Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%

Sector Outperformers:

• 1) Computer Services +.8% 2) Internet +.4% 3) Computer Hardware +.4%

Stocks Rising on Unusual Volume:

• SCOR, ESPR, PAHC, KN, TDG, HAS, NOV, BAP, EMR, RBC, WWW, LITE, ELF, CNC, JLL, TSO, ICE, ALSN, ARMK, CDW, CAH, CBOE, RE, LOB, ABG, KN and AMBA

Stocks With Unusual Call Option Activity:

• 1) MPLX 2) TPX 3) RH 4) EMR 5) DXJ

Stocks With Most Positive News Mentions:

• 1) FN 2) VSAT 3) FEYE 4) DIS 5) OMC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -4.7% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 56.5% of Issues Advancing, 38.5% Declining
• 106 New 52-Week Highs, 7 New Lows
• 58.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.2%
• Vix 11.2 -1.2%
• Total Put/Call .71 -31.7%
• TRIN/Arms 1.34 +5.0%

Tuesday Watch

Evening Headlines

Bloomberg:

• Have China's FX Reserves Dipped Below $3 Trillion? (video)
• Asian Stocks Fall After Yen Climbs on Haven Demand. Asian equities declined after the yen led a rally in haven assets with political uncertainty infecting markets across the globe. Japan’s Topix index dropped for the first time in three days, after the yen touched the highest level since November. That comes after the S&P 500 Index retreated from near-record levels, with shares most tied to economic growth struggling after sagging wagegains and uneven retail results. The euro slumped with French, Italian and Spanish bonds amid political uncertainty in France. Gold surged to the highest price since November on Monday, while 10-year Treasury yields touched a two-week low. The Topix index fell 0.6 percent as of 9:23 a.m. in Tokyo, after a two-day gain. Toyota Motor Corp. dropped 2.5 percent after reporting a 39 percent decline in third-quarter operating profit. Australia’s S&P/ASX 200 Index declined 0.2 percent. South Korea’s Kospi Index retreated 0.1 percent. New Zealand’s main benchmark was down 0.2 percent.

Wall Street Journal:

• Tiger Hedge Funds Become Wall Street Prey. Funds managed by disciples of Julian Robertson have fallen on hard times.
• Donald Trump’s Administration Argues in Travel-Ban Appeal That Security At Risk. Ninth U.S. Circuit Court of Appeals to hold oral arguments Tuesday afternoon, after which a ruling could be made at any time.
• Conservative Republicans Double Down on Push to Repeal Health Law. Some fear losing momentum to undo the Affordable Care Act as more GOP members sound cautious notes.

Fox News:

• ‘Right-to-work’ movement claims victory in Missouri, eyes NH next. (video)
• Details of Iran nuclear deal still secret as US-Tehran relations unravel.

CNBC:

• After-hours buzz: FOXA, GPS, FMC & more.
• Consumers could see 20% price hike with border adjustment tax, retail group says. (video)
• Fed's Harker says March 'should be considered' for next rate hike.

Zero Hedge:

• California Senate Leader Admits: "Half Of My Family" In Country Illegally With "False Social Security Cards".
• Shock Poll Shows Merkel Losing Chancellorship If Elections Held Today; JPMorgan Stunned.
• Chinese Auto Dealers Hit Panic Button As Tax Hike Triggers "Inventory Early Warning". (graph)
• This Is What America's Top Trading Partners Export To The US.
• Grant Williams: A Punch In The Face For Central Bankers Is Coming.
• According To Credit Suisse, This Is The Only Thing That Matters To Markets.
• Yield Curve Inverts, Swap Spreads Spike Signal Panic As Debt-Ceiling Looms. (graph)
• Gold Jumps To 3-Month Highs Amid China Tightening, Europe Turmoil, & Trump. (graph)

Night Trading 

• Asian equity indices are -.25% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 108.75 -1.25 basis points.
• Asia Pacific Sovereign CDS Index 30.0 -1.0 basis point.
• Bloomberg Emerging Markets Currency Index 71.30 -.11%. 
• S&P 500 futures -.05%. 
• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AGCO)/.71
• (ADM)/.80
• (BP)/.04
• (EMR)/.43
• (GM)/1.17
• (ICE)/.69
• (KORS)/1.64
• (MOS)/.12
• (STE)/1.04
• (VSH)/.21
• (VMC)/.85
• (WCG)/.52
• (AKAM)/.68
• (BWLD)/1.31
• (TCS)/.09
• (GILD)/2.60
• (MCHP)/.90
• (MYGN)/.24
• (ORLY)/2.54
• (PNRA)/2.00
• (TDW)/-1.23
• (DIS)/1.49
• (ZG)/.11 

Economic Releases
8:30 am EST

• The Trade Deficit for December is estimated at -$45.0B versus -$45.2B in November. 
  

10:00 am EST

• The JOLTS Job Openings report for December is estimated to rise to 5569 versus 5522 in November.

3:00 pm EST

• Consumer Credit for December is estimated at $20.0B versus $24.532B in November.

