BETWEEN THE HEDGES

Monday, March 14, 2016

Bull Radar

Posted by Gary .....at 1:18 PM

Style Outperformer:

Large-Cap Growth unch.

Sector Outperformers:

1) Gaming +1.2% 2) Restaurants +.8% 3) HMOs +.2%

Stocks Rising on Unusual Volume:

TFM, ZYNE, GWPH, HOT, DDD, INSY and TRIP

Stocks With Unusual Call Option Activity:

1) BK 2) STLD 3) TRIP 4) GRA 5) HOT

Stocks With Most Positive News Mentions:

1) JNJ 2) MAR 3) GOT 4) TFM 5) DDD

Charts:

Morning Market Internals

Posted by Gary .....at 10:51 AM

NYSE Composite Index:

Volume Running -17.2% Below 100-Day Average
4 Sectors Rising, 6 Sectors Declining
40.4% of Issues Advancing, 56.7% Declining
61 New 52-Week Highs, 4 New Lows
42.5% of Issues Above 200-day Moving Average
Average 14-Day RSI 50.5%
Vix 17.3 +5.0%
Total Put/Call 1.24 +22.8%
TRIN/Arms 1.0 +26.0%

Sunday, March 13, 2016

Monday Watch

Posted by Gary .....at 11:04 PM

Today's Headlines
Bloomberg:

Merkel's CDU Loses Support in Elections Swayed by Refugee Crisis. Chancellor Angela Merkel faces an increasingly splintered political landscape after voters punished her party and lifted the anti-immigration Alternative for Germany to its best showing yet in three state elections dominated by the refugee crisis. Support for Merkel’s Christian Democratic Union tumbled across the board Sunday as her candidates failed to capture two western states including Baden-Wuerttemberg, home to carmaker Daimler AG. Her party hung on to win the most votes in Saxony-Anhalt in the formerly communist east, though Alternative for Germany, or AfD, upended the coalition math there by winning about 24 percent support in its first attempt in the state. While Merkel didn’t make the rounds of evening talk shows, CDU party officials signaled she won’t renounce her stance of fighting for open travel and commerce within the European Union and a deal with Turkey to stanch the flow of refugees from war-torn Syria. Merkel will chair a meeting of her party’s national leadership on Monday to assess the election results and plans to hold a news conference at 1:15 p.m. in Berlin.
China's Growth Target Is the Next Test for Its Central Bank. China’s central bank chief oozed calm in an annual press briefing in Beijing Saturday, supported by weeks of composure in markets as investor anxiety over the nation’s currency policy eased. How long the lull lasts will depend on how policy makers manage a balancing act made tougher by a weaker-than-anticipated start to the year for the world’s No. 2 economy. After People’s Bank of China Governor Zhou Xiaochuan spoke at the country’s annual gathering of the legislature, data showed an “alarming” failure of growth to respond to recent stimulus, Bloomberg Intelligence analysts Tom Orlik and Fielding Chen concluded.
China's Output and Retail Sales Slow. (video)
Chinese Lenders Repay Loans Borrowed During Stock Rout: Chart. Financial firms in China are repaying bank loans they took during the stock rout last year as the government unwinds its support for the equity market, according to Mark Williams, chief Asia economist at Capital Economics in London.
China Pledges Greater Effort to Crack Down on Financial Crime. China’s judicial authorities vowed to do more to combat financial crimes in the coming year, as the economy slows and leaders remain concerned that financial risks might lead to higher unemployment and social unrest. Chief prosecutor Cao Jianming said in his annual report to the country’s top legislature on Sunday that his department would prioritize investigations into finance, securities and insurance to "guarantee a healthy development of capital market." The Supreme People’s Procuratorate plans to tackle financial crimes involvin illegal fundraising to protect the public and focus on contract fraud crimes to establish a "fair and orderly environment of market competition", he said.
Hedge Funds Look to Space With New China Economy Gauge. (pic) "What we have is an independent third look at the facilities in China". San Francisco-based SpaceKnow Inc. has launched the China Satellite Manufacturing Index, or SMI, based on analysis of thousands of photos taken from commercial satellites.
Suicide Car Bomb Rocks Turkey's Capital, Killing at Least 34. A suicide car bomb in Turkey’s capital killed at least 34 people and wounded many more, the third time the city has been hit in five months. Two public buses were completely burned out in Sunday’s blast in Ankara, which occurred near a bus station about 200 meters (650 feet) from Prime Minister Ahmet Davutoglu’s office at around 7 p.m. local time. Health Minister Mehmet Muezzinoglu said at least 125 people were injured, with 19 in serious condition. Police immediately cordoned off the area near Ankara’s Guvenpark as authorities investigated. The explosion comes less than a month after a Feb. 17 car bombing near military buildings in the capital killed at least 30 people, most of them soldiers. That attack was claimed by a group called the Kurdistan Freedom Falcons, or TAK, which is linked to Kurdish PKK separatists. A pair of Islamic State suicide bombers in October killed more than 100 people in Ankara.
Asian Stocks Rise for Third Day Ahead of Central Bank Meetings. Asian stocks rose after four weeks of gains, tracking a global rally that sent U.S. equities to their highest this year, as Japanese shares led the advance. The MSCI Asia Pacific Index added 0.6 percent to 127.47 as of 9:01 a.m. in Tokyo, extending its gain from this year’s low to 13 percent. The focus now turns to policy decisions this week by the Bank of Japan, the Federal Reserve and others after stocks jumped on Friday as investors reevaluated the European Central Bank’s stimulus. Chinese data over the weekend showed industrial production and retail sales both slowed in the first two months of the year, highlighting the pressure leaders face to meet this year’s growth target. “Central banks are going to be dominating market sentiment,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, told Bloomberg Radio. “That could be enough for the risk rally to continue, but I think it is starting to run out of steam. The Fed is going to be front and center” this week.
Iran on Oil Freeze: ‘Leave Us Alone’ Until Production Higher. Iran plans to boost crude output to 4 million barrels a day before it will consider joining other suppliers in seeking ways to rebalance the global oil market. “They should leave us alone” until then, Oil Minister Bijan Zanganeh said, according to the Iranian Students News Agency. “After that we will work with them.” Saudi Arabia, Russia, Venezuela and Qatar proposed an accord to freeze oil output and tackle a global surplus. Oil extended gains after their initial meeting on Feb. 16, and has climbed more than 40 percent since the 12-year low in January. Oil at $70 a barrel is “suitable,” ISNA cited Zanganeh saying.
Morgan Stanley(MS) Says Bonds Set to Surge in 2016 Year of the Bull. Morgan Stanley, one of the Wall Street banks that deals directly with the Federal Reserve, cut its bond yield forecasts for 2016 and said the U.S. central bank will wait until December before raising interest rates. “The global backdrop for rates markets looks so supportive that 2016 may become known as the ‘Year of the Bull,”’ according to a report the company issued Sunday by analysts including Matthew Hornbach, head of global interest-rate strategy in New York. The company’s new and previous forecasts for 10-year yields by Dec. 31 are:

