Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%

Sector Outperformers:

• 1) Banks +1.9% 2) HMOs +1.2% 3) Retail +1.0%

Stocks Rising on Unusual Volume:

• CYNO, TRU, AYR, CUTR, SALE, OMF, CSOD, HLI, ACIA, SCI, QTNA, CYBR, MSCI, KATE, DNB, IPGP, CARA, WUBA, OCLR, DBD, GM, TOWR, CRL, GPK, BEAT, TWTR, QTNA, Z and TAP

Stocks With Unusual Call Option Activity:

• 1) DATA 2) CERN 3) HON 4) OCLR 5) ALXN

Stocks With Most Positive News Mentions:

• 1) ZG 2) S 3) BKU 4) OPGN 5) CUI

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -4.8% Below 100-Day Average
• 4 Sectors Rising, 6 Sector Declining
• 40.1% of Issues Advancing, 54.8% Declining
• 94 New 52-Week Highs, 2 New Lows
• 61.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.4%
• Vix 11.3 +2.4%
• Total Put/Call .68 +4.6%
• TRIN/Arms .77 +8.5%

Tuesday Watch

Evening Headlines

Bloomberg:

• Le Pen Lures French Farmers Angered by Worst Crisis in Decades. Every time French farmer Nicolas Menier looks at his black-and-white milk cows, he’s reminded that he loses money on each one. That’s why he sent 14 of his 60 Prim’Holsteins to the slaughterhouse in the past year. It didn’t net him much: Beef prices are falling too. So are grains. Menier’s small corner of Brittany is a microcosm of French farming’s deepest crisis since World War II, and that could have an impact on April’s presidential election. He blames his woes on politicians from establishment parties, saying they haven’t protected farmers from falling prices and international competition. He plans to vote for the National Front’s Marine Le Pen, whom he calls the only candidate who understands farmers and whose threats to pull France out of the European Union could bring him relief.
• Steven Mnuchin Is Confirmed by Senate to Be Treasury Secretary. Steven Mnuchin was confirmed as U.S. Treasury secretary, filling the role of chief spokesman for the dollar and steward for the Trump administration’s economic priorities. The former Goldman Sachs banker won in a 53-47 Senate vote on Monday in which only one Democrat broke ranks and supported Mnuchin. After several delays in the Senate vetting process, Mnuchin is expected to push ahead quickly with top administration goals to dismantle financial regulations and slash taxes. Almost immediately, he’ll be immersed in preparing for the expiration of the debt limit suspension and his first meeting of G-20 finance ministers and central bank governors in Germany, both coming up next month.
• Australian Business Conditions Surge to Highest Level Since 2007. Australian business conditions jumped to the highest level in more than nine years and the employment gauge surged, diminishing the likelihood of interest-rate cuts in the near term. The business conditions index -- a measure of hiring, sales and profits -- jumped to 16 in January from a revised 10 in December, a National Australia Bank Ltd. survey of more than 400 firms conducted from Jan. 27 to Feb. 3 showed. Business confidence climbed to 10 from 6, the best result in almost three years, and a gauge of employment rose to the highest level since 2011.
• U.S. Hits Venezuelan Vice President With 'Kingpin' Act Sanctions. (video) The Trump administration imposed sanctions against Venezuelan Vice President Tareck El Aissami, after years of investigation by U.S. authorities into his alleged participation in drug trafficking and money laundering. The Treasury Department announced the move Monday, placing El Aissami and another Venezuelan on a U.S. list of foreign nationals with suspected ties to drug trafficking. El Aissami has consistently denied all allegations against him. His office declined to comment on the U.S. decision after it was announced.
• Asian Stocks Keep Global Rally Going as Bonds Drop. Asian equities continued their march to the highest levels in more than a year after U.S. equities surged to a fresh round of records. Bonds retreated before testimony from the Federal Reserve’s Janet Yellen. Equities in Japan, Australia and New Zealand gained after the S&P 500 Index closed at an unprecedented high and the MSCI All-Country World Index came within a whisker of its May 2015 record close. With reflation trades regaining their vigor, Treasuries nursed a three-day slide. The dollar was steady after a three-day advance while oil edged higher after Monday’s declines. The MSCI Asia Pacific Index climbed 0.1 percent to the highest since July 2015.
• Iraq Oil Flow to Slump as Maintenance Helps With OPEC Cut Pledge. (video) Iraq’s oil exports are poised to decline to a seven-month low in March as ongoing maintenance at some of its biggest fields coincides with a seasonal slump in shipments, potentially helping the country to meet a pledge to OPEC that it would restrict crude supply. The second-biggest producer in the Organization of Petroleum Exporting Countries will export 3.01 million barrels a day of crude from its Persian Gulf export terminals, down from 3.64 million in February, loading programs obtained by Bloomberg show. The March figure is the lowest since August, while this month’s flows are scheduled to be the highest since October 2015.

