Bull Radar

Style Outperformer:

• Mid-Cap Value -.1%

Sector Outperformers:

• 1) Hospitals +3.5% 2) Gold & Silver +2.3% 3) Retail +1.8%

Stocks Rising on Unusual Volume:

• CWEI, RAI, BAS, NBL, SN, PVH, STZ, DLTR, AAOI, RL, NYLD, NRG, PBF, REN, SFS, WPX and GME

Stocks With Unusual Call Option Activity:

• 1) PAA 2) ACWI 3) TSO 4) ARRY 5) BCEI

Stocks With Most Positive News Mentions:

• 1) JWN 2) PPL 3) DV 4) VSI 5) KBH

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +5.7% Above 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 50.2% of Issues Advancing, 47.5% Declining
• 75 New 52-Week Highs, 8 New Lows
• 59.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.2%
• Vix 12.0 +6.9%
• Total Put/Call .92 +1.1%
• TRIN/Arms .86 -38.1%

Tuesday Watch

Today's Headlines

Bloomberg:

• May Ready to Announce Britain Will Leave EU Single Market. The U.K. is likely to pull out of the European Union’s single market for goods and services and seek a completely new trading relationship with the bloc, Prime Minister Theresa May will say Tuesday as she sets out her plan for Brexit. In a blow to business groups pressing for the closest possible links to Europe, May will use a speech in London to explicitly say she expects Britain to leave the single market and overhaul its links to the customs union, according to a person familiar with the matter. She has no interest in a “partial” or “associate” membership of the EU or “anything that leaves us half-in, half-out,” according to extracts released by her office. “We seek a new and equal partnership -- between an independent, self-governing, global Britain and our friends and allies in the EU,” the premier will say, according to the extracts. “We do not seek to adopt a model already enjoyed by other countries. We do not seek to hold on to bits of membership as we leave.”
• Geopolitical Risks Threaten China’s Economy, Premier Li Says. As Chinese leaders prepare for Donald Trump taking office this week, Premier Li Keqian warned that an increasingly complicated global political situation will weigh on the economy. Geopolitical risk and political shifts add great uncertainty to the existing headwinds for the expansion, Li said at a meeting Friday on the government work report for this year, the state-run People’s Daily reported Monday. Li’s comments came ahead of President Xi Jinping’s keynote speech to the World Economic Forum on Tuesday, in which he is expected to talk about global economic conditions. Chinese leaders are preparing for what may be a tumultuous new year after Trump occupies the White House on Jan. 20, as well as new elections coming soon in Europe and South Korea.
• This Hedge Fund Says China’s Next Big Short Is Stocks. When Kevin Smith realized late last year that China was getting serious about defending its currency, his first move was to dial back bearish bets on the yuan. His second move: double down on wagers against Chinese stocks. Smith, whose global macro hedge fund has returned about 350 percent over the past decade, says China’s attempts to prop up its currency are tightening domestic monetary conditions and making a credit crisis increasingly likely. To him, that means shares of banks and other “zombie” companies may be the first dominoes to fall as China faces a reckoning after years of debt-fueled growth.
• German Automakers Push Back Trump’s Warning Over Mexican Plants. German carmakers pushed back Donald Trump’s threats of import duties on the autos they make in Mexico, pointing to extensive production expansion in the U.S. in recent years. BMW AG, which the president-elect singled out in an interview with German newspaper Bild on Sunday, sought to defuse potential tensions by stating that its largest factory is in South Carolina and that cars made at a planned, smaller factory in Mexico will be exported globally. Trump said BMW will face a 35 percent import duty on vehicles it exports to the U.S. from Mexico. “We take the comments seriously, but it remains to be seen if and how the announcements will be implemented by the U.S. administration,” Matthias Wissmann, president of German auto industry association VDA, said in an e-mailed statement. The U.S. Congress will probably show “substantial resistance” against the duty proposals, he said.
• Emerging-Market Currencies and Stocks Slide on Trade Jitters. Emerging-market assets declined as concern grew that threats to global trade and growth are proliferating. Mozambique’s international bond tumbled after the nation said it won’t make an interest payment on Jan. 18. The MSCI Emerging Markets Index dropped the most in more than three weeks and a gauge of currencies slipped for the first time in three days. Investors turned bearish after a report that the U.K.’s exit from the European Union would also involving leaving the single market. U.S. President-Elect Donald Trump said other members would also quit the bloc. All but two of the 24 emerging-market currencies tracked by Bloomberg slid, led by Turkey’s lira, the world’s worst performer this year. Saudi Arabia’s Tadawul All Share Index was the biggest drag among major world gauges.
• European Stocks Decline as FTSE 100 Ends Record Winning Streak. European stocks fell on concern Britain will quit the European Union’s single market and as U.S. President-elect Donald Trump suggested other countries could follow the U.K. out of the bloc. The Stoxx Europe 600 fell 0.8 percent at the close, after Friday’s biggest rise in a month. The U.K.’s FTSE 100 lost 0.2 percent, ending a streak of 14 straight advances and 12 consecutive all-time highs. Its losses were limited by gains in exporters as as the pound tumbled ahead of U.K. Prime Minister Theresa May’s speech on Brexit plans on Tuesday.
• Saudis See No Need to Extend OPEC Deal Beyond Six Months. OPEC probably won’t need to extend a deal it reached with other crude producers to cut output, given compliance with the reductions and the outlook for an increase in global demand, Saudi Energy Minister Khalid Al-Falih said. The re-balancing of the oil market should take place by the end of the first half of the year, Al-Falih told reporters during an energy event in the United Arab Emirates capital of Abu Dhabi. Demand will pick up in the summer, and OPEC wants to make sure markets are well-supplied, he said.
• Trump, Fed Headed for Clash Amid Dollar Surge, Economists Say. Donald Trump and the U.S. Federal Reserve are heading for a collision that will almost certainly result in a stronger dollar, two leading economists said. “I see a likelihood for a major clash developing in the next year, year and half, between the Trump administration’s desire to go for 3 to 4 percent growth and the growing attention of the Fed to emerging inflation in their own 2 percent mandate,” Northwestern University’s Robert J. Gordon told a conference in Paris on Monday. Barry Eichengreen of the University of California Berkeley sees “double-digit” dollar appreciation as a possible consequence of Trump’s fiscal stimulus, tax reform and protectionist trade policy.