Upcoming Splits

• None of note

Other Potential Market Movers

• The $24B 3Y T-note auction, German Industrial Production report, Reserve Bank of Australia decision, Reserve Bank of India decision, weekly US retail sales reports and the (IDTI)  analyst day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by commodity and consumer shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Modestly Lower into Final Hour on Rising European Debt Angst, Oil Decline, Yen Strength, Energy/Healthcare Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 11.38 +3.74%

• Euro/Yen Carry Return Index 125.47 -1.08%

• Emerging Markets Currency Volatility(VXY) 10.27 -1.15%

• S&P 500 Implied Correlation 46.13 -3.37%

• ISE Sentiment Index 56.0 -30.0%
  

• Total Put/Call 103.0 +98.0%

• NYSE Arms 1.32 +26.92%

Credit Investor Angst:

• North American Investment Grade CDS Index 65.31 +1.61%
  

• America Energy Sector High-Yield CDS Index 371.0 +.36%

• European Financial Sector CDS Index 91.48 +5.39%

• Western Europe Sovereign Debt CDS Index 23.70 +2.82%

• Asia Pacific Sovereign Debt CDS Index 30.02 -3.64%

• Emerging Market CDS Index 226.15 -.50%
  

• iBoxx Offshore RMB China Corporate High Yield Index 133.85 +.13%

• 2-Year Swap Spread 32.5 +1.25 basis points

• TED Spread 52.75 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -28.75 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.36 -.10%
• 3-Month T-Bill Yield .51% +1.0 basis point

• Yield Curve 126.0 -1.0 basis point
  

• China Import Iron Ore Spot $80.60/Metric Tonne -1.93%

• Citi US Economic Surprise Index 43.80 -2.5 points

• Citi Eurozone Economic Surprise Index 63.0 +7.1 points

• Citi Emerging Markets Economic Surprise Index 37.80 -.2 point

• 10-Year TIPS Spread 2.02 -3.0 basis points
• 40.80% chance of Fed rate hike at May 3 meeting, 65.1% chance at June 14 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -94 open in Japan 
• China A50 Futures: Indicating +49 open in China

• DAX Futures: Indicating +16 open in Germany

Portfolio: 

• Slightly Higher: On gains in my in my biotech/tech sector longs and emerging markets shorts 

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Today's Headlines

Bloomberg:

• Russia Rejects Trump’s Charge That Iran Is Top Terrorist State. (video) Russia rejected U.S. President Donald Trump’s assertion that Iran is the world’s “number one terrorist” nation, and said that the government in Tehran should be part of a proposed coalition to fight against Islamic State. “All those who see Islamic State as an existential threat should start to act in a coordinated manner and I’m sure that if we look objectively at potential members of this coalition, Iran should, of course, be part of our joint efforts,” Russian Foreign Minister Sergei Lavrov told reporters on Monday.
• Ukraine Is Fighting Its Own Cold War.
• This Is Marine Le Pen’s Plan to Break Up the Euro. (video) National Front leader Marine Le Pen will take back control of the central bank and fire up the printing presses as she leads France out of the euro if she wins the presidential election in May, her chief economic adviser said. Le Pen is making a “return to monetary sovereignty” a key plank of her policy platform as she seeks to replicate the populist victory of Donald Trump in the U.S. and has set up a task force to prepare, her adviser Bernard Monot said, as he explained the details of her plan on the sidelines of a rally in Lyon Saturday.
• China’s Welcome Mat for Foreign Money Leaves Some Staying Away. Some foreign investors are worried China is turning into a kind of Hotel California. Fourteen months after qualifying for official reserve-currency status, and after a series of steps opening up domestic markets to overseas funds, the take-up remains below estimates. For all China’s attraction as the second-largest economy with large and expanding domestic capital markets, regulators’ efforts to tamp down on outflows of money have stoked concerns.
• Stoxx 600 Falls as Investors Focus on Draghi. (video)
• Here Comes the Economic Growth That Confidence Data’s Predicting. It turns out businesses and consumers have reason to be confident economic growth is about to pick up. But it’s not because of President Donald Trump’s policy prescriptions. Just two weeks into the president’s term, the world’s largest economy is already churning out a raft of signals that growth is posed to accelerate, according to Renaissance Macro Research. “What gets lost in the economic discourse, in our view, is that many leading indicators of activity have already turned,” Neil Dutta, head of U.S. economics at the New York-based firm, wrote in a report Monday. “We expect actual activity to pick up in the months ahead.”

Wall Street Journal:

• For Donald Trump’s Team, Iran Moves Atop Confrontation List. The nation’s missile test, and the administration’s response, hints at a long-term clash.
• Facebook(FB) and Google(GOOGL) Step Up Efforts to Combat Fake News. New initiatives important in pivotal year for European politics.

Fox News: 

• Trump refugee order could be headed to Supreme Court. (video)
• China sails warships near islands Mattis vowed to defend for Japan. (video)

CNBC:

• Bill Gross: Central bank 'financial methadone' isn't going to end well. (video)

Zero Hedge:

• Trump Blocked From Addressing UK Parliament For "Racism And Sexism". (video)
• For The First Time Since 2008, It Costs Over $1000/Month To Purchase A Median U.S. Home. (graph)
• USDJPY Snaps To 2 Month Lows After 112 Stops Taken Out. (graph)
• Gasoline Glut Could Ruin The Oil Price Party.
• Market Not Happy With Fillon Statement: Spread To Germany Spikes. (graph)
• Trump Threatens To De-Fund "Out Of Control" California.
• Mario Draghi: "Equity Prices Are In Line With Fundamentals"; SocGen Disagrees.
• Gold Spikes As European Election Anxiety Spreads. (graph)

The Telegraph: 

• Asia's top banks warn that Chinese capital flight is becoming dangerous.

Bear Radar

Style Underperformer:

• Small-Cap Growth -.90%

Sector Underperformers:

• 1) Oil Service -1.9% 2) HMOs -1.5% 3) Tobacco -1.3%

Stocks Falling on Unusual Volume: 

• OSTK, SCOR, LGIH, HAE, NWL, LH, ATW, MWA, CATM, TSN, DO, LPL and SYY

Stocks With Unusual Put Option Activity:

• 1) GNC 2) TWX 3) NWL 4) FAST 5) EMR

Stocks With Most Negative News Mentions:

• 1) LGIH 2) IP 3) LH 4) AN 5) TIF

Charts:

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