Bear Radar

Style Underperformer:

• Small-Cap Growth +.3%

Sector Underperformers:

• 1) Coal -4.9% 2) Restaurants -1.3% 3) HMOs -1.0%

Stocks Falling on Unusual Volume: 

• MTZ, VYGR, CLVS, GCP, HDB, OTTR, NGG, HUM, HHC, MIME, NVDA, FOXF, TWLO, MDT, COG, HURN, HIIQ, AET, BDX, KATE, LVS, GBX, CC, IGOV, ARMK, DSW and RRC

Stocks With Unusual Put Option Activity:

• 1) VZ 2) PSX 3) LB 4) XLB 5) JCP

Stocks With Most Negative News Mentions:

• 1) FOXF 2) MLHR 3) BDX 4) BRKS 5) MDT

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.0%

Sector Outperformers:

• 1) Gold & Silver +2.3% 2) Oil Service +2.3% 3) Energy +2.1%

Stocks Rising on Unusual Volume:

• DEPO, MPC, ALJ, CS, GLNG, CTL, WATT, BOOT, MDRX, DK, TREX and IAC

Stocks With Unusual Call Option Activity:

• 1) ZNGA 2) RICE 3) UUP 4) MPC 5) LLY

Stocks With Most Positive News Mentions:

• 1) GRPN 2) CUDA 3) MCK 4) QEP 5) ALG

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +14.7% Above 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 76.8% of Issues Advancing, 21.0% Declining
• 109 New 52-Week Highs, 9 New Lows
• 56.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.0%
• Vix 13.6 -3.4%
• Total Put/Call .90 -14.3%
• TRIN/Arms .65 -61.6%

Tuesday Watch

Today's Headlines

Bloomberg:

• China Central Bank Adviser Calls for 6%-7% Growth Target. China should set a more flexible 2017 economic growth target to give policy makers more room to enact reform, according to Huang Yiping, an adviser to the People’s Bank of China. He proposed a range of 6 percent to 7 percent for this year, compared with the 6.5 percent to 7 percent objective in 2016, the official Xinhua News Agency reported. Last year’s target, the first range in two decades, was down from 7 percent for 2015.
• Singapore Home Prices Fall for Third Year Amid Government Curbs. Singapore home prices fell 3 percent in 2016, the third straight year of declines as the government held steadfast on property cooling measures. An index tracking private residential prices fell 0.4 percent in the three months ended Dec. 31 from the previous quarter, according to preliminary data from the Urban Redevelopment Authority released Tuesday. Prices fell for a 13th straight quarter, the longest streak since the data was first published in 1975.
• Singapore's Economy Expands More Than Economists Estimated. (video)
• Israeli Investigators Question Netanyahu Over Graft Suspicions.
• Why Brexit Is Work in Progress Six Months Later: QuickTake Q&A.
• European Stocks Advance as Data Confirms Manufacturing Strength. European stocks advanced in the first trading day of 2017, erasing earlier losses, after Italy’s better-than-expected economic data helped confirm a trend of stronger manufacturing in the euro area. The Euro Stoxx 50 index was 0.5 percent higher as of 12:50 p.m. in London, with the U.K. and Swiss markets closed for holidays. The DAX index in Germany, the region’s biggest economy, jumped 0.9 percent and headed for its best day in two weeks. The broader Stoxx Europe 600 Index was up 0.5 percent, after slipping 1.2 percent in 2016, when it underperformed the S&P 500 index.
• Dollar Enjoys New Year as Yield Gap Most Since ’99: Markets Wrap. (video) Australia’s benchmark index touched the highest level in 1 1/2 years as the first major market to open Tuesday. The U.S. currency was little changed against the yen and the euro after it climbed against all major developed-market peers the previous session. Ten-year Treasuries yielded 1.57 percentage points more than the average for the bonds of other Group-of-Seven nations on Dec. 27, the most in 17 years. Most markets were shut Monday, though European stocks advanced amid evidence of stronger manufacturing in the euro area. Australia’s S&P/ASX 200 Index rose 0.9 percent as of 8:53 a.m. Tokyo time on Tuesday, advancing for the third time in four days. Australia & New Zealand Banking Corp. rose 1.6 percent after announcing it sold a 20 percent stake in Shanghai Rural Commercial Bank for A$1.84 billion ($1.32 billion).
• ‘Rogue One’ Takes in $64.3 Million for Disney Over Weekend.