Wall Street Journal:

• China Digs In Heels, Girds for Trump’s Unpredictability. Chinese officials, academics reached out to U.S. contacts to help interpret president-elect’s remarks.
• Democrats’ Fissures Re-Emerge as Party Seeks New Leader. Officials fear hangover from Sanders-Clinton primary fight may threaten unity. 
• For Shale Drillers, Rising Oil Prices Also Come With Rising Costs. Much of shale firms’ savings during downturn came at expense of oil-field-services firms, which aim to raise prices.

MarketWatch.com:

• Davos elite promise global solutions, but they’re part of the problem.

CNBC:

• Trust in CEOs plummets and hits all-time low: Global survey.
• Noble Energy(NE) to buy Clayton Williams Energy(CWEI) for $2.7 billion.
• China will 'take off the gloves' if Trump continues on Taiwan, state media warns.

Zero Hedge:

• Pound Slides After Theresa May's Full Speech Leaks, Laying Out Her 12-Point Plan.
• Angry Germany Slams Trump Criticism: Urges US To "Build Better Cars", Accuses Washington Of Causing Refugee Crisis.
• Trump Promises "Insurance For Everybody" In Obamacare Repeal.
• Istanbul Nightclub Attacker Who Killed 39 On New Year's Day Has Been Captured.
• IMF Downplays Trump Stimulus Effect; Slashes Saudi, Mexico Growth In Latest World Economic Outlook.
• While Davos Elites Address Populism, Just "Eight Men Own Same Wealth As Half The World".
• NYSE Short Interest Plunges To Lowest In Three Years. (graph)
• Obama Sends 10 More Guantanamo Detainees To Oman.
• Oil Slides After Saudis Suggest Early End To OPEC Deal. (graph)
• China Warns Trump "It Will Take Off The Gloves" If He Continues To Provoke Beijing.
• Ray-Ban Maker Luxottica To Merge With French Esilor, Creating $49 Billion Eyewear Giant.
• Tumbling Pound Rattles Global Markets; Chinese Stock Slide Forces Government Intervention. (graph)
• Can Marine Le Pen Pull Off French Election Stunner? Germany Loses No Matter Who Wins.
• Trump Responds To CIA Chief Brennan, Asks "Was He The Leaker Of Fake News?"
• Davos Elite Eat $40 Hot Dogs While "Struggling For Answers", Cowering in "Silent Fear".

Washington Post: 

• Obama to commute hundreds of federal drug sentences in final grants of clemency.

Reuters:

• Exclusive: China to target around 6.5 percent growth in 2017 - sources. China will lower its 2017 economic growth target to around 6.5 percent from last year's 6.5-7 percent, policy sources said, reinforcing a policy shift from supporting growth to pushing reforms to contain debt and housing risks. The proposed target was endorsed by top leaders at the closed-door Central Economic Work Conference in mid-December, according to four sources with knowledge of the meeting outcome. "The target will be around 6.5 percent, which indicates that slightly slower growth is acceptable," said one of the sources, a policy adviser.
• China stocks fall for 5th session, pressured by tech stocks. China's main indexes fell for the fifth straight session on Monday, led by tech stocks as investors grew gloomy about 2017 prospects following comments by the premier and official estimates suggesting slowing economic growth in big cities. The blue-chip CSI300 index was unchanged at 3,319.45 points, while the Shanghai Composite Index lost 0.3 percent to 3,103.43 points. The tech-heavy ChiNext Price Index, the benchmark index tracking listed start-up companies, slumped as much as 6.1 percent in its 8th session of losses to hit a 16-month low, as faster approvals for IPOs increased the supply of equity in the market. The start-up index closed 3.6 percent lower, within sight of lows plumbed during the market crash in 2015.

live mint:

• IMF cuts India’s GDP growth forecast to 6.6% due to note ban woes.

