Day Traders Diary

4/11/17

Geopolitical tensions spooked investors on Tuesday, but the S&P 500's 50-day moving average provided support to keep losses in check. The Dow (unch) and the Nasdaq (-0.2%) settled on opposite sides of the benchmark index (-0.1%) while the small-cap Russell 2000 (+0.7%) outperformed.

Stocks retreated out of the gate, hitting their lowest levels of the day about an hour after the opening bell. By noon, equities had reclaimed about half of their earlier losses, but they still had difficulty shaking the risk-off sentiment until the final minutes of action. Even still, the late rally left the cash market short of its flat line.

Sector standings echoed the day's risk-off sentiment as countercyclical groups held the upper hand over their more-risky, cyclical peers. The real estate (+0.4%), consumer staples (+0.1%), and telecom services (+0.1%) spaces closed in the green while the utilities sector (unch) finished flat.

On the cyclical side, the heavily-weighted financials (-0.3%) and technology (-0.4%) sectors were hit the hardest. The financial group suffered from a flattening of the yield curve as increased buying interest within the Treasury market was unequally distributed; the 10-yr yield (2.30%) lost six basis points while the 2-yr yield (1.24%) gave up only four basis points.

For technology, the sector's top component by market cap, Apple (AAPL 141.63, -1.54), gave back some of its huge first quarter gain (+24.0%), falling 1.1%. Meanwhile, chipmakers showed relative weakness, evidenced by the 0.8% decrease in the PHLX Semiconductor Index, after Qualcomm (QCOM 55.35, -1.17) filed its Answer and Counterclaims to the January lawsuit brought by Apple against the company.

The energy sector (-0.1%) performed roughly in line with the broader market despite an uptick in crude oil. The energy component climbed out of negative territory following reports that Saudi Arabia favors extending the OPEC/non-OPEC production cut agreement beyond June. WTI crude settled 0.6% higher at $53.38/bbl, marking the commodity's sixth consecutive win.

Although the S&P 500 managed to close above its 50-day moving average (2349), the sharp rise in the CBOE Volatility Index (VIX 15.26, +1.21) provides evidence that investors are putting the pro-growth trade into question. The VIX Index now sits at its highest level since the presidential election.

Investor participation was a bit below average again today in light of the abbreviated week; 933.3 million shares changed hands at the NYSE floor.

On the data front, investors received only one economic report--February JOLTS--on Tuesday:

The February Job Openings and Labor Turnover Survey showed that job openings increased to 5.743 million from a revised 5.625 million (from 5.626 million) in January.

Tomorrow, investors will receive a batch of economic data, including the MBA Mortgage Applications Index at 7:00 ET, March Export/Import Prices at 8:30 ET, and the March Treasury Budget at 14:00 ET.

Nasdaq Composite +9.0% YTD

S&P 500 +5.1% YTD

Dow Jones Industrial Average +4.5% YTD

Russell 2000 +1.5% YTD