Fox News:

• Secretary of State Tillerson planning trip to Mexico amid tense relations. (video)

CNBC:

• After hours buzz: NRG, BKD, OMF & more.
• Bank stocks can run up another 50 percent over 3 years, analyst says. (video)
• S&P 500 to rally 8% as an improving economy takes over from the Trump trade, RBC says.

Zero Hedge:

• Republican Version Of 'Cadillac Tax' In Obamacare Replacement Drawing Fire From Employers And Unions.
• Someone Will Make A $100 Million Profit If Le Pen Wins. (graph)
• Re-evaluating Crude Oil Speculative Positioning.
• Stocks Soar To Record-est Highs Despite VIX & Crude Warnings. (graph)

Night Trading 

• Asian equity indices are unch. to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 104.25 -3.5 basis points.
• Asia Pacific Sovereign CDS Index 29.25 +.25 basis point.
• Bloomberg Emerging Markets Currency Index 71.27 +.03%. 
• S&P 500 futures -.01%. 
• NASDAQ 100 futures -.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AB)/.49
• (CPLA)/.95
• (DBD)/.32
• (DISCA)/.50
• (INCY)/.23
• (ITT)/.42
• (MLM)/1.60
• (TAP)/.61
• (A)/.49
• (AIG)/1.16
• (DVN)/.18
• (ESRX)/1.87
• (FOSL)/1.21
• (OMI)/.50

Economic Releases 
6:00 am EST

• The NFIB Small Business Optimism Index for January is estimated to fall to 104.9 versus 105.8 in December. 

8:30 am EST

• PPI Final Demand MoM for January is estimated to rise +.3% versus a +.3% gain in December.
• PPI Ex Food and Energy MoM for January is estimated to rise +.2% versus a +.2% gain in December.
  

Upcoming Splits

• (CMCSA) 2-for-1

Other Potential Market Movers

• The Fed's Yellen speaking, Fed's Lacker speaking, Fed's Kaplan speaking, Fed's Lockhart speaking, Eurozone GDP report, UK CPI report, Eurozone Industrial Production report, Australia Consumer Confidence report, weekly US retail sales reports, Stifel Transport/Logistics Conference and the Goldman Tech/Internet conference could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Rising into Final Hour on Tax Reform Hopes, Economic Optimism, Yen Weakness, Financial/Metals & Mining Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 11.17 +2.95%

• Euro/Yen Carry Return Index 125.82 -.02%

• Emerging Markets Currency Volatility(VXY) 10.10 -.88%

• S&P 500 Implied Correlation 45.57 -4.0%

• ISE Sentiment Index 85.0 +49.12%
  

• Total Put/Call .60 -38.78%

• NYSE Arms .71 -36.51%

Credit Investor Angst:

• North American Investment Grade CDS Index 63.42 -1.83%
  

• America Energy Sector High-Yield CDS Index 374.0 -1.16%

• European Financial Sector CDS Index 92.02 -2.04%

• Western Europe Sovereign Debt CDS Index 23.10 -5.29%

• Asia Pacific Sovereign Debt CDS Index 27.54 -4.74%

• Emerging Market CDS Index 212.60 -3.24%
  

• iBoxx Offshore RMB China Corporate High Yield Index 134.48 +.10%

• 2-Year Swap Spread 31.25 unch.

• TED Spread 50.25 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -27.75 -1.5 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.23 -.06%
• 3-Month T-Bill Yield .53% unch.

• Yield Curve 123.0 +1.0 basis point
  

• China Import Iron Ore Spot $92.23/Metric Tonne +6.48%

• Citi US Economic Surprise Index 37.0 -3.8 points

• Citi Eurozone Economic Surprise Index 49.60 -2.2 points

• Citi Emerging Markets Economic Surprise Index 39.20 +.6 point

• 10-Year TIPS Spread 2.01 -1.0 basis point
• 48.6% chance of Fed rate hike at May 3 meeting, 71.2% chance at June 14 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +65 open in Japan 
• China A50 Futures: Indicating +46 open in China

• DAX Futures: Indicating +12 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

