Bull Radar

Style Outperformer:

• Large-Cap Growth unch.

Sector Outperformers:

• 1) Disk Drives +5.8% 2) Computer Hardware +.8% 3) Semis +.6%

Stocks Rising on Unusual Volume:

• NMBL, MOMO, AF, TGTX, CNCE, LGIH, PSTG, FMI, DISH, TERP, TEDU, RGNX, GTT, CVGW, INVA, DCO, DSLV, LPL, WUBA, NOAH, NX, BRSS, CCS, AAOI, KITE and KRO

Stocks With Unusual Call Option Activity:

• 1) TXN 2) DISH 3) MXIM 4) SWFT 5) TIF

Stocks With Most Positive News Mentions:

• 1) WFT 2) MEET 3) FMI 4) PEGA 5) SRCL

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +.6% Above 100-Day Average
• 4 Sectors Rising, 6 Sectors Declining
• 34.1% of Issues Advancing, 61.9% Declining
• 37 New 52-Week Highs, 50 New Lows
• 58.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.3%
• Vix 11.3 +.8%
• Total Put/Call .95 +6.7%
• TRIN/Arms 1.05 -23.4%

Tuesday Watch

Evening Headlines

Bloomberg:

• Here Are the Top China-U.S. Trade Flashpoints as Trump Readies Case. With his commerce secretary sworn in, U.S. President Donald Trump is now in a position to carry out his trade threats against China -- should he decide to do so. Specific measures against China will be announced “as soon as we have a proper case prepared,” Commerce Secretary Wilbur Ross said in a Bloomberg Television interviewlast week. The billionaire investor spoke just before Trump’s speech to Congress, which included promises to bring back "millions of jobs" and that "dying industries will come roaring back to life." Since the election, Trump hasn’t specified his trade plans, but the U.S. Trade Representative has said the U.S. won’t be bound by World Trade Organization decisions, according to a document obtained by Bloomberg News that outlines the administration’s trade agenda.
• Caution Prevails for Asian Stocks; Aussie Climbs. Asian stocks were mixed as trading began, after U.S. equities and bonds retreated. Caution is rippling through markets after Federal Reserve Chair Janet Yellen all but assured investors that interest rates will rise next week. Japan’s Topix index was little changed while Korean shares advanced. The Aussie strengthened with stocks in Sydney ahead of a central bank policy decision. The S&P 500 Index retreated Monday with volumes 13 percent below the 30-day average. JPMorgan Chase & Co. warned that hawkish Fed rhetoric has increased the likelihood for a short-term pullback after stocks reached records last week. The dollar rose Monday as a surge in corporate bond issuance pushed up Treasury yields. The yen fell 0.1 percent to 114.01 per dollar as of 9:48 a.m. in Tokyo. The Bloomberg Dollar Spot Index was little changed after gaining 0.2 percent on Monday. The Aussie rose 0.2 percent to 75.92 U.S. cents. The Topix fluctuated while Australia’s S&P/ASX 200 Index rose 0.3 percent. South Korea’s Kospi climbed 0.4 percent.
• One of the Rarest Precious Metals Is on the Best Run in a Decade. Rhodium’s on the best run in a decade on expectations of more demand for the material that’s used in cleaning toxic car emissions. One of the rarest precious metals, it climbed the past seven months and is up 19 percent this year, outperforming most major commodities. Mostly used alongside palladium in gasoline autocatalysts, prices have rebounded from a 12-year low set in July.
• Exxon(XOM) Is Steering Its Construction Dollars Back to U.S. Exxon Mobil Corp.’s $20 billion building spree in the heart of the U.S. chemical and refining industry will create 45,000 jobs and boost U.S. efforts to feed Asian demand, the company’s new leader said. President Donald Trump couldn’t be happier. Following Chief Executive Officer Darren Woods’s announcement of the projects on Monday, Trump described Exxon as a “true American success story” in a statement. The president followed up with a trademark tweet: “We are already winning again, America!” and a White House video. 
• Bird Flu Prompts Quick Quarantines as Chicken Farmers Fight Back. The merest mention of bird flu is enough to send shivers down the spine of a chicken farmer. But as the U.S. deals with its first case of highly pathogenic avian influenza on a farm in a year, the poultry industry hasn’t started to panic. Learning lessons after the worst-ever U.S. outbreak two years ago, America’s chicken, turkey and egg producers are gearing up with tighter biosecurity measures and quicker quarantines to deter spread of the infection. One thing working in their favor: early spring-like weather in the region that can stop the virus from thriving.

