Day Traders Diary

12/26/17

It was a lackadaisical day of trading on Wall Street as many participants clearly found better things to do the day after Christmas than buy or sell stocks.  The trading proof of point was in the volume, which totaled just 528 million shares at the NYSE versus 650 million shares last Tuesday and 723 million shares the Tuesday before that.

The light participation was not a surprise as this is a popular vacation day (and week).  Major bourses in Europe were closed for Boxing Day, which contributed to the light volume.

There wasn't much news driving the market narrative, which revolved around the following:

• Weakness in Apple (AAPL 170.57, -4.44, -2.5%) and many of its suppliers in the wake of press reports highlighting some analysts' concerns about iPhone X demand possibly being weaker than expected in the fiscal first quarter, which encompasses the holiday selling season
• A nice move by many retail stocks after Mastercard Spending Pulse reported retail sales, excluding autos, rose at their strongest pace (+4.9%) since 2011 from November 1 through Christmas Eve.  The SPDR S&P Retail ETF (XRT 46.03, +0.52, +1.1%) reflected the relative strength of the retail stocks while Amazon.com (AMZN 1176.76, +8.40, +0.7%), which said it had its best holiday season ever, reflected the upbeat sales report.
• The rise in oil prices ($59.90, +$1.43, +2.5%), which hit their highest level since mid-2015, spurred on by reports of a pipeline explosion in Libya that will curtail about 90,000 barrels per day from the OPEC nation.  That move led to some concurrent strength in the energy sector (+0.8%), which was the market's best-performing sector on Tuesday.
• The huge reversal in bitcoin, which hit $16,000 after trading below $11,000 last Friday

For the most part, the broader market found itself pinned down by Apple's weakness and the weight of losses in the information technology (-0.7%) and financial (-0.5%) sectors, which are its two most heavily-weighted sectors.

Some curve flattening pressured the financials, yet that was more of an excuse for the weakness on a day when there wasn't a lot of substantive news to account for the price action.

The yield on the 2-yr note bumped up one basis point to 1.90% following a weak $26 billion 2-yr note auction; meanwhile, the yield on the benchmark 10-yr note slipped two basis points to 2.47%.

The S&P Case-Shiller Home Price Index for October was the only economic release of note.  It showed home prices in 20 major metropolitan cities increased 6.4% year-over-year (Briefing.com consensus +6.3%).

Wednesday's slate of data will feature the weekly Mortgage Applications Index at 7:00 a.m. ET, the Consumer Confidence report for December at 10:00 a.m. ET, and the Pending Home Sales report for November at 10:00 a.m. ET.

• Nasdaq Composite: +28.9% YTD
• Dow Jones Industrial Average: +25.2% YTD
• S&P 500 +19.7% YTD
• S&P Midcap 400 Index: +14.8% YTD
• Russell 2000 +13.8% YTD