Night Trading

• Asian indices are -.5% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 118.0 +1.5 basis point.
• Asia Pacific Sovereign CDS Index 34.5 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 69.77 -.44%.
• S&P 500 futures -.29%.
• NASDAQ 100 futures -.22%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (OZRK)/.69
• (CMA)/.94
• (MS)/.65
• (PRGS)/.56
• (UNH)/2.07
• (ADTN)/.14
• (CSX)/.49
• (IBKR)/.34
• (LLTC)/.52
• (UAL)/1.68

Economic Releases
8:30 am EST

• Empire Manufacturing for January is estimated to fall to 8.4 versus 9.0 in December.

Upcoming Splits

• (NAVG) 2-for-1

Other Potential Market Movers

• The Fed's Dudley speaking, Germany ZEW Index, World Economic Forum and the UK CPI report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighted down by commodity and industrial shares in the region. I expect US stocks to open modestly lower and to rally 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 mixed as rising European/Emerging Markets/US high-yield debt angst, earnings outlook worries and rising long-term rates offset oil strength, economic optimism and short-covering. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Today's Headlines

Bloomberg:

• Tech Rally Fails to Budge S&P 500 for Week as Nasdaq Sets Record. Investor enthusiasm for technology stocks helped lift the Nasdaq Composite Index to a record this week, while the S&P 500 and Dow Jones Industrial Average were little changed. The Nasdaq, which gained prominence during the dot-com boom of the 1990s, advanced in four out of five days amid gains in the computer and transportation industries, each of which rose at least 1 percent. The S&P 500 ended the week down 0.1 percent and the Dow lost 0.4 percent. The week marked a turnaround for some of the sectors that had stood out during the market rally after Donald Trump’s surprise presidential election win. Energy shares in the S&P 500 dropped 1.9 percent, the most since the five days ended Nov. 4. Financial stocks slipped 0.1 percent Real estate companies led declines with a drop of 2.2 percent as the 10-year Treasury yield slid for the fourth straight week. Consumer discretionary stocks and tech companies added 0.8 percent.
• May to Seek Hard Brexit by Leaving EU Market, Times Reports. U.K. Prime Minister Theresa May will this week signal plans for a “hard Brexit’’ by saying she’s willing to quit the European Union’s single market for goods and services to regain control of Britain’s borders and laws, the Sunday Times reported. In a speech scheduled for Tuesday in London, May will prepare to withdraw from tariff-free trade with the region in return for the ability to curb immigration, strike commercial deals with other countries, and escape the jurisdiction of the European Court of Justice, the Sunday Times said without saying how it obtained the information. Her finance chief, Philip Hammond, in a separate interview said Britain would be willing to abandon “mainstream economic and social thinking” if it is unable to craft a favorable post-Brexit EU deal, according to the German newspaper Welt am Sonntag.
• Trump Calls NATO Obsolete and Dismisses EU in German Interview. U.S. President-elect Donald Trump called NATO obsolete, predicted that other European Union members would follow the U.K. in leaving the bloc and threatened BMW with import duties over a planned plant in Mexico, according to an interview with Germany’s Bild newspaper that will raise concerns in Berlin over trans-Atlantic relations. Quoted in German from a conversation held in English, Trump predicted Britain’s exit from the EU will be a success and portrayed the EU as an instrument of German domination with the purpose of beating the U.S. in international trade. For that reason, Trump said, he’s fairly indifferent whether the EU breaks up or stays together, according to Bild.
• Merkel Coalition Seeks to Punish Social Media for Hate Speech. Chancellor Angela Merkel’s government plans to fine social media networks such as Facebook Inc. and Twitter Inc. if they fail to combat hate speech, as German officials accuse media companies of being too slow to take action. Volker Kauder, chairman of Merkel’s Christian Democratic Union parliamentary caucus, said on Saturday that he reached a preliminary agreement with Social Democratic Justice Minister Heiko Maas that would require companies to respond to speech complaints within 24 hours. Otherwise they’ll have to pay.

Wall Street Journal:

• ‘Real Rates’ Show Real Concerns Over Trump Economic Rebound. Decline in inflation-adjusted Treasury yields signals investor doubt about future economic growth.
• Beijing Says ‘One China’ Policy Isn’t Negotiable. Donald Trump said Friday he wasn’t committed to longstanding policy on Taiwan.

