Friday Watch

Night Trading 

• Asian equity indices are -.75% to -.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 93.75 -.25 basis point.
• Asia Pacific Sovereign CDS Index 26.25 unch.
• Bloomberg Emerging Markets Currency Index 70.82 -.03%. 
• S&P 500 futures -.14%. 
• NASDAQ 100 futures -.14%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BIG)/2.22

Economic Releases

10:00 am EST

• ISM Non-Manufacturing Composite for February is estimated at 56.5 versus 56.5 in January. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Yellen speaking, Fed's Fischer speaking, Fed's Evans speaking, Fed's Lacker speaking, Fed's Powell speaking, Eurozone Retail Sales report and the Eurozone Services PMI report could also impact trading today.

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

Stocks Lower into Afternoon on Fed Rate-Hike Worries, Profit-Taking, Oil Decline, Metals&Mining/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 11.78 -6.06%

• Euro/Yen Carry Return Index 125.65 +.31%

• Emerging Markets Currency Volatility(VXY) 9.69 -.41%

• S&P 500 Implied Correlation 45.55 -.91%

• ISE Sentiment Index 100.0 +23.46%
  

• Total Put/Call .94 +9.3%

• NYSE Arms .71 +17.59%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.31 -1.03%
  

• America Energy Sector High-Yield CDS Index 348.0 -.11%

• European Financial Sector CDS Index 86.48 -2.17%

• Western Europe Sovereign Debt CDS Index 22.30 -1.76%

• Asia Pacific Sovereign Debt CDS Index 26.23 -.32%

• Emerging Market CDS Index 212.56 +2.06%
  

• iBoxx Offshore RMB China Corporate High Yield Index 135.33 +.08%

• 2-Year Swap Spread 33.75 -.25 basis point

• TED Spread 38.0 -5.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -25.75 +1.5 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.85 -.74%
• 3-Month T-Bill Yield .66% +4.0 basis points

• Yield Curve 117.0 -1.0 basis point
  

• China Import Iron Ore Spot $92.36/Metric Tonne +1.21%

• Citi US Economic Surprise Index 35.40 +2.8 points

• Citi Eurozone Economic Surprise Index 68.60 -.4 point

• Citi Emerging Markets Economic Surprise Index 51.60 -3.2 points

• 10-Year TIPS Spread 2.03 unch.
• 91.3% chance of Fed rate hike at May 3 meeting, 96.3% chance at June 14 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +51 open in Japan 
• China A50 Futures: Indicating -15 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.1%

Sector Underperformers:

• 1) Steel -4.3% 2) Gold & Silver -3.9% 3) Gaming -2.4%

Stocks Falling on Unusual Volume: 

• AHP, PTCT, PBYI, OME, KITE, TASR, GEF, BOX, ATHM, JUNO, PSTG, CAT, HIIQ, VGR, CCRN and ENV

Stocks With Unusual Put Option Activity:

• 1) SIRI 2) KR 3) CSAL 4) PTCT 5) SLV

Stocks With Most Negative News Mentions:

• 1) OME 2) ETFC 3) NVDA 4) CAT 5) NEM

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.3%

Sector Outperformers:

• 1) Retail +1.0% 2) Biotech +.9% 3) Utilities +.9%

Stocks Rising on Unusual Volume:

• SFR, DERM, KPTI, NKTR, GCP, ANF, MNST, DGLD, BLDR, GKOS, CWST, CALA, ACIW, DSLV, BMCH, ITCI, NLNK, NOAH, FOXF, BURL, NVGS, SRPT, TDOC, AKRX, XLRN, AIRM, IONS, AJRD, XON, FGEN, BBY, CARA, BW, AMBC, OSUR, PODD, CHRS, AEO, ATRC, LJPC and FOE

Stocks With Unusual Call Option Activity:

• 1) KMB 2) ANF 3) AVGO 4) SHAK 5) LITE

Stocks With Most Positive News Mentions:

• 1) XLRN 2) SRPT 3) MNST 4) CGI 5) AKRX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -3.9% Below 100-Day Average
• 3 Sectors Rising, 7 Sectors Declining
• 28.6% of Issues Advancing, 68.6% Declining
• 99 New 52-Week Highs, 21 New Lows
• 62.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.6%
• Vix 11.9 -5.3%
• Total Put/Call 1.03 +19.8%
• TRIN/Arms 1.05 +74.7%

Thursday Watch

Evening Headlines

Bloomberg:

