Stocks Surging into Final Hour on Tax Reform Hopes, Economic Optimism, Yen Weakness, Financial/Retail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.2 +3.0%

• Euro/Yen Carry Return Index 137.62 -.1%

• Emerging Markets Currency Volatility(VXY) 7.82 +.13%

• S&P 500 Implied Correlation 16.28 unch.

• ISE Sentiment Index 125.0 +47.1%
  

• Total Put/Call .65 -8.45%

• NYSE Arms .61 -40.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.58 -1.42%
  

• America Energy Sector High-Yield CDS Index 374.0 +.97%

• European Financial Sector CDS Index 47.32 -.6%

• Western Europe Sovereign Debt CDS Index 3.66 -3.94%

• Asia Pacific Sovereign Debt CDS Index 13.75 -3.65%

• Emerging Market CDS Index 179.47 -.51%
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.54 -.07%

• 2-Year Swap Spread 17.25 -.5 basis point

• TED Spread 19.0 -2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -50.5 -4.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.36 -.07%
• 3-Month T-Bill Yield 1.7% +2.0 basis points
  

• Yield Curve 58.0 -.5 basis point

• China Import Iron Ore Spot $67.76/Metric Tonne +.73%

• Citi US Economic Surprise Index 58.10 +.7 point

• Citi Eurozone Economic Surprise Index 86.30 -.2 basis point

• Citi Emerging Markets Economic Surprise Index 10.70 -.4 point

• 10-Year TIPS Spread 1.86 unch.
  
• 100.0% chance of Fed rate hike at Jan. 31 meeting, 100.0% chance at March 21 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +164 open in Japan 
• China A50 Futures: Indicating +63 open in China

• DAX Futures: Indicating +67 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.3%

Sector Underperformers:

• 1) Shipping -.3% 2) Gold & Silver -.2% 3) REITs -.2%

Stocks Falling on Unusual Volume: 

• MOMO, BSX, XNET, NOAH, BITA and MULE

Stocks With Unusual Put Option Activity:

• 1) LC 2) ZNGA 3) CMCSA 4) ROKU 5) MO

Stocks With Most Negative News Mentions:

• 1) BSX 2) TROX 3) REGN 4) CLGX 5) NKE

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.9%

Sector Outperformers:

• 1) Banks +1.8% 2) Airlines +1.5% 3) Homebuilders +1.4%

Stocks Rising on Unusual Volume:

• BWLD, COOL, DQ, NOMD, UPLD, AGI, TUSK, PACW, ASYS, VNTV, SQ, THO, CWH, YEXT, TECD, TCF, SCMP, LAUR, QNST, NWL, GGAL and ULTI

Stocks With Unusual Call Option Activity:

• 1) JCI 2) IYR 3) HDS 4) F 5) ITB

Stocks With Most Positive News Mentions:

• 1) RYB 2) EFX 3) CC 4) LOW 5) MU

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -7.5% Below 100-Day Average
• 10 Sectors Rising, 0 Sectors Declining
• 60.2% of Issues Advancing, 35.8% Declining
• 125 New 52-Week Highs, 52 New Lows
• 59.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.7%
• Vix 9.9 +.3%
• Total Put/Call .47 -33.8%
• TRIN/Arms .68 -34.1%

Tuesday Watch

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 74.50 -2.25 basis point. 

• Asia Pacific Sovereign CDS Index 14.25 -.75 basis point.

• Bloomberg Emerging Markets Currency Index 73.39 -.03%.

• S&P 500 futures -.1%.

• NASDAQ 100 futures -.1%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CBK)/-.08
• (ADSK)/-.13
• (CENT)/.09
• (MRVL)/.33
• (NUAN)/.15

Economic Releases 

8:30 am EST

• Advance Goods Trade Balance for October is estimated at -$65.0B versus -$64.1B in September.
• Wholesale Inventories MoM for October is estimated to rise +.4% versus a +.3% gain in September.

9:00 am EST

• The FHFA House Price Index for September is estimated to rise +.5% versus a +.7% gain in August.
• S&P CoreLogic CS 20-City MoM for September is estimated to rise +.3% versus a +.45% gain in August.
  

10:00 am EST

• The Conference Board Consumer Confidence Index for November is estimated to fall to 124.0 versus 125.9 in October.
• The Richmond Fed Manufacturing Index for November is estimated to rise to 14.0 versus 12.0 in October.
  

Upcoming Splits

• (CGNX) 2-for-1

Other Potential Market Movers

• The Jerome Powell Fed Chair Confirmation Hearing, $28B 7Y T-Note auction, NRF release of Thanksgiving weekend sales data, weekly US retail sales reports, Germany GfK Consumer Confidence report, Piper Jaffray Healthcare Conference, Citi Basic Materials Conference, CSFB Aerospace Industrials Conference and the (UNH) Investor Conference could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by energy and financial 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 Slightly Lower into Final Hour on Profit-Taking, Oil Decline, Yen Strength, Energy/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.82 +1.55%

• Euro/Yen Carry Return Index 137.69 -.7%

• Emerging Markets Currency Volatility(VXY) 7.82 unch.

• S&P 500 Implied Correlation 16.28 unch.

• ISE Sentiment Index 74.0 -40.8%
  

• Total Put/Call .75 -11.8%

• NYSE Arms 1.14 +6.41%

Credit Investor Angst:

• North American Investment Grade CDS Index 53.35 +1.6%
  

• America Energy Sector High-Yield CDS Index 370.0 +.1%

• European Financial Sector CDS Index 49.61 +.6%

• Western Europe Sovereign Debt CDS Index 3.81 +3.81%

• Asia Pacific Sovereign Debt CDS Index 14.27 -4.55%

• Emerging Market CDS Index 180.07 -.79%
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.64 -.02%

• 2-Year Swap Spread 17.75 +.25 basis point

• TED Spread 21.0 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -46.25 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.41 +.17%
• 3-Month T-Bill Yield 1.25% -1.0 basis point
  

• Yield Curve 58.5-1.0 basis point

• China Import Iron Ore Spot $67.27/Metric Tonne -1.0%

• Citi US Economic Surprise Index 57.40 +6.8 points

• Citi Eurozone Economic Surprise Index 86.50 -6.4 basis points

• Citi Emerging Markets Economic Surprise Index 11.10 -1.7 points

• 10-Year TIPS Spread 1.86 -1.0 basis point
  
• 100.0% chance of Fed rate hike at Jan. 31 meeting, 100.0% chance at March 21 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -10 open in Japan 
• China A50 Futures: Indicating -29 open in China

• DAX Futures: Indicating +20 open in Germany

Portfolio: 

• Slightly Lower: On gains in my tech/biotech sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long