Bull Radar

Style Outperformer:

• Mid-Cap Growth +.23%

Sector Outperformers:

• 1) Restaurants +1.69% 2) Gaming +1.09% 3) Oil Tankers +.88%
  

Stocks Rising on Unusual Volume:

• SNMX, NWBO, POWR, BYD, VLCCF, PLUG, PNK, ZU, UBNT, FIO and MTW

Stocks With Unusual Call Option Activity:

• 1) PCAR 2) CI 3) FCEL 4) NWBO 5) RGSE

Stocks With Most Positive News Mentions:

• 1) JCP 2) DKS 3) MCD 4) AAPL 5) M
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg: 

• Russia Stands Fast on Crimea as Ukraine Drills Military. Russia showed no signs of yielding in the Crimea standoff as Ukraine’s prime minister prepared to meet U.S. President Barack Obama and western nations threatened further repercussions if Russia failed to defuse tensions. Ukraine is testing its military’s combat readiness, the Defense Ministry said, while reiterating the government’s desire for a peaceful solution. Russia, which has vowed to defend the ethnic Russians who dominate the Crimean peninsula, accuses Ukraine of ignoring radicals in the nation’s east and said it rejects the legitimacy of the western-backed leadership in Kiev. 

• 2014 Will Be a Year of Defaults for China: Miller. (video) China Beige Book International President Leland Miller discusses China’s economy, their recent bond default and why it’s making investors nervous.

• SoftBank’s Son Vows ‘Massive Price War’ If T-Mobile Deal Allowed. SoftBank Corp. President Masayoshi Son will start a “massive price war” if U.S. regulators allow him to purchase T-Mobile US Inc., he said in an interview with PBS’s Charlie Rose. The billionaire, who bought control of Sprint Corp. last year, said combining the third- and fourth-largest U.S. mobile-phone carriers would give him enough scale to compete against the largest operators, AT&T Inc. and Verizon Communications Inc.

• Asia Stocks Climb as Investors Weigh China Credit, BOJ. Asian stocks rose, after the regional benchmark index yesterday dropped the most in two weeks, as investors weighed data showing China’s credit growth trailed estimates in February and awaited the conclusion of the Bank of Japan’s policy meeting. Taiheiyo Cement Corp., Japan’s biggest maker of the product, jumped 4.4 percent on a report the company’s U.S. unit will post its first profit in six years. Yamada Denki Co. added 1.8 percent after JPMorgan Chase & Co. raised its rating on the electronics retailer. Fortescue Metals Group Ltd., Australia’s third-largest producer of iron ore, lost 0.7 percent, extending a two-day slump to 10 percent, after the raw material used to make steel plunged by most since August 2009. The MSCI Asia Pacific Index gained 0.2 percent to 137.95 as of 10:03 a.m. in Tokyo.

• Copper Has Biggest Two-Day Drop in 28 Months on Economic Concern. Copper futures posted the biggest two-session drop in 28 months on signs of faltering economic growth from France to China, the world’s biggest consumer of industrial metals. On the Comex in New York, copper dropped below $3 a pound for the first time since June. French industrial production production unexpectedly dropped in January for the second straight month, and business confidence declined, separate reports showed today. In China, exports slid in February by the most since 2009, government data showed on March 8. 

• Iron Ore Plunges Most Since August 2009 on China Concern. Iron ore extended its decline into a bear market, slumping by the most since August 2009, amid concern that demand in China is slowing just as rising output signals a global glut. Ore with 62 percent content delivered to Tianjin fell 8.3 percent to $104.70 a dry ton, the lowest since October 2012 and the biggest drop in more than four years, according to data from The Steel Index Ltd. yesterday. The benchmark price lost 27 percent since Aug. 14, when it reached a five-month high of $142.80. The raw material dropped into a bear market on March 7.

• Investing for the Next Shock by A. Gary Shilling.

Wall Street Journal: 

• Stolen Passports Used on Malaysia Airlines Flight Show Gaps in Air Security Around Globe. Investigation Shines Light on Thriving Market for Illicit Documents and Disparity in Aviation Security Around World. The investigation into passengers aboard a missing Malaysia Airlines 3786.KU 0.00% flight who were traveling with stolen passports has drawn attention to a thriving market for illicit documents and the disparity in aviation security across the globe.

• GM(GM) Taps Former Lehman Investigator to Lead Recall Probe. Anton "Tony" Valukas to Work With GM General Counsel Michael Millikin in Review.

