Stocks Surging into Afternoon on Diminished Global Growth Fears, Central Bank Hopes, Seasonal Optimism, Financial/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.44 -14.74%

• Euro/Yen Carry Return Index 139.76 -.27%

• Emerging Markets Currency Volatility(VXY) 10.64 unch.

• S&P 500 Implied Correlation 55.70 -3.60%

• ISE Sentiment Index 141.0 +78.48%

• Total Put/Call .86 -22.52%

• NYSE Arms 1.15 +52.40% 

Credit Investor Angst:

• North American Investment Grade CDS Index 81.95 -1.10%

• America Energy Sector High-Yield CDS Index 1,334.0 +3.27%

• European Financial Sector CDS Index 71.50 +.53%

• Western Europe Sovereign Debt CDS Index 17.74 +2.16%

• Asia Pacific Sovereign Debt CDS Index 68.86 -.58%

• Emerging Market CDS Index 339.27 -.31%
  

• iBoxx Offshore RMB China Corporate High Yield Index 123.87 -.03%

• 2-Year Swap Spread 10.0 +2.0 basis points

• TED Spread 23.75 +2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -35.25 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.61 -.15%
• 3-Month T-Bill Yield .21% +1.0 basis point

• Yield Curve 133.0 -4.0 basis points

• China Import Iron Ore Spot $40.03/Metric Tonne -1.77%

• Citi US Economic Surprise Index -25.80 -4.0 points

• Citi Eurozone Economic Surprise Index 19.10 +1.4 points

• Citi Emerging Markets Economic Surprise Index 12.1 +1.9 points

• 10-Year TIPS Spread 1.63 -1.0 basis point
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 1.61 -.03

Overseas Futures:

• Nikkei 225 Futures: Indicating +171 open in Japan 
• China A50 Futures: Indicating -144 open in China

• DAX Futures: Indicating +89 open in Germany

Portfolio: 

• Slightly Higher: On gains in my medical/biotech/retail/tech sector longs

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer: 

• Small-Cap Value +.56%

Sector Underperformers: 

• 1) Coal -9.41% 2) Oil Tankers -3.45% 3) Oil Service -2.01%

Stocks Falling on Unusual Volume:

• COO, KMI, MPLX, BIG, AMBA, IEP, NSH, MMLP, P, NGLS, CMG, CORR, ETE, NSC, KYN, PTLA, NGL, TITN, BPT, ZIOP, TYG, EQM, CEQP, BPL, SUPN, GEL, PII, FGP, PAA, TLLP, VECO, WPZ, OKE, KYE, DYN, TRGP, NGLS and RYAM

Stocks With Unusual Put Option Activity: 

• 1) HAS 2) CCL 3) KMI 4) OXY 5) NSC

Stocks With Most Negative News Mentions: 

• 1) GPRO 2) COO 3) PBR 4) AMBA 5) CMG

Charts:

• ETFs Falling on Unusual Volume 
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.28%

Sector Outperformers: 

• 1) Gold & Silver +3.59% 2) Banks +2.36% 3) HMOs +2.28%

Stocks Rising on Unusual Volume: 

• ULTA, ZUMZ, PLAB, RYLP, USLV, NPTN, SHLD and EXPR

Stocks With Unusual Call Option Activity: 

• 1) AMLP 2) RAD 3) ULTA 4) NRG 5) BKD

Stocks With Most Positive News Mentions: 

• 1) DGX 2) HPQ 3) EMC 4) FIVE 5) LMT

Charts: 

• ETFs Rising on Unusual Volume 
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running +8.9% Above 100-Day Average
• 9 Sectors Rising, 1 Sector Declining
• 56.9% of Issues Advancing, 40.5% Declining
• 24 New 52-Week Highs, 176 New Lows
• 34.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.3
• Vix 16.3
• Total Put/Call .85
• TRIN/Arms 1.16

Friday Watch

Night Trading 

• Asian equity indices are -1.50% to -.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 130.5 +1.5 basis points.
• Asia Pacific Sovereign CDS Index 69.25 +1.0 basis point.
• Bloomberg Emerging Markets Currency Index 70.71 unch.
• S&P 500 futures +.26%.
• NASDAQ 100 futures +.23%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

• (BIG)/.00
• (GCO)/1.30
• (HOV)/.10 

Economic Releases
8:30 am EST

• The Change in Non-Farm Payrolls for November is estimated to fall to 200K versus 271K in October.
• The Unemployment Rate for November is estimated at 5.0% versus 5.0% in October.
• Average Hourly Earnings for November are estimated to rise +.2% versus a +.4% gain in October.
• The Trade Deficit for October is estimated at -$40.5B versus -$40.81B in September. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kocherlakota speaking, Fed's Bullard speaking, Fed's Harker speaking, OPEC Meeting, Eurozone retail sales data, German CPI report, (ITW) investor day and (NUS) investor day could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by commodity and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Falling Substantially into Final Hour on Terrorism Fears, European/Emerging Markets/US High-Yield Debt Angst, Surging Long-Term Rates, Biotech/Transport Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 18.86 +18.54%

• Euro/Yen Carry Return Index 140.24 +2.52%

• Emerging Markets Currency Volatility(VXY) 10.70 -.09%

• S&P 500 Implied Correlation 57.87 +1.58%

• ISE Sentiment Index 76.0 +18.75%

• Total Put/Call 1.11 +6.73%

• NYSE Arms .65 -43.09% 

Credit Investor Angst:

• North American Investment Grade CDS Index 83.77 +2.25%

• America Energy Sector High-Yield CDS Index 1,292.0 +1.29%

• European Financial Sector CDS Index 71.12 +6.95%

• Western Europe Sovereign Debt CDS Index 17.36 +.52%

• Asia Pacific Sovereign Debt CDS Index 68.67 +.70%

• Emerging Market CDS Index 342.13 +4.85%
  

• iBoxx Offshore RMB China Corporate High Yield Index 123.91 -.11%

• 2-Year Swap Spread 8.0 +1.25 basis point

• TED Spread 21.75 +1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -34.25 -17.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.76 +.75%
• 3-Month T-Bill Yield .20% -1.0 basis point

• Yield Curve 137.0 +13.0 basis points

• China Import Iron Ore Spot $40.75/Metric Tonne -.92%

• Citi US Economic Surprise Index -21.80 -4.1 points

• Citi Eurozone Economic Surprise Index 17.70 -3.5 points

• Citi Emerging Markets Economic Surprise Index 10.2 -.3 point

• 10-Year TIPS Spread 1.64 +5.0 basis points
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 1.64 -.17

Overseas Futures:

• Nikkei 225 Futures: Indicating -464 open in Japan 
• China A50 Futures: Indicating -253 open in China

• DAX Futures: Indicating -125 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long