Bear Radar

Style Underperformer:

• Large-Cap Growth -.3%

Sector Underperformers:

• 1) Road & Rail -1.4% 2) I-Banks -1.4% 3) Software -1.2%

Stocks Falling on Unusual Volume: 

• OFIX, XBIT, GPOR, AGIO, UBSI, AVA, BABY, FNSR, ADBE, BDC, CAPL, ORCL, JWN, CNS, CFNL, FBC, IPAR, IPHS, ACET, WTW, QDEL, GIB, ECHO, HDB, PFS, GOLF, WBMD, EQT, CYNO, ORCL, MET and DECK

Stocks With Unusual Put Option Activity:

• 1) CYH 2) JWN 3) ORCL 4) SWN 5) ALR

Stocks With Most Negative News Mentions:

• 1) VRX 2) MRTN 3) JWN 4) HTLD 5) WTW

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.3%

Sector Outperformers:

• 1) REITs +1.4% 2) Utilities +1.2% 3) Hospitals +1.2%

Stocks Rising on Unusual Volume:

• JBL, HZNP, CORE, INN, BID, MCRB, REN, WEB, MGNX and DERM

Stocks With Unusual Call Option Activity:

• 1) SEMG 2) HEDJ 3) LEN 4) ADBE 5) JWN

Stocks With Most Positive News Mentions:

• 1) BID 2) KSU 3) GE 4) OXY 5) TSS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +27.7% Above 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 60.5% of Issues Advancing, 36.4% Declining
• 100 New 52-Week Highs, 21 New Lows
• 57.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.7%
• Vix 12.6 -1.4%
• Total Put/Call .76 -9.5%
• TRIN/Arms 1.29 +48.3%

Friday Watch

Evening Headlines

Bloomberg:

• Guess Which Huge Asian Country Is Afraid of Capital Flight? After years of encouraging foreign deals, China gets worried. For years, China has encouraged its companies to make acquisitions overseas to gain access to new technology, brands, and management expertise. Under its “Go Abroad” policy, or zou chuqu, Beijing has loosened approval requirements for international deals and eased capital controls. In the first 10 months of 2016, outbound direct investment by Chinese enterprises reached $146 billion, up 53.3 percent from the same period a year ago, according to China’s Ministry of Commerce. That push may stall as Chinese regulators redouble efforts to clamp down on capital flight amid concern that a weakening currency could further spur outflows. 
• Singapore Dollar Likely to Slide to Levels Seen After 2008 Crisis, Says Policy Sage. The Singapore dollar is likely to slide to levels seen in the aftermath of the global financial crisis as the Monetary Authority of Singapore resumes easing policy in April. So says an analyst who’s correctly predicted the last three central bank decisions. The authority, which uses the currency as a tool to manage the economy rather than interest rates, is set to lower the center of the band within which it steers the local dollar as Singapore’s export-driven economy feels more pain from China’s slowdown in 2017, according to Vaninder Singh, an economist at NatWest Markets, part of Royal Bank of Scotland Group Plc. The currency is set to weaken past S$1.45 against the greenback within the next six months, Singh said, a level last seen in August 2009.
• Dollar Solidifies Its Climb on Fed Outlook as Japan Stocks Rise. The dollar is cementing its domination of the currency market, trading near an almost 14-year high versus the euro as the Federal Reserve’s more hawkish outlook invigorates its post-election rally. Japanese stocks advanced as bonds extended their drop. The greenback headed for its best week in a month against major peers, after surging to its strongest point since 2003 versus the euro and to a 10-month high against the yen. The yen’s losses helped the Topix index extend gains at its highest level this year as Korea’s won extended its drop. Yields on Japanese debt due in a decade touched their highest level since January after the Fed’s only interest-rate hike of 2016 came with a boost to the number of increases expected next year. Oil attempted a rebound as copper rose. The MSCI Asia Pacific Index added .3% as of 10:07 a.m. Tokyo time, reducing its decline in the week to 1.7%, still the worst weekly performance since October.
• OPEC Threatened by Tiny Oklahoma Town With Soaring Supplies. For OPEC, there are few enemies more fearsome than the tiny Oklahoma town of Cushing. With oil inventories at Cushing creeping near an all-time high, U.S. benchmark futures prices are struggling to advance despite the promised production cuts agreed to by OPEC, Russia and other producers. And the storage tanks are likely to stay full as refiners park crude in Oklahoma to lower their tax bills. Cushing, which prides itself as the “pipeline crossroads of the world,” is the delivery point for the West Texas Intermediate crude contract. With tanks that can hold 77 million barrels of crude, enough to supply France for two months, it’s the biggest storage hub in the U.S. The last high point there came in May. Now, after a brief hiatus, the tanks are filling up once again. For the OPEC-led efforts to boost prices, that’s a major problem.

Wall Street Journal: 

• Aleppo Evacuation of Civilians, Rebels Begins. People who had pleaded to escape city were forced to confront never returning home again.
• The Children of the Opioid Crisis. Left behind by addict parents, tens of thousands of youngsters flood the nation’s foster-care system; grandparents become moms and dads again.
• China Halts Trading in Key Bond Futures as Panicky Investors Sell Securities. Slowing growth, capital outflows fuel concerns that bull market is coming to an end.
• States Sue Generic-Drug Companies Over Price-Fixing Allegations. State attorneys accuse generic drugmakers including Mylan, Teva of manipulating prices on two medicines.