• Le Pen Calls Rioters Scum as Violence Roils Paris Suburbs. (video) Marine Le Pen, the anti-immigration candidate in France’s election, unleashed a social-media campaign attacking minority communities after successive nights of violence in the ghettos around Paris. Some satellite towns around the capital have seen violent protests almost every night since Feb. 5 when four policemen were charged with attacking a young black man in Aulnay-sous-Bois, close to where riots erupted 12 years ago. Police have made multiple arrests, including last night, Agence France-Presse reported.
• Europe Stocks Rise to Highest Since 2015 on Economic Optimism. European stocks advanced to their highest level since December 2015 in a broad rally underpinned by higher raw-materials prices and forecasts of stronger inflation. The Stoxx Europe 600 Index closed 0.8 percent higher, with the mining sector hitting its highest level since 2014 as metals prices climbed for a second day. The European equity gauge rose for a fifth day, in its longest climbing streak since December, as markets in both Asia and the U.S. rose.
• Kuwait Says OPEC Leaning on Non-Members to Cut More Oil Output. OPEC is urging oil suppliers outside the group to fulfill their commitments to cut output, and crude prices will rise once producers demonstrate better compliance with their agreement to clear a global glut, Kuwait’s oil minister said. The Organization of Petroleum Exporting Countries, which agreed to the cuts with 11 other oil-producing nations in December, is 92 percent compliant with its pledge to reduce output by 1.2 million barrels a day, Oil Minister Essam Al-Marzooq told reporters Monday in Kuwait City. Non-OPEC producers are complying at a lower rate of more than 50 percent, he said. “At the time when producers signed the deal, the initial commitments were to gradually increase cuts until April and May, so we were expecting to see some producers not fulfilling the 100 percent cuts,” Al-Marzooq said. “We understand the circumstances, and in February we are talking to non-OPEC producers to raise their cuts according to their commitments.” 
• U.S. Consumer Inflation Expectations at 19-Month High, Fed Says. (video) U.S. households’ expectations for consumer price inflation rose to the highest level since mid-2015, according to a Federal Reserve Bank of New York survey. The median survey respondent reported an expected inflation rate last month of 2.9 percent three years ahead, up from 2.8 percent in December, according to results released Monday by the New York Fed. Expected inflation for one year from now rose to 3 percent, from 2.8 percent the month earlier.
• Verizon(VZ) offers unlimited data as mobile competition heats up.

Wall Street Journal: 

• Beijing Watches for How Trump Handles North Korea. China withheld comment on weekend missile test and said burden was on Washington, Seoul.
• ‘Buy America’ Push Tests Steel Industry. With the Trump administration’s plans for $1 trillion infrastructure program using U.S.-made materials, some companies are concerned about how the policy is being interpreted.

CNBC:

• Trump wants to ease access to capital for women.
• Elon Musk: Humans must merge with machines or become irrelevant in AI age. (video)

Zero Hedge:

• Trump, Trudeau, & 'Terrific' Trade Talks - Joint Press Conference Live Feed.
• "Look Away" - Just 2 Charts. (graph)
• RBC's Story Of The Day: "Reflation Trade Back On With A Vengeance".
• German Wholesale Prices Soar 4%, Biggest Jump Since October 2011. (graph)
• Apple(AAPL) Stock Soars Above Record Closing High. (graph)
• Trader Warns "US Markets Are Playing Global Pied Piper".
• China "Seriously Concerned And Opposed" After Trump Backs Japan Over Disputed East China Sea Islands.
• Wilbur Ross, Trump's Commerce Dept Pick, To Keep 11 Investments Including Chinese Govt-Backed Company.
• Trump, Bannon Said To Weigh Firing Mike Flynn Over Russian Phone Calls Scandal.
• China Bonds, Stocks, Commodities Extend Gains As Yuan Tumbles To One-Month Lows After Renewed Liquidity Injection.

The Telegraph:

• Dr Copper rallies as strikes and disruption grip the market.
• Why Donald Trump is the catalyst that will put Greece on course to end its euro misery.

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.3%

Sector Underperformers:

• 1) Gold & Silver -.5% 2) Retail -.4% 3) Energy -.1%

Stocks Falling on Unusual Volume: 

• HAIN, UBNT, KNL, CECE, AXON, CYNO, CARA and UCTT

Stocks With Unusual Put Option Activity:

• 1) LC 2) TPX 3) ADM 4) LQD 5) K

Stocks With Most Negative News Mentions:

• 1) HAIN 2) INOV 3) COV 4) ATVI 5) GCA

Charts:

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