Thursday, January 18, 2018

Stocks Reversing Slightly Higher into Final Hour on Economic Optimism, Positive Earnings Outlooks, Technical Buying, Tech/Retail Sector Strength

Broad Equity Market Tone:
  • Advance/Decline Line: Lower
  • Sector Performance: Mixed
  • Volume: Above Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 11.70 -1.76%
  • Euro/Yen Carry Return Index 141.64 +.24%
  • Emerging Markets Currency Volatility(VXY) 7.92 +.13%
  • S&P 500 Implied Correlation 33.23 -3.96%
  • ISE Sentiment Index 104.0 +10.64%
  • Total Put/Call .85 +7.89%
  • NYSE Arms .88 +1.92%
Credit Investor Angst:
  • North American Investment Grade CDS Index 47.54 -.74%
  • America Energy Sector High-Yield CDS Index 318.0 -.55%
  • European Financial Sector CDS Index 43.32 +.83%
  • Italian/German 10Y Yld Spread 141.75 -2.0 basis points
  • Asia Pacific Sovereign Debt CDS Index 10.47 +.82%
  • Emerging Market CDS Index 111.54 +1.32%
  • iBoxx Offshore RMB China Corporate High Yield Index 146.76 -.02%
  • 2-Year Swap Spread 20.75 +.75 basis point
  • TED Spread 29.75 unch.
  • 3-Month EUR/USD Cross-Currency Basis Swap -24.25 +1.25 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 75.74 +.49%
  • 3-Month T-Bill Yield 1.43% -1.0 basis point
  • Yield Curve 56.75 +3.5 basis points
  • China Iron Ore Spot 522.0 CNY/100 Metric Tonnes +1.18%
  • Citi US Economic Surprise Index 64.70 -5.3 points
  • Citi Eurozone Economic Surprise Index 55.30 -.7 basis point
  • Citi Emerging Markets Economic Surprise Index 6.7 +1.4 basis points
  • 10-Year TIPS Spread 2.09 +3.0 basis points
  • 85.2% chance of Fed rate hike at March 21 meeting, 85.6% chance at May 2 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +121 open in Japan 
  • China A50 Futures: Indicating +23 open in China
  • DAX Futures: Indicating +8 open in Germany
  • Higher: On gains in my biotech/retail/tech/medical sector longs
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:
  • Small-Cap Value -.4%
Sector Underperformers:
  • 1) Gold & Silver -1.1% 2) REITs -.8% 3) I-Banks -.7%
Stocks Falling on Unusual Volume: 
Stocks With Unusual Put Option Activity:
  • 1) MBI 2) P 3) DLTR 4) HLF 5) CL
Stocks With Most Negative News Mentions:
  • 1) VSLR 2) PLXS 3) GTT 4) SYMC 5) ABX

Bull Radar

Style Outperformer:
  • Mid-Cap Growth +.2%
Sector Outperformers:
  • 1) Paper +2.0% 2) Semis +.5% 3) Retail +.5%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
  • 1) MAT 2) ON 3) FLR 4) JUNO 5) JNPR
Stocks With Most Positive News Mentions:
  • 1) ESIO 2) PANW 3) FLR 4) HTZ 5) WMT

Morning Market Internals

NYSE Composite Index:

