Day Traders Diary

8/22/17

 The stock market crept higher throughout the first half of Tuesday's session, but has hit some resistance in recent action at the S&P 500's 50-day simple moving average (2,450.20). The benchmark index is currently up 0.8%, hovering between the Nasdaq (+1.1%) and the Dow (+0.7%).

Today's session has had a risk-on tone with cyclical sectors largely outperforming their countercyclical peers. For instance, three of the four countercyclical groups--consumer staples (-0.1%), utilities (-0.1%), and telecom services (+0.4%)--are currently trading behind the broader market. However, the defensive-oriented health care sector (+1.0%) is trading near the top of the sector standings.

Within the health care group, biotech names have exhibited particular strength, evidenced by the 1.6% increase in the iShares Nasdaq Biotechnology ETF (IBB 309.55, +4.87).

In total, eight of the eleven sectors are trading in the green with the top-weighted technology sector (+1.2%) pacing the advance. The tech group has bounced back from a three-day slide amid broad strength with mega-cap names like Apple (AAPL 159.60, +2.40) and Alphabet (GOOGL 938.37, +17.50) adding 1.5% and 1.9%, respectively.

There hasn't been a particular catalyst for today's advance, but a Politico report that President Trump's team has made significant progress on a tax reform plan has likely contributed to the bullish bias.

The risk-on tone is present outside of the equity market as well, sending safe-haven assets into the red. U.S. Treasuries are down across the curve, pushing the 10-yr yield two basis points higher to 2.20%. Meanwhile, gold is down 0.4% at $1,291.73/ozt and the Japanese yen has slipped 0.4% against the U.S. dollar to 109.42.

Also of note, the CBOE Volatility Index (VIX 11.84, -1.35) has dropped 10.2% in today's session and currently hovers near its lowest mark in two weeks.

Reviewing Tuesday's economic data, which was limited to the FHFA Housing Price Index for June:

The FHFA Housing Price Index for June rose 0.1%. The prior month's reading was revised to 0.3% (from 0.4%).