Fox News:

• Trump's choices of Cabinet renew debate over opening Alaska's Arctic refuge to oil drilling.

MarketWatch:

• This is how far Beijing will go to defend its claim to the South China Sea.

CNBC:

• Oracle(ORCL) earnings: 61 cents a share vs estimates of 60 cents. (video)
• Euro could finally reach parity with the dollar. 
• Breakingviews: Fed rate hike foretells end of credit-market boom.

Zero Hedge: 

• China Dumps Treasuries: Foreign Central Banks Liquidate A Record $403 Billion In US Paper.
• Caught On Tape: CA Governor Brown Goes On Epic Climate Change Rant; Vows To Defy Trump.
• Hollywood Celebrities Urge Electors Not To Vote For Trump.
• The Associated Press Announces It Is Joining The "Fight Against The Scourge" Of Fake News.
• Facebook(FB) Launches Campaign To Combat "Fake News".
• China Should Retake Taiwan By Force, State Media Urges.
• The Exiling of Risk. (graph)
• Freddie Mac Issues Warning As Mortgage Rates Soar. (graph)
• "You Haven't Succeeded Once": State Department Slammed By AP Reporter Over Failure In Syria.
• Mark Spitznagel: "The Big, Fat, Ugly Stock Bubble" Is Now The Greatest Risk For Trump.
• Dip-Buyers Bid Banks & Long Bonds But Batter Barbarous Relics. (graph)

Telegraph:

• Defeated at the ballot box, the Left is waging guerrilla war on Britain.

Economic Information Daily:

• Economist Sees Fed Hike to Add to Yuan Downward Pressure. The Fed rate hike may also lead to capital outflows from China, which will have big impact on China's stock and property markets, Yi Xianrong, a former researcher at Chinese Academy of Social Sciences, writes in a commentary.

Night Trading 

• Asian equity indices are -.25% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 123.75 +1.0 basis point.
• Asia Pacific Sovereign CDS Index 37.25 +1.0 basis point.
• Bloomberg Emerging Markets Currency Index 69.46 -.06%. 
• S&P 500 futures +.03%. 
• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• None of note

Economic Releases 
8:30 am EST

• Housing Starts for November are estimated to fall to 1230K versus 1323K in October.  
• Building Permits for November are estimated to rise to 1240K versus 1229K in October. 

9:45 am EST

• Preliminary Markit US Services PMI. 

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Eurozone CPI, (HON) conference call, (AGCO) analyst briefing and the (MET) conference call could also impact trading today.

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

Stocks Higher into Final Hour on Economic Optimism, Yen Weakness, Technical Buying, Hospital/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.78 -3.11%

• Euro/Yen Carry Return Index 128.41 -.26%

• Emerging Markets Currency Volatility(VXY) 11.48 +2.96%

• S&P 500 Implied Correlation 49.59 -2.26%

• ISE Sentiment Index 140.0 +91.78%
  

• Total Put/Call .86 -3.37%

• NYSE Arms .94 -28.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.79 +.01%
  

• America Energy Sector High-Yield CDS Index 441.0 +.25%

• European Financial Sector CDS Index 94.81 -.33%

• Western Europe Sovereign Debt CDS Index 20.63 +.19%

• Asia Pacific Sovereign Debt CDS Index 37.37 +4.17%

• Emerging Market CDS Index 248.62 -.8%
  

• iBoxx Offshore RMB China Corporate High Yield Index 132.98 -.03%

• 2-Year Swap Spread 25.0 +1.75 basis points

• TED Spread 46.75 +2.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -54.75 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 69.50 -.41%
• 3-Month T-Bill Yield .50% -3.0 basis points

• Yield Curve 133.0 +5.0 basis points
  

• China Import Iron Ore Spot $81.50/Metric Tonne +2.93%

• Citi US Economic Surprise Index 37.0 +9.5 points

• Citi Eurozone Economic Surprise Index 64.40 +6.9 basis points

• Citi Emerging Markets Economic Surprise Index 3.50 +.4 point

• 10-Year TIPS Spread 1.92% -4.0 basis points
• 33.1% chance of Fed rate hike at March 15 meeting, 46.4% chance at May 3 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +212 open in Japan 
• China A50 Futures: Indicating +1 open in China

• DAX Futures: Indicating -3 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.2%

Sector Underperformers:

• 1) Gold & Silver -3.7% 2) Gaming -1.9% 3) Homebuilders -1.5%

Stocks Falling on Unusual Volume: 

• SFNC, FANG, GPOR, NH, MPEL, YHOO, TYL, PVH, PFSI, AI, APOG, RL, SAFM, USLV, UA, INTL, ARR, ACRE, AIRG, SLW, NOAH, TMHC, ABX, DOX and HUBS

Stocks With Unusual Put Option Activity:

• 1) YHOO 2) KEY 3) OXY 4) TXN 5) ADBE

Stocks With Most Negative News Mentions:

• 1) VRX 2) NOG 3) ZBH 4) EAT 5) MIDD

Charts:

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