• Drones Find Fans Among Farmers, Filmmakers. FAA Still Debating Rules but Drones are Spraying 40% of Japan's Rice Fields.

Fox News:

• Russians enter town north of Crimea, say Ukrainians. Ukrainians in the Kherson province just north of Crimea say Russian operatives have moved into the territory, an incursion which, if true, could show Vladimir Putin has more than just the Black Sea peninsula in his sights. Residents of the village of Chonhar, in the Kherson region of Ukraine, say Russian troops showed up last week in armored personnel carriers, prompting the dispatch of Ukrainian troops and a standoff.  The suspected Russian troops pulled back and established a checkpoint on a major road leading north from the Crimean capital of Simferopol.

MarketWatch.com:

• Why China’s economy is in trouble in one chart.

CNBC:

• Corporate debt fever rises to new record in 2014. Corporate America's love affair with debt has intensified in 2014, with record levels of borrowing happening as feared rate increases have yet to materialize. This year was supposed to be the one where the rock-bottom rates began to lift as the Federal Reserve eased its foot off the stimulus pedal and economic growth pushed borrowing costs higher.

Zero Hedge:

• The Holy Grail Of Trading Has Been Found: HFT Firm Reveals 1 Losing Trading Day In 1238 Days Of Trading.

• A Tale Of Two Bubbles. (graph)

• Hussman Warns S&P 500 Over-Valuation Now Higher Than Housing In 2006. (graph)

• 20 Stunning Facts On The US Retail Apocalypse.

• America's Most Overvalued Companies Are... 

• Bank Of Japan Disappoints.

Business Insider:

• PRESENTING: The Big Battle That's Brewing Inside The Fed.

• US Profit Growth Is Much Weaker Than Reported. (graph)

• Why Terrorists Usually Don't Claim Responsibility For Their Attacks.

Reuters: 

• Urban Outfitters(URBN) warns on current-quarter results after sales miss. Teen apparel retailer Urban Outfitters Inc reported lower-than-expected quarterly sales, citing severe winter weather in the United States, and said it was "very cautious" on its current-quarter performance. Shares of the company, known for its Anthropologie, Free People and Urban Outfitters brands, fell 3 percent in extended trading.

• French business under no illusions about challenges in home market.

Telegraph:

• Markets hold breath as China's shadow banking grinds to a halt. Fresh loans in China’s shadow banking system evaporated to almost nothing from $160bn in January.

NHK:

• 55% of Japanese to Cut Spending After Sales Tax Hike. 72% of interviewees say they are worried about the economy after the increase.

China Youth Daily:

• People's Bank of China Governor Zhou Xiaochuan said yesterday that restrictions against printing money are lacking, citing Zhou as saying in a speech at a CPPCC meeting. Printing too much money will cause asset bubbles or inflation, Zhou said.

Shanghai Securities News:

• Australia May Start Probe on Chinese Solar Imports. Australia may start an anti-dumping and anti-subsidy investigation on Chinese solar product imports, citing a person from China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

Evening Recommendations
 Piper Jaffray:

• Rated (BLOX) Overweight, target $30.

Night Trading

• Asian equity indices are -.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 128.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 94.0 - basis points.

• FTSE-100 futures +.33%.

• S&P 500 futures -.06%.

• NASDAQ 100 futures  -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JW/A)/.84

• (AEO)/.26

• (DKS)/1.11

• (PAY)/.27

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for February is estimated to fall to 93.8 versus 94.1 in January.

10:00 am EST

• JOLTs Job Openings for January are estimated to rise to 4015 versus 3990 in December.

• Wholesale Inventories for January are estimated to rise +.4% versus a +.3% gain in December.

• Wholesale Sales for January are estimated to rise +.2% versus a +.5% gain in December.