Wall Street Journal:

Subprime Flashback: Early Defaults Are a Warning Sign for Auto Sales. High level of missed payments for such loans made recently has raised concerns about underwriting standards.
Oil Price Rise Could Be Its Own Undoing. Higher crude-oil prices could encourage shale producers to ramp up output again.
What to Expect if Republican Convention Is Contested. Losses in both Ohio and Florida could upend Donald Trump’s march toward nomination.

Fox News:

Maryland officer killed in 'unprovoked' shooting outside police headquarters. (video) A police officer was shot and killed Sunday outside a Maryland police station in an "unprovoked attack", authorities said. A second person, not a police officer, also was shot and wounded, police said. Two suspects in the officer's shooting were in custody. Police identified the slain officer as 28-year-old Jacai Colson, a four-year veteran of the Prince George's County Police Department who was days shy of his birthday. "One of your defenders lost his life in defense of this community today," Police Chief Hank Stawinski said Sunday night. The shooting occurred Sunday afternoon outside the Landover police station in Prince George's County, a suburb of Washington, D.C. Law enforcement sources told FOX 5 DC that the attack was "ambush-style."

CNBC:

These things 'disturb' me about markets: BMO's Ablin. (video) Troubling aspects of the market have persuaded one of Wall Street's most outspoken money managers to go defensive.
Wall Street's wise men (and women) rap Trump. (video)

Zero Hedge:

Business Insider:

Washington Post:

The Latest: Al-Qaida-linked group claims Ivory Coast attack. The Latest on the beach attack in Ivory Coast (all times local): A group that monitors jihadist websites says that al-Qaida in the Islamic Maghreb has claimed responsibility for the attack that killed at least 14 civilians and two security forces in Ivory Coast’s Grand-Bassam beach resort town. SITE Intelligence Group said the Islamic extremist group made the declaration in a post to its Telegram channels, calling three of the attackers “heroes” for the assault on the Grand Bassam beach resort.