Wednesday, January 17, 2018

Thursday Watch

Evening Headlines
  • Bank of Korea Holds Policy Rate Steady, Reviews Economic Outlook. South Korea’s central bank left its key interest rate unchanged, choosing to assess the impact of a November increase as the nation’s currency trades near near a multi-year high. The decision on Thursday to keep the seven-day repurchase rate at 1.5 percent, in the next-to-last rate decision before Governor Lee Ju-yeol’s term ends in March, was forecast by all 17 analysts surveyed by Bloomberg. The central bank will release updates to its 2018 forecasts of 2.9 percent economic growth and 1.8 percent inflation later on Thursday.
  • Crypto Lending Site's Shutdown Renews Ponzi Scheme Claims. BitConnect isn’t letting this week’s closure of its cryptocurrency exchange and lending operations deter it from attempting to raise funds though another digital token offering. That isn’t sitting well with existing coin owners, who have seen the value of the tokens tumble by as much as 95 percent since Monday. Critics on Twitter and Reddit have renewed allegations of fraud and are equating the company to a Ponzi scheme, where an operator pays off old investors by raising money from new ones.
  • Asian Stocks Head for New Highs, Bonds Hold Losses. Equity benchmark indexes in Japan, Australia and South Korea all climbed, with technology shares leading gains on the MSCI Asia Pacific Index. The S&P 500 Index posted its biggest gain in over a month, amid hopes that tax cuts will boost profits. A global rise in yields has pushed those on 10-year Japanese government bonds to their highest since July, stretching toward a test of the Bank of Japan’s target around zero percent. Japan’s Topix index rose 0.5 percent as of 9:23 a.m. in Tokyo.
    Australia’s S&P/ASX 200 Index added 0.1 percent and South Korea’s Kospi index climbed 0.6 percent. Futures on Hong Kong’s Hang Seng Index gained 0.5 percent. Futures on the S&P 500 gained 0.1 percent after the underlying gauge advanced 0.9 percent on Wednesday
  • OPEC-Russia Oil Deal Faces a New Danger. When OPEC and Russia meet this weekend to review their strategy for clearing a global oil glut, they’ll face an unusual problem: it could be working just a bit too well. As their output cuts, coupled with robust global demand, tighten the market, crude prices have soared to a three-year high near $70 a barrel. That’s prompted warnings -- from Iran’s oil minister to Goldman Sachs Group Inc. -- of a fresh surge in U.S. production, wrecking all of OPEC’s hard work.
  • Alcoa(AA) Profit Misses as Rising Costs Rain on Aluminum Parade. Rising costs took the shine off what was by most measures a strong year for Alcoa Corp. While the top U.S. aluminum maker’s adjusted fourth-quarter earnings swelled, the profit missed analysts’ estimates amid higher costs for energy and raw materials and unfavorable movements in exchange rates. Alcoa’s shares surged 92 percent last year as the prospect of China shutting outdated, illegal and polluting plants helped boost aluminum prices. It was the company’s best annual performance since 1999 and happened during its first year since splitting from parts-maker Arconic Inc. in late 2016.
Wall Street Journal:
Business Insider: 
Night Trading 
  • Asian equity indices are unch. to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 61.5 +.5 basis point
  • Asia Pacific Sovereign CDS Index 10.5 +.5 basis point.
  • Bloomberg Emerging Markets Currency Index 75.39 +.02%.
  • S&P 500 futures +.03%.
  • NASDAQ 100 futures -.05%.
Morning Preview Links

Earnings of Note

  • (BBT)/.80
  • (BK)/.91
  • (JBHT)/.84
  • (KEY)/.36
  • (MS)/.78
  • (PPG)/1.19
  • (TSM)/3.75
  • (AXP)/1.54
  • (CP)/3.19
  • (IBM)/5.15
Economic Releases
8:30 am EST
  • Housing Starts for December are estimated to fall to 1275K versus 1297K in November.
  • Building Permits for December are estimated to fall to 1295K versus 1298K in November.
  • The Philly Fed Business Outlook Index for January is estimated to fall to 25.0 versus 26.2 in December. 
  • Initial Jobless Claims for last week are estimated to fall to 249K versus 261K the prior week.
  • Continuing Claims are estimated to rise to 1900K versus 1867K prior.
9:45 am EST
  • Bloomberg Economic Expectations Index for January.
11:00 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,075,100 barrels versus a -4,948,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +3,088,300 barrels versus a +4,135,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,169,200 barrels versus a +4,254,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.37% versus a -1.4% decline the prior.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China retail sales report, Australia Unemployment report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, ASCO Gastrointestinal Conference and the (MNST) Business Update could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.