Wall Street Journal: 

• Chinese Access to U.S. Semiconductor Industry May Be Curbed. Recommendations loom on bolstering protection of industry deemed critical to national security. 
• Luxury Apartment Boom Looks Set to Fizzle in 2017. Building glut outstrips demand, likely forcing landlords to slash rents.
• Republican Congress Promises to Move Quickly Toward Goals. First task is to dismantle Affordable Care Act, but effort is creating a maze of challenges.

MarketWatch.com:

• India PMI contracts for the first time in a year. The seasonally-adjusted India Manufacturing Purchasing Managers' Index fell to 49.6 from 52.3 in November, survey figures released by IHS Markit and Nikkei showed Monday.

Fox News:

• At least 36 killed after suicide bomber targets crowded Baghdad market. A suicide bomber driving a pickup loaded with explosives struck a bustling market in Baghdad on Monday, killing at least 36 people in an attack claimed by the Islamic State group (ISIS) hours after French President Francois Hollande arrived in the Iraqi capital. The bomb went off in a fruit and vegetable market that was packed with day laborers, a police officer said, adding that another 52 people were wounded.
• Report: Dems target eight Trump nominees in bid to delay process, get picks to disclose more info. (video)

CNBC:

• Oil won’t repeat its spectacular year in 2017: Analyst. (video)

Zero Hedge:

• Indian Banks Slash Interest Rates As Cash Shortage Leads To Manufacturing Contraction, Economic Shockwaves. (graph)
• Yuan Dumps, Bitcoin Jumps As China Researchers Suggest "One-Off Devaluation" & Capital Controls. (graph)
• JPM: "Central Banks Have Created Unprecedented Distortions In Government Bond Markets".
• Iron Ore Stocks At Chinese Ports Hit New Record Highs: Why This Is An "Ominous Sign" For Prices. (graph)
• Obama Brags About "Remarkable Progress" Of Past 8 Years - Our Data Paints A Slightly Different Picture.
• NYT Reporter Writes: "If Donald Trump Targets Journalists, Thank Obama".
• Bitcoin Surges Above $1,000 As China Unveils New Capital Controls. (graph)
• Trump to Continue "Freaking Mainstream Media Out", Will "Boldly Use" Twitter For Policy Announcements.
• European Stocks Greet The New Year By Rising To One Year Highs; Euro Slides. (graph)

Business Insider:

• 11 things we think will happen in business technology in 2017.
• Oil prices should be a lot lower than where they are now.

Reuters: 

• Islamic State claims Istanbul attack, gunman remains at large. (video) Islamic State claimed responsibility on Monday for a New Year's Day mass shooting in a packed Istanbul nightclub that killed 39 people, an attack carried out by a lone gunman who remains at large. It described the Reina nightclub, where many foreigners as well as Turks were killed, as a gathering point for Christians celebrating their "apostate holiday". The attack, it said, was revenge for Turkish military involvement in Syria. "The apostate Turkish government should know that the blood of Muslims shed with airplanes and artillery fire will, with God's permission, ignite a fire in their own land," the Islamic State declaration said.

Telegraph:

• Trump, interest rates and Chinese panic: Why euphoria could turn to a credit crunch in 2017.

Shanghai Securities News:

• China 2017 GDP May Grow About 6.5%, Researchers Say. China M2 will likely rise 12% this year, researchers with State Information Center led by Zhu Baoliang wrote. Exports will probably fall 3% and the CPI may increase 2%, he said. China should curb SOEs' M&A activities in overseas property, antiques and sports teams.