Night Trading

Asian indices are +.50% to +1.50% on average.
Asia Ex-Japan Investment Grade CDS Index 135.25 -8.25 basis points.
Asia Pacific Sovereign CDS Index 66.25 -1.5 basis points.
Bloomberg Emerging Markets Currency Index 71.11 +.07%.
S&P 500 futures -.04%.
NASDAQ 100 futures +.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

(DDD)/.06

Economic Releases

None of note

Upcoming Splits

None of note

Other Potential Market Movers

The Japan Industrial Production report and the OPEC monthly update could also impact trading today.

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

Weekly Outlook

Posted by Gary .....at 8:52 PM

Week Ahead by Bloomberg.
Wall St. Week Ahead by Reuters.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on earnings outlook concerns, rising European/Emerging Markets/US High-Yield debt angst, diminished central bank hopes, yen strength, global growth fears and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Saturday, March 12, 2016

Today's Headlines

Posted by Gary .....at 8:46 PM

Bloomberg:

China PBOC Chief Cites Credit Risk While Reassuring on Growth. People’s Bank of China Governor Zhou Xiaochuan warned banks about increased credit risk amid rising real estate prices in the biggest cities, while adding the country can achieve its economic growth targets without too much monetary stimulus. Property prices have begun to diverge severely from values in less-populated areas, Zhou said at a briefing in Beijing. He said the country faces “relatively big’ downward pressure from efforts to eliminate excess housing inventory, which may suppress prices nationwide. With the briefing, his fourth public appearance in less than a month, Zhou again sought to project an aura of calm and tamp down concern over volatility in the stock and currency markets while underscoring the risks posed by rising debt. Warning signs including low inflation and flagging industrial output have led to speculation that the government will need to rely on looser monetary policy to achieve its minimum growth target of 6.5 percent over the next five years. “Excessive monetary policy stimulus isn’t necessary to achieve the target,” Zhou said, reiterating past comments that monetary policy is prudent with a slight easing bias. “If there isn’t any big economic or financial turmoil, we’ll keep prudent monetary policy.”
China Industrial Output, Retail Sales Slow as Property Gains. China’s industrial production and retail sales both slowed in the first two months of the year, highlighting the pressure leaders will face to meet this year’s annual growth target even as the central bank governor said major stimulus wasn’t needed. Industrial output rose 5.4 percent from a year earlier in January and February, the National Bureau of Statistics said Saturday, compared with the 5.6 percent median estimate of economists surveyed by Bloomberg. Retail sales climbed 10.2 percent from a year earlier, missing the 11 percent projected gain in the survey, while fixed-asset investment exceeded estimates with a 10.2 percent increase. The reports highlight the choice facing policy makers: step up monetary and fiscal stimulus and build up more debt, or let the nation’s industrial engines slow further while reducing overcapacity in the steel, cement and coal sectors. Steel output fell in the two-month period, while aluminum output tumbled 7.7 percent, Saturday’s reports showed. "The overall growth profile remains still gloomy," said Zhou Hao, an economist at Commerzbank AG in Singapore. "The mix of data give us a worrying picture. Activity data remained weak while inflation and property prices are turning around."
New China Stocks Chief Vows Decisive Intervention If Needed. China’s new stock regulator vowed to step in “decisively” if needed to stem the sort of stock-market panic that resulted in a $5 trillion wipeout last summer, adding that it was far too early to think about the state rescue fund leaving the market. China Securities Regulatory Commission Chairman Liu Shiyu wouldn’t give a time line on government plans to speed up initial public offerings. He defended the government’s decision to intervene last year, saying the move bought leaders time to restore a “dysfunctional” market and headed off bigger threats to the financial system. “Under such a situation of panic, if we didn’t act decisively, could the impact not be huge?” Liu said at the briefing, held on the sidelines of China’s annual legislative session. “It would certainly have led to even greater panic and systemic financial risks.”
