Day Traders Diary

11/26/18

• The S&P 500 rebounded 1.6% on Monday, as Amazon (AMZN 1581.33, +79.27, +5.3%) and retail stocks led the broad-based advance from what many considered to be short-term oversold conditions. Meanwhile, the Dow Jones Industrial Average gained 1.5%, the Nasdaq Composite gained 2.1%, and the Russell 2000 gained 1.2%.

  Reports of record online Black Friday sales and encouraging forecasts for Cyber Monday sales contributed to the upbeat investor sentiment within the top-performing consumer discretionary sector (+2.6%). Adobe Analytics reported that online Black Friday sales surged 23.6% to a record $6.22 billion and expected a 17.6% year-over-year growth of $7.8 billion on Cyber Monday. The S&P SPDR Retail ETF (XRT 45.75, +0.87) rose 2.0%.

  The information technology (+2.3%), financials (+2.1%), communication services (+1.9%), and energy (+1.7%) sectors also had solid performances on Monday.

  A positive showing from the other FANG stocks also manifested the general belief that the market was due for a bounce. Facebook (FB 136.38, +4.65, +3.5%), Alphabet (GOOG 1048.62, +24.74, +2.4%), Netflix (NFLX 261.43, +2.61, +1.0%), and Apple (AAPL 174.62, +2.33, +1.4%) all sported healthy gains. Apple was able to shrug off midday losses to finish near its session high.

  Financial heavyweights JPMorgan Chase (JPM 109.26, +2.61, +2.5%), Bank of America (BAC 27.56, +0.59, +2.2%), Citigroup (C 63.73, +1.98, +3.2%), and American Express (AXP 109.68, +3.94, +3.7%) provided strong support for the group. Though there was no specific news catalyst for the sector's strong performance, the financials space has been able to weather the stock market's decline in the fourth quarter better than most. The financials group is down 4.1% this quarter compared to the S&P 500's quarterly decline of 8.3%.

  Looking at energy, the oil-sensitive energy sector rose in tandem with oil prices. WTI crude, which had fallen over 10.0% last week, jumped 2.4% to $51.66/bbl. Top-weighted component Exxon Mobil (XOM 76.98, +1.49) gained 2.0% after being upgraded to 'Outperform' at Wolfe Research.

  Conversely, the defensive-oriented consumer staples (unch), real estate (+0.2%), and utility (+0.5%) sectors finished at the bottom of the sector standings, though still finished above their flat lines.

  In other corporate news, General Motors (GM 37.65, +1.72, +4.8%) announced additional restructuring plans that will result in a 15% reduction of its salaried staff and possibly the closure of five of its North American plants. President Donald Trump said to reporters that he told GM executives that he is unhappy with the job cuts and is hopeful that something else will replace the GM plants in Ohio.

  Separately, U.S. Treasury selling was modest in scope, especially when considering the optimism that was on display in stocks. The 2-yr yield added one basis point to 2.83%, and the 10-yr yield added two basis points to 3.07%. Also, the U.S. Dollar Index rose 0.1% to 97.05.

  In Europe, some ostensibly positive reports surfaced amid the equity rally. Italy's MIB showed relative strength (+2.8%) amid reports that Italian officials indicated a willingness to lower next year's deficit target of 2.4%. However, this report follows weekend remarks from Italy's Deputy Prime Minister Matteo Salvini, who said he would bring down the government if the deficit target is changed. Separately, EU leaders approved the UK Brexit plan, but the plan still faces a lot of dissent in the UK, and there is no assurance it will pass a vote in Parliament.

  Elsewhere, equity indices in the Asia-Pacific region closed mostly higher with Hong Kong's Hang Seng rising 1.7%.

  Investors did not receive any notable economic data on Monday. Looking ahead, investors will receive the Case-Shiller 20-city Index for September, the Conference Board's Consumer Confidence Index for November, and the FHFA Housing Price Index for September on Tuesday.

• Nasdaq Composite +2.6% YTD
• Dow Jones Industrial Average -0.3% YTD
• S&P 500 unch YTD
• Russell 2000 -1.9% YTD
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  • Headlines provided by Briefing.com