Night Trading

• Asian indices are -.50% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 114.25 -7.5 basis points.
• Asia Pacific Sovereign CDS Index 36.0 -1.0 basis point.
• Bloomberg Emerging Markets Currency Index 69.61 +.02%.
• S&P 500 futures +.29%.
• NASDAQ 100 futures +.45%.

Morning Preview Links

Earnings of Note

Company/Estimate

• None of note

Economic Releases
9:45 am EST

• Final Markit US Manufacturing PMI for December is estimated at 54.2 versus a prior estimate of 54.2.

10:00 am EST

• The ISM Manufacturing Index for December is estimated to rise to 53.7 versus 53.2 in November.
• The ISM Prices Paid Index for December is estimated to rise to 55.5 versus 54.5 in November.
• Construction Spending MoM for November is estimated to rise +.5% versus a +.5% gain in October.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Manufacturing PMI, UK Manufacturing PMI, (DAL) December Traffic Data, (ALK) December Traffic Data and the Citi Internet/Media/Telecom Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity 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 week.

Weekly Outlook

• 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 rising European/Emerging Markets/US high-yield debt angst, earnings outlook worries, yen strength, technical selling, profit-taking and rising long-term rates. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Today's Headlines

Bloomberg:

• Erdogan Vows to ‘Destroy Threats’ After Istanbul Gunman Kills 39. Turkey’s president vowed to “destroy threats” targeting the nation after a gunman opened fire inside a popular Istanbul nightclub, killing at least 39 people, including 15 foreigners -- an act of terrorism that has become grimly familiar in Turkey. The assailant escaped and a manhunt has been launched, Turkish Interior Minister Suleyman Soylu said on Sunday. No one has claimed responsibility for the attack, the latest in a string of assaults that have multiplied as Turkey steps up its war against Islamic State and Kurdish militants. Prime Minister Binali Yildirim said the gunman left his rifle at the scene before fleeing.

Wall Street Journal:

• Re-Energized Dollar Looms Over the Rest of the World. On Wall Street, the rising dollar has been one of the most visible signals of growing optimism in the U.S. economy; for many other countries, it spells trouble.
• Europe’s Fate in 2017: Caught Between Low Rates and Populist Politics. Europe seems on course for modest growth in 2017—unless Brexit proves to be the start of something bigger.

Fox News:

• Chicago records 762 homicides in 2016, up 57 percent from previous year. (video)

CNBC:

• China's homegrown populism to test Xi Jinping. Britain voted to leave Europe, and the United States voted to elect Donald Trump. Now, could China be facing a populist backlash of its own?

Zero Hedge:

• Trump Hints At "Russian Hacking" Revelations In Coming Days: "I Know Things Other People Don't".
• How George Soros Destroyed The Democratic Party.
• How Hedge Funds Closed Out 2016, And Why Hopes For A 2017 Rebound May Disappoint.
• Manhunt Underway For Gunman Who Killed 39 At Istanbul Nightclub.
• "Something For Nothing" All-Weather Funds Disappoint In Post-Election Era.
• For The First Time Since World War II, No US Carriers Are Deployed Anywhere In The World.

Business Insider:

• Here's what 10 Wall Street pros are predicting for the stock market in 2017. 
• ISIS is planning a chemical attack on Britain.
• The boss of one of the world's largest companies tells us how Trump is going to boost the US economy through tax reforms.
• The top 7 retailers to watch in 2017.

The Telegraph: 

• The political earthquakes which could shake Europe's economy this year.

Xinhua:

• China PBOC Adviser Calls for Lower Growth Target. Chinese government should set more flexible target for economic growth in 2017 to provide room for reform, Huang Yiping, member of PBOC's montetary policy committee, tells Xinhua. Huang proposes GDP growth target of 6-7% in 2017, compared with 6.5-7% in 2016. Large-scale monetary  loosening unlikely, while possible of tightening cannot be ruled out, Huang said.