Finland Loses AAA Rating From Fitch as Growth Prospects Weaken. Finland had its credit grade cut to AA+ by Fitch Ratings, which cited a limited potential for a pickup in economic growth. “Economic performance remains weak,” Fitch said in a statement Friday announcing the reduction to the second-highest credit grade. Finland had a triple-A rating from Fitch since 1998. The company changed its outlook to negative in March 2015, five months after Standard & Poor’s lowered the nation to AA+. The lower credit rating hasn’t hurt the country’s ability to borrow. Since the S&P downgrade, 10-year government bond yields have fallen 0.44 percentage point to 0.58 percent, according to data compiled by Bloomberg.
Merkel Faces Triple Challenge as States Vote Amid Refugee Crisis. Voters in three German states go to the polls Sunday in the first major electoral test of Chancellor Angela Merkel’s open-border refugee policy. More than a fifth of the German population lives in the regions at stake, making the contest the biggest of Merkel’s third term and the most significant vote before the next federal ballot in 18 months. Voting stations open at 8 a.m. and close at 6 p.m., when exit polls will be released. While voters will be casting their ballots for regional assemblies, surveys show the biggest public concern to be Europe’s refugee crisis and its impact on Germany. The arrival of about 1 million asylum seekers in Germany last year alone has hurt support for Merkel’s Christian Democratic Union party nationally and threatens to upend the election outcome in the states of Baden-Wuerttemberg, Rhineland-Palatinate and Saxony-Anhalt. “Merkel faces the most serious challenge of her chancellorship in the migrant crisis” and a major setback for her party Sunday would “trigger some unsettling headlines and possibly even speculation that her position may be at risk,” said Holger Schmieding, chief economist at Berenberg Bank. “That could cause concerns well beyond Germany.”
A Short History of Unsuccessfully Calling a Bottom in Oil: (graph). Catching a falling knife is hard, especially when it’s covered in oil. The International Energy Agency today said oil prices may have bottomed out. Several people have tried to call the oil’s floor since prices started falling in the summer of 2014. So far nobody has been right.
China Steel Output Declines as Economic Transition Cuts Demand. China’s steel mills, which supply half of global output, churned out less steel in the first two months of the year, extending a decline amid government efforts to reduce reliance on manufacturing for growth. Crude-steel production for the January-to-February period dropped 5.7 percent from a year earlier to 121.07 million metric tons, data published by the country’s statistics bureau Saturday showed. Steel products output fell 2.1 percent to 162.28 million tons. Steel mills in China are battling losses and overcapacity as the nation transitions its economy to one fueled by consumption and services, from growth driven by manufacturing, and have seen their output fall off record highs in 2014. Steel output tends to drop before and during the weeklong Lunar New Year holiday, which began Feb. 8 this year, before climbing after the break when manufacturing activity picks up.
Trump Rally Violence Spurs Kasich Rebuke for `Toxic' Atmosphere. Donald Trump has created “a toxic environment” that’s allowed for violence at his rallies, Ohio Governor John Kasich said on Saturday, hours after the Republican front-runner canceled a campaign appearance in Chicago after large protests. It’s right to acknowledge the frustration and anger that many voters have about politics, yet “there is no place for a national leader to prey on the fears of people,” Kasich said at a press conference before speaking at a Republican Party breakfast in suburban Cincinnati, days before Ohio’s presidential primary on March 15. He said he was “deeply disturbed” by the tenor of the race. “You don’t get down in the mud and wrestle,” he said. “If our rhetoric is negative, our rhetoric is divisive, we will not solve these problems that the American people expect us to fix.”

Wall Street Journal:

Cities Grapple With Rising Murder Rates. A continuing rise in homicides in some cities during the first two months of 2016 is rattling officials hoping last year’s spike in killings was an aberration in the decadeslong decline in the country’s murder rate.
Voters Should Be Mad at Electric Cars.
The Donald and The Barack. Obama is Trump’s more sophisticated, articulate liberal antecedent. President Obama is said to be a reflective man, and often he is the one saying so, but you wouldn’t know it from his Thursday press conference with Canadian Prime Minister Justin Trudeau. Asked about political polarization and the Donald Trump phenomenon, Mr. Obama denied all responsibility. He doesn’t seem to appreciate the kind of country he will leave behind.

Barron's:

Had bullish commentary on (TWX), (ASH), (HYH), (IR), (KORS), (DISCA), (BA), (INTC) and (RL).
Had bearish commentary on (FB), (AMZN), (NFLX) and (GOOGL).