Wall Street Journal:

• The Health Bill You’ve Waited For. Our plan removes taxes and mandates, while offering tax credits to help Americans afford coverage. ‘ObamaCare is collapsing,” President Trump said during his address to Congress last week, “and we must act decisively to protect all Americans.” House Republicans have heard the president’s message loud and clear. On Monday night the congressional committees we lead released the American Health Care Act, which will rescue those hurt by ObamaCare’s failures and lay the groundwork for a patient-centered health-care system. 
• GM’s(GM) Opel Exit Is Rare No-Confidence Vote in European Market. Pulling out of Europe allows the Detroit car maker to slash engineering costs and lower the amount of cash it needs to keep on hand
• Exxon’s(XOM) $20 Billion Spending Plan Points to U.S. Energy Surge. Exxon CEO Darren Woods outlined an 11-project spending plan, largely aimed at creating new outlets for U.S. natural gas.
• North Korea Missile Test Stirs ICBM Fears. Latest midrange launch underlines Pyongyang’s threat to U.S. military and allies in region. North Korea’s firing of a burst of midrange missiles aimed at Japan underscores Pyongyang’s immediate threat to the U.S. military, even as it pushes toward a promised launch this year of an intercontinental ballistic missile that could potentially hit the U.S. West Coast.

Fox News: 

• House Republicans release long-awaited ObamaCare replacement bill. (video)

CNBC:

• CSX(CSX) names veteran railroad executive to be new CEO in deal with activist investor. (video)
• IBM(IBM) and Salesforce(CRM) shake hands on artificial intelligence. (video)

Zero Hedge: 

• House Republicans Release Plan To Repeal and Replace Obamacare: Key Highlights.
• The Second Dumbest Kind Of Money Is Pouring Into Stocks - "With A Vengeance".
• Judicial Watch Sues CIA, DOJ For Intel Leak Records: "President Trump Is On To Something".
• There's no end in sight to the deep slump in brick-and-mortar retail.
• These Are The 100 Most Overpaid CEOs.
• How The Market Creates Jobs (And How Government Destroys Them).
• Wikileaks Releases Encrypted "Vault 7" Torrent, Will Unveil Password Tuesday 9am.
• CNN Airs 'Spy Cam' Footage Of Trump Oval Office Meeting As If It's Perfectly Acceptable.
• Snap, Crackle, & Drop: "Hottest IPO" Crashes As Bull Market Celebrates 8th Birthday. (graph)

Night Trading 

• Asian equity indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 95.5 +.75 basis point.
• Asia Pacific Sovereign CDS Index 27.5 +1.0 basis point
• Bloomberg Emerging Markets Currency Index 71.09 +.03%. 
• S&P 500 futures -.09%. 
• NASDAQ 100 futures +.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DKS)/1.30
• (JW/A)/.79
• (MIK)/.95
• (NAV)/-.47
• (ABM)/.31
• (HRB)/-.49
• (URBN)/.56

Economic Releases
8:30 am EST

• The Trade Balance for January is estimated at -$48.5B versus -$44.3B in December. 

3:00 pm EST

• Consumer Credit for January is estimated to rise to $17.75B versus $14.16B in December. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone GDP report, German Factory Orders report, Japan GDP report, $24B 3Y T-Note auction, weekly US Retail Sales reports, RBC Financial Institutions conference, (CVX) analyst meeting, (IBM) investor briefing and the (QCOM) annual meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial 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 Modestly Lower into Final Hour on Tax Reform Worries, Rate Hike Fears, Earnings Outlook Concerns, Metals&Mining/Airline Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 11.27 +2.83%

• Euro/Yen Carry Return Index 125.91 -.46%

• Emerging Markets Currency Volatility(VXY) 9.53 -2.26%

• S&P 500 Implied Correlation 44.93 -.11%

• ISE Sentiment Index 60.0 -31.03%
  

• Total Put/Call .86 -9.47%

• NYSE Arms 1.29 +62.57%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.50 +.73%
  

• America Energy Sector High-Yield CDS Index 359.0 +1.69%

• European Financial Sector CDS Index 87.30 +1.68%

• Western Europe Sovereign Debt CDS Index 20.0 -5.55%

• Asia Pacific Sovereign Debt CDS Index 27.40 +3.63%

• Emerging Market CDS Index 207.92 +.47%
  

• iBoxx Offshore RMB China Corporate High Yield Index 135.58 +.17%

• 2-Year Swap Spread 33.25 -.75 basis point

• TED Spread 39.50 +4.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -24.5 -1.75 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.12 -.09%
• 3-Month T-Bill Yield .72% +2.0 basis points

• Yield Curve 119.0 unch.
  