• Global Stocks Rally Intact as U.S. Hits New Highs. The bulls are gaining momentum as the global equity rally stretches to Asia. Tokyo shares jumped to the highest level since December 2015 while equities in Australia and New Zealand also climbed after U.S. indexes set new records on signs growth is firming worldwide. The dollar extended gains after Federal Reserve Governor Lael Brainard supported the case for an interest-rate hike “soon.” Treasuries fell for a fourth straight day and gold retreated. Japan’s Topix jumped 1.2 percent, the most since Dec. 18, 2015, as of 9:28 a.m. in Tokyo. Australia’s S&P/ASX 200 Index rose 1 percent and New Zealand’s S&P/NZX 50 Index added 0.7 percent. Hang Seng futures rose 0.6 percent.

• Why Are Global Stocks Soaring After Trump's Speech? (video)

• White House Said to Kick Off Infrastructure Planning Thursday. President Donald Trump’s administration will convene a meeting of at least 15 federal agencies Thursday as a first government-wide step toward crafting the president’s $1 trillion infrastructure initiative, a senior White House official said. Gary Cohn, director of the National Economic Council, will lead the meeting, which will focus on identifying new projects that would boost the economy; finding existing projects, such as the Keystone XL pipeline, that could be expedited; targeting policies, outdated rules and laws that could delay projects; and developing funding and financing options, the official said.

• Fed's Brainard Says Rate Hike Will Likely Be Appropriate Soon. Federal Reserve Governor Lael Brainard painted a positive picture of economies at home and abroad that supported the case for an interest-rate hike “soon” by the U.S. central bank. “Assuming continued progress, it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path,” Brainard said in the text of a speech Wednesday at Harvard University in Cambridge, Massachusetts. “We are closing in on full employment, inflation is moving gradually toward our target, foreign growth is on more solid footing and risks to the outlook are as close to balanced as they have been in some time.”

• Big Pharma Is Losing a Fortune Trying to Cure Alzheimer's. Alzheimer’s disease is upending the rules of drug discovery, with a handful of companies abandoning caution to keep pursuing an elusive hypothesis because the potential payoff is so great.

• Oppenheimer Strategist Sees More Upside to Stock Rally. (video)

Wall Street Journal:

• White House Options on North Korea Include Use of Military Force. The strategy review comes as recent events have strained stability in Asia.

• U.S. to Remove Iraq From Travel-Ban List. Decision comes amid concerns in Washington and Baghdad that restriction would undercut relations with ally in fight against Islamic State.

Fox News:

• General says Russia bombed site near US forces in Syria in ISIS fight. (video)

CNBC:

• After-hours buzz: AVGO, BOX, MNST & more.

• Things are in place for the Trump rally to continue, strategist says. (video)

• Trump's latest comments are 'constructive' for drug industry: Amicus Therapeutics CEO. (video)

Zero Hedge:

• Holder Foretells The Return Of Obama: "He's Coming, And He's Ready To Roll".

• Libor Spikes Most In 15 Months To 8 Year Highs. (graph)

• CalPERS Threatens To Slash Pension Benefits By 63% For Some Unfortunate East San Gabriel, California Workers.

• USDJPY Surges After Brainard Says "Rate Hike Likely Appropriate Soon". (graph)

• Snap IPO To Price At $17, Above Range, Valuing Company At $24 Billion.

• White House Prepares For Trade War, Warns US "Will Not Be Bound By WTO Decisions".

• Stocks Soar To Record Highs As Hawkish Fed, Dovish Trump Spark Bond Bloodbath. (graph)

Night Trading 

• Asian equity indices are +.75% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 94.0 -2.0 basis points.

• Asia Pacific Sovereign CDS Index 26.25 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 71.36 -.03%. 

• S&P 500 futures -.07%. 

• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ANF)/.77

• (BUD)/1.03

• (BKS)/1.13

• (JOY)/-.12

• (KR)/.52

• (SHLD)/-2.85

• (SUP)/.19

• (TD)/1.27

• (COO)/1.88

• (COST)/1.36

• (MRVL)/.19

Economic Releases
7:30 am EST

• Challenger Job Cuts YoY for February. 

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 245K versus 244K the prior week.

• Continuing Claims are estimated at 2060K versus 2060K prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Mester speaking, China Manufacturing PMI, Eurozone PPI report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, BofA Merrill Refining conference, (LB) Feb. sales report, (WAT) investor day and the (BCO) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by commodity and technology 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.