tayyip Erdogan over the weekend, beginning their failed attempt shortly ahead of Friday's closing bell. The attempted upheaval was largely shrugged off by global markets as U.S. investors shifted their focus to upcoming quarterly reports and news on the M&A front.

The benchmark index found support near the 2161 area, which also corresponded with a rebound in crude oil. Equities inched higher through the morning as heavily-weighted technology (+0.7%) paced the advance. The influential sector benefited from news that ARM Holdings (ARMH 66.17, +19.09) agreed to be acquired by Softbank (SFTBY 26.22, -2.22). However, the S&P 500 (+0.2%) was unable to clear technical resistance near the 2067 price level and ended modestly beneath that point. Five sectors ended in the green as technology (+0.7%), materials (+0.7%), and financials (+0.4%) outperformed. Conversely, consumer staples (-0.2%), industrials (-0.1%), and energy (-0.1%) rounded out the board.

The PHLX Semiconductor Index (+1.5%) demonstrated relative strength as the price-weighted index moved higher in sympathy with ARM Holdings (ARMH 66.17, +19.09). ARM Holdings rallied 40.6% after announcing that it would be acquired by Softbank (SFTBY 26.22, -2.22) for approximately $31.4 billion. In the broader technology sector (+0.7%), large cap components Facebook (FB 119.37, +2.51) and Alphabet (GOOG 733.78, +13.93) outperformed, gaining 2.2% and 1.9%, respectively. On the flipside, Yahoo! (YHOO 37.95, +0.23) ended behind the sector as investors look ahead to tomorrow evening's quarterly report.

The economically-sensitive financial (+0.4%) space continued its recent winning streak as participants examined a positive earnings report from Bank of America (BAC 14.11, +0.45). The company beat bottom-line estimates for the quarter and reported that trading and sales revenue increased 12.0% year-over-year. Life insurance names also helped lead the group as MetLife (MET 43.09, +0.48) jumped 1.3%. Elsewhere, Dow component Goldman Sachs (GS 163.33, +1.39) moved higher by 1.1% ahead of tomorrow morning's earnings report.

In the consumer discretion space (+0.3%), retail names outperformed, evidenced by the 1.6% advance in the SPDR S&P Retail ETF (XRT 44.44, +0.70). The group traded higher in sympathy with Coach (COH 43.37, +1.07) after Robert W. Baird upgraded the stock to "Outperform" from "Neutral." Meanwhile, Netflix (NFLX 98.81, +0.42) ticked higher by 0.4% ahead of this evening's quarterly results.

The heavily-weighted health care sector (UNCH) finished behind the broader market as the health care plan sub-group underperformed. Dow component UnitedHealth (UNH 140.75, -0.58) finished behind the price-weighted index, slipping 0.4%. The company is scheduled to release its earnings report ahead of tomorrow's open. Additionally, Merck (MRK 59.02, -0.61) lost 1.0% after being downgraded to "Market Perform" from "Outperform" at BMO Capital.

The U.S. Dollar Index (96.55, -0.03) finished narrowly beneath its flat line as commodity currencies, the euro, and the pound each gained ground against the buck. The dollar/Canadian dollar pair ended higher by 0.2% (1.2946) while the single currency gained 0.4% against the dollar (1.1074).

Treasuries ended off their session lows, but yields still showed modest upticks throughout the complex. The yield on the 10-yr note finished at 1.59%, rising three basis points.

Today's trading volume was below with the recent average as fewer than 723 million shares changed hands on the NYSE floor.

Today's economic data was limited to the NAHB Housing Market Index for July:

The NAHB Housing Market Index for July came in at 59 from an unrevised 60 in June while the Briefing.com consensus expected the reading to come in at 61.

Tomorrow's economic data will be limited to Housing Starts (Briefing.com consensus 1165k) and Building Permits (Briefing.com consensus 1150k) for June, which will each be released at 8:30 ET.

Dow Jones +6.4% YTD

Russell 2000 +6.4% YTD

S&P 500 +6.0% YTD

Nasdaq +1.0% YTD