Upcoming Splits

• None of note

Other Potential Market Movers

• The German trade figues, $30B 3Y T-Note auction, weekly retail sales reports, BofA Consumer/Retail Conference, Barclays Healthcare Conference, Piper Jaffray Tech/Media/Telecom Conference, Pershing Square (HLF) conference call, (CVX) analyst meeting, (MMC) investor day and the (DLPH) investor update could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Lower into Final Hour on Rising Global Growth Fears, Ukraine/Russia Tensions, Emerging Markets Debt Angst, Homebuilding/Gaming Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Slightly Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.58 +3.33%

• Euro/Yen Carry Return Index 149.32 -.11%

• Emerging Markets Currency Volatility(VXY) 8.77 +1.15%

• S&P 500 Implied Correlation 54.67 +.98%

• ISE Sentiment Index 89.0 -26.45%

• Total Put/Call .88 +7.32%

• NYSE Arms 1.42 +54.87% 

Credit Investor Angst:

• North American Investment Grade CDS Index 63.38 -.12%

• European Financial Sector CDS Index 87.27 +1.63%

• Western Europe Sovereign Debt CDS Index 48.28 -.82%
• Asia Pacific Sovereign Debt CDS Index 98.69 +2.74%

• Emerging Market CDS Index 312.45 +.68%

• China Blended Corporate Spread Index 354.99 -.13%
• 2-Year Swap Spread 13.75 unch.

• TED Spread 19.25 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -3.75 -2.0 basis points

Economic Gauges:

• 3-Month T-Bill Yield .04% -1.0 basis point

• Yield Curve 241.0 unch.

• China Import Iron Ore Spot $104.70/Metric Tonne -8.32%

• Citi US Economic Surprise Index -31.60 -.4 point

• Citi Emerging Markets Economic Surprise Index .9 -13.4 points

• 10-Year TIPS Spread 2.22 -1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating +49 open in Japan

• DAX Futures: Indicating +9 open in Germany

Portfolio: 

• Higher: On gains in my biotech sector longs, index hedges and emerging markets shorts

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg: 

• Ukraine Starts Military Exercises as Russia Warns on East. Ukraine began military drills as Russian forces tightened their hold on the Crimean peninsula and the Foreign Ministry in Moscow warned of “lawlessness” in the former Soviet republic’s eastern provinces. Ukraine’s armed forces are testing the combat-readiness of troops, the Defense Ministry said today on its website, reiterating the government’s desire for a peaceful end to the standoff in Crimea. Russia, which has vowed to defend the ethnic Russians that dominate Crimea after an uprising in Kiev, accused Ukraine of ignoring radicals in the nation’s east.

• China’s CSI 300 Sinks to 5-Year Low as Export Slump Weakens Yuan. China’s CSI 300 Index (SHSZ300) plunged to the lowest level in five years and the yuan weakened as an unexpected drop in exports spurred concern that the world’s second-largest economy is slowing. The index of the largest Chinese stocks slid 3.3 percent to 2,097.79 at the close, the lowest since February 2009, while the Shanghai Composite Index tumbled 2.9 percent, the most since June. The yuan fell 0.2 percent to 6.1385 per dollar. Money-market rates slumped to a 21-month low amid speculation demand for cash is diminishing as economic growth weakens. 

• European Stocks Drop on Ukraine Concern as Miners Slump. European stocks declined, following their first weekly drop since January, on rising tensions over Ukraine’s Crimea region and after an unexpected slump in Chinese exports triggered a selloff in mining stocks. Aurubis AG and Fresnillo Plc lost more than 3.4 percent each as commodity producers fell. Iliad SA surged to its highest price since its 2004 initial public offering after Bouygues SA said it is in talks to sell some of its mobile-phone assets to the operator of the Free brand. Rolls-Royce Holdings Plc rose 1.7 percent after Daimler AG said it will sell a 50 percent stake in an engine joint venture to the British company. The Stoxx Europe 600 Index slipped 0.5 percent to 331.4 at the close of trading in London.

• Copper Futures Set for Biggest Two-Day Loss Since 2011. Copper prices, which reached an eight-month low today, headed for the biggest two-session loss since 2011 on demand concerns amid signs of slowing economic growth from France to China, the world’s biggest consumer. French industrial production unexpectedly dropped for a second month in January and business confidence declined, separate reports showed today. In China, exports slid in February by the most since 2009, according to government data released March 8. Copper stockpiles tracked by the Shanghai Futures Exchange climbed for eight straight weeks, the longest stretch since Feb. 2012. Futures slumped 11 percent this year, the most among 34 commodities tracked by Bloomberg.

• Fed’s Plosser Sees High Bar for Change in Pace of Tapering. Federal Reserve Bank of Philadelphia President Charles Plosser, who votes on policy this year, said recent encouraging economic data isn’t enough to change the pace of the central bank’s asset purchases.