Barron's:

• Had bullish commentary on (GOOGL), (MRK), (ATW), (GS), (PNC), (POOL), (CSX), (RDC), (DO), (HP), (NBR), (PTEN), (UNT), (AMAT), (OLED) and (HXL).

Fox News: 

• Pence urges Americans to unite on Inauguration Day, says he's 'disappointed' in Lewis' comments. (video)
• CIA's Brennan warns Trump, says he doesn't 'fully understand' Russia threat. (video)

CNBC:

• Ringling Brothers, the 'Greatest Show on Earth', will take final bow in May.

Zero Hedge:

• In Scathing Attack, CIA Director Brennan Warns Trump To "Watch What He Says".
• "They Are The Opposition Party" - Trump May Evict Press From The White House.
• China's Bitcoin Exchanges Suspend Margin Trading.
• The "Most Bearish Hedge Fund" Capitulates: "We Are Beginning To Close Parts Of Our Short Book".
• Is The Biggest Treasury Drawdown In History Imminent? The "Bond Shock" Story Refuses To Go Away.
• Goldman Is Concerned: "The S&P Has Surged 6% Since The Election But 2017 EPS Forecasts Haven't Budged". (graph)
• Trump Team Responds: May Move White House Briefings To Accommodate More Than Just "Media Elite".
• Cable Plunges To Flash-Crash Lows On May's "Hard Brexit" Speech; DB Eyes GBPUSD 1.06; Euro Parity.
• Why Everyone Is Complacent: "2016 Saw The Fewest S&P 500 Drawdowns Ever". (graph)
• The Clinton Foundation Is Shutting Down The Clinton Global Initiative.
• Driverless Shuttles Hit Las Vegas: No Steering Wheels, No Brake Pedals.
• Trump Says He Is Open To Lifting Russia Sanctions, Won't Label China Currency Manipulator "On Day One". 
• RealVision's 15 "Killer Charts" For Q1 2017. (graph)
• Beijing Responds: Tells "Relevant Parties" In The U.S. That "One China" Principle Is Non-Negotiable.
• The US Economy: Back On Track? (graph)
• New York Real Estate Prices Plunge In 4Q As Listing Days and Discounts Soar.
• Debunking Loretta Lynch's One-Sided 'Chicago Cops Are Racist Villains' Statistics.
• Treasury Specs Are So Short, It Is Now A 4 Sigma Event. (graph)
• D.C. National Guard Chief Fired Days Before Trump Inauguration: "The Timing Is Extremely Unusual".
• Oil Prices Are Up 90% YoY... What That Might Mean For Bonds. (graph)
• "China's Next Time Bomb" - A Look Inside The Insane World Of China's Bitcoin Traders.
• Citadel Pays $22 Million Settlement For Frontrunning Its Clients.
• YouTube Joins The "Fake News" Crusade, Shuts Down Popular Conservative Channel.
• Weekend Reading: Anticipation.
• Dow 20k Disappoints For Fourth Straight Week As Banks Pump'n'Dump. (graph)

Business Insider:

• Everyone is asking the wrong question about Europe.
• Trump Tweets "Car Companies Have To Start Making Things Here Again".
• China's currency manipulation could become a global problem in 2017.
• Trump has a $20 trillion problem.
• Wall Street's smart money is dumping the biggest trade in stocks since Trump's election. (graph)
• Iran: 'There will be no renegotiation' of the Iran deal.
• Europe braces for the next wave of 'record levels' of migrants and economic refugees.
• New drilling technology will create an explosion of oil.
• Johnson & Johnson will begin disclosing drug price increases.
• The math doesn't add up for OPEC's oil production cut.
• Solar is getting a lot cheaper, and it's reducing investment in solar.
• Mexico says it'll respond 'immediately' to any US border tax under Trump.
• The House just took another major step toward repealing Obamacare.
• Democrats let FBI Director James Comey have it during tense closed-door meeting on Russian hacking.
• Civil-rights icon John Lewis: 'I don't see this president-elect as a legitimate president'.

The Telegraph:

• Oil price rise falters as doubts emerge over Opec cuts.
• The year that raw nationalism toppled 'Davos Man'.

China Daily:

• Trump 'Playing With Fire' Over Taiwan Remarks. It appears that the Trump administration is intending to use the one-China policy as its "trump card," China Daily writes in an editorial. To assume Trump and his team's remarks have been based on bluster or miscalculation seems "wishful thinking". Breaking the one-China policy may upend fundamentals for China-US relations. Trump to pay costly price if "Taiwan game" continues, the editorial said.

Market Week in Review

• S&P 500 2,274.56 -.21%*

The Weekly Wrap by Briefing.com.

*5-Day Change