• China Import Iron Ore Spot $89.73/Metric Tonne -1.74%

• Citi US Economic Surprise Index 38.20 +1.4 points

• Citi Eurozone Economic Surprise Index 68.0 -2.0 points

• Citi Emerging Markets Economic Surprise Index 54.80 +1.5 points

• 10-Year TIPS Spread 2.03 -1.0 basis point
• 98.2% chance of Fed rate hike at May 3 meeting, 98.9% chance at June 14 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -3 open in Japan 
• China A50 Futures: Indicating +3 open in China

• DAX Futures: Indicating +1 open in Germany

Portfolio: 

• Slightly Lower: On losses in my in my retail/biotech sector longs 

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 100% Net Long

Today's Headlines

Bloomberg:

• U.K. Slams Russian Aggression as EU Steps Up Defense Cooperation. British Foreign Secretary Boris Johnson warned against the threat Russia poses to Western democracies as the European Union moved to bring its military operations under a single command for the first time. Russian authorities “are, I’m afraid, engaged in cyber-warfare, they’re engaged in undermining countries in the Western Balkans -- you saw what happened in Montenegro -- to say nothing of Russia’s actions in Ukraine which are, as everybody knows, completely unacceptable,” Johnson told reporters in Brussels on Monday as he headed into a meeting of European Union foreign and defense ministers.

• Stocks Retreat With Treasuries as Dollar Advances. (video) The Stoxx Europe 600 lost 0.5 percent, with Deutsche Bank dropping 5.5 percent.

• U.S. Oil Industry Becomes Refiner to the World as Exports Boom. From major producers such as Chevron Corp. to specialized refiners including Valero Energy Corp., the U.S. refining industry has shifted its game over the last five years, taking advantage of gaps left by struggling refiners in Latin America, Africa and Asia. Along the way, it’s transforming what had long been a largely domestic business into a new global venture.

• U.S. Will Reclaim Global Supply Chain, Trump Trade Aide Says. (video)

• Airline Stocks Fall After Delta Cuts Outlook.

Wall Street Journal:

• Race Tightens for Next Wave of Cancer Drugs. Incyte, which operates out of an old department store in Delaware, is one of the closest to market with a new class of immunotherapies.

Fox News:

• 300 refugees subjects of FBI terror investigations, U.S. officials say. (video)

• Trump signs new immigration order, narrows scope of travel ban. (video)

CNBC:

• The market’s top sector could fly even higher. (video)

• Alcoa(AA) to rally more than 40% because it's a 'cash machine,' Goldman says.

• Oil price volatility back on the horizon once again unless lackluster investment can improve: IEA.

• These forces of change are dramatically reshaping the energy industry: Yergin.

• Get ready for 'regular Fed rate hikes all year,' ex-Treasury official warns. (video)

Zero Hedge:

• Trump Does Not Accept Comey's Wiretap Denial: White House.

• Mark Levin Issues Open Letter To CNN's Brian Stetler: "You Are Thoroughly Dishonest".

• BIS Admits TARGET2 Is A Stealth Bailout Of Europe's Periphery. (graph)

• NYT's Nick Kristof Urges IRS Employees To Illegally Leak Trump's Tax Return.

• China's Banking System Hits $33 Trillion, Overtaking The Eurozone As World's Largest. (graph)

• Iran Test Fired 2 Ballistic Missiles As Iranian Vessels Came Within 600 Yards Of US Navy Ship. (video)

• Eurozone Capital Flight Intensifies: Target2 Imbalances Widen Again. (graph)

• Core Factory Orders Growth Slows To Six-Month Lows. (graph)

• Snap Enters Correction - Plunges 16% From Post-IPO Highs.

The Telegraph:

• Permian shale boom in Texas is devastating for Opec.

• The eight charts that show France is the sick man of Europe.

Bear Radar

Style Underperformer:

• Small-Cap Value -.7%

Sector Underperformers:

• 1) Gold & Silver -3.3% 2) Airlines -2.3% 3) Hospitals -1.3%

Stocks Falling on Unusual Volume: 

• INF, NTNX, TELL, BKD, PEN, TTD and RRD

Stocks With Unusual Put Option Activity:

• 1) MBI 2) XLY 3) MDR 4) NTNX 5) FTR

Stocks With Most Negative News Mentions:

• 1) GPRO 2) AKRX 3) NH 4) SNAP 5) FIT

Charts:

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