• McDonald’s(MCD) Sales Hurt by Fourth-Straight U.S. Drop. McDonald’s Corp. (MCD), the world’s largest restaurant chain, said sales at stores open at least 13 months fell 0.3 percent in February as its U.S. business slumped for the fourth straight month amid harsh weather. Analysts estimated a 0.1 percent decline, the average of 15 projections from Consensus Metrix. Domestic same-store sales slid 1.4 percent, Oak Brook, Illinois-based McDonald’s said in a statement today, while analysts anticipated a drop of 0.6 percent in the U.S.

Wall Street Journal:  

• Small Caps Flash Pricey Warning. Small-cap stocks come with big price tags these days. The Russell 2000 index of small-capitalization stocks has surged 251% off the March 2009 bear-market bottom, far outpacing the Dow, the S&P 500 and the Nasdaq Composite. Over the past 30 years, there have been 40 weeks (or 2.5% of the time) in which the Russell has traded at least 40% above its 200-week moving average, Mr. Krinsky says. Six of those weeks have taken place over the past three months. But in 32 of the 34 other occurrences, the Russell traded down over the next three months, averaging a 7% drop.

Fox News:

• Netanyahu blasts world's 'self-deception' on Iran as intercepted weapons unveiled. Israeli Prime Minister Benjamin Netanyahu blasted the international community's "self-deception" regarding Iran as defense officials unveiled an arsenal of weapons the Islamic Republic is accused of trying to smuggle into Gaza.

MarketWatch:

• Mt. Gox files for Chapter 15 in U.S.

CNBC:

• Why it could get even worse for this troubled sector. (video)

• Warning signs? Margin debt soars again. (graph)

• Housing chill more than weather: Hovnanian(HOV).

ZeroHedge: 

• Ukraine Lieutenant Colonel In Charge Of Crimea Unit Defects To Russia, Takes Soldiers With Him.

• Fed's Chuck Evans Loses It.

• Long Crude Oil Speculative Bets Rise To All Time High. (graph)

• China Loan Creation Tumbles, Lowest Credit Growth In 20 Months. (graph)

• Meanwhile In Turkey...

• Russian Troops Open Fire In Crimea, Reuters Reports As Kerry Delays Russia Visit.

• Iron Ore Prices Collapse Into Bear Market On China Credit Concerns. (graph)

Wall Street All-Stars:

• Indicator Update: The Current Risk/Reward for Stocks.

Business Insider:

• Venezuelans Are Marked With Numbers To Stand In Line At Government Supermarkets.

• SETH KLARMAN: This Is A 'Truman Show' Market Where Nothing Is Real.

• EXPERT: Crimea Is Just The Start If The West Doesn't Deter Putin.

• Sbarro Files For Chapter 11 Bankruptcy.

• 26 Disquieting Photos Of Armed Russians Still Surrounding Ukrainian Soldiers In Crimea.

Reuters: 

• IMF economist sees deflation risk, especially in euro zone-report. The chief economist of the International Monetary Fund sees a risk of deflation, particularly in the euro zone, German newspaper Handelsblatt reported him as saying.

Bear Radar

Style Underperformer:

• Small-Cap Growth -.60%

Sector Underperformers:

• 1) Steel -2.82% 2) Coal -2.43% 3) Gaming -2.21%

Stocks Falling on Unusual Volume:

• ACO, WPPGY, PSO, DANG, CRTO, UL, CAF, NCIT, VHC, AERI, DL, ZU, WUBA, HMC, SNP, MXWL, PTR, PWRD, NLNK, CSV, DB, BCS, ARII, BIB, FICO and OSIR

Stocks With Unusual Put Option Activity:

• 1) JRCC 2) JWN 3) AKS 4) URBN 5) IBB
  

Stocks With Most Negative News Mentions:

• 1) FCX 2) UAL 3) CLF 4) DHI 5) MTH
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value -.62%

Sector Outperformers:

• 1) HMOs -.13% 2) Gold & Silver -.20% 3) Biotech -.21%
  

Stocks Rising on Unusual Volume:

• HYGS, CQB, MONT, CACQ, FMC, EJ, VECO, HIMX, ALJ and ALXN

Stocks With Unusual Call Option Activity:

• 1) PLUG 2) FCEL 3) RBCN 4) NWBO 5) PVA

Stocks With Most Positive News Mentions:

• 1) ALXN 2) ADM 3) HLF 4) JBLU 5) BIG
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume