Bear Radar

Style Underperformer:

• Large-Cap Growth +.2%

Sector Underperformers:

• 1) Software -1.9% 2) Alt Energy -1.5% 3) Semis -1.5%

Stocks Falling on Unusual Volume: 

• DQ, CVS, COUP, TPIC, TTWO, IPGP, NOW, FNSR, VMW, ADBE, ANET, IRWD, ESIO, CGNX, ICHR and ALGN

Stocks With Unusual Put Option Activity:

• 1) AMC 2) OIH 3) CVS 4) AET 5) HZNP

Stocks With Most Negative News Mentions:

• 1) FNSR 2) AIG 3) CNP 4) MMM 5) CHTR

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +1.0%

Sector Outperformers:

• 1) Road & Rail +3.8% 2) Steel +3.5% 3) Banks +2.8%

Stocks Rising on Unusual Volume:

• BGC, EGBN, FMI, CCJ, SCMP, MEDP, BGNE, GMED, HOME, NICE, CRH, XNET, BKU, RIOT, TUR, FND, MOMO, AXTA, EXAC, CG, ULTI, OCFC, NOBL, M, OLLI, CVNA, DIN, OSTK, DISCA, GCO, UNP, CMG, FAST, DIS, FND, SGMO, ESRX, ETSY, FDX, SYF, BAC, LOW, ULTA, CNCE, MSM and VIVO

Stocks With Unusual Call Option Activity:

• 1) CAH 2) NUE 3) GT 4) TOL 5) MRK

Stocks With Most Positive News Mentions:

• 1) BA 2) UPS 3) DLPH 4) DAL 5) BBY

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +35.6% Above 100-Day Average
• 9 Sectors Rising, 1 Sector Declining
• 60.0% of Issues Advancing, 37.1% Declining
• 264 New 52-Week Highs, 12 New Lows
• 62.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.0%
• Vix 10.8 -6.0%
• Total Put/Call .63 -18.2%
• TRIN/Arms .87 +8.31%

Monday Watch

Today's Headlines

Bloomberg:

• Asian Banks See Funding Costs Rise, Making for Challenging 2018. It’s been a borrower’s market for a long time, in Asian syndicated loans as in the rest of the dollar universe. But Asia-Pacific lenders are facing increasing funding pressures, and a handful are aiming to pass those costs along -- in another sign that the beginning of the end of ultra-easy money may be coming. Half of the 50 banks in a Bloomberg News survey have experienced an increase in funding cost of as much as 20 basis points over the past few months. “Banks across the Asia Pacific in many cases will be challenged to maintain momentum on net interest margin primarily from a competitive standpoint in 2018,” said Gavin Gunning, senior director at S&P Global Ratings. “The banking sector regionally is becoming more competitive and in general that means that there are more pressure in terms of banks’ funding cost.”

• Apple(AAPL), Google(GOOGL) CEOs Bring Star Power as China Promotes Censorship. Apple Inc.’s Tim Cook and Google’s Sundar Pichai made their first appearances at China’s World Internet Conference, bringing star power to a gathering the Chinese government uses to promote strict online censorship. Apple’s chief executive officer gave a surprise keynote at the opening ceremony on Sunday, calling for future internet and AI technologies to be infused with privacy, security and humanity. The same day, Politburo member Wang Huning called for more aggressive government involvement online to combat terrorism and criminals online, even calling for a global response team to go well beyond China’s borders.

• U.K. Fears Brexit Breakdown as May Takes Her Best Offer to Lunch. While a deal on what happens to the Irish border after Brexit is still to be done, the role of the ECJ in enforcing the rights of citizens emerged as the greatest obstacle on Sunday after a weekend of intense talks, according to the British official and a person familiar with the EU side. May has offered all that she can and a rejection from Europe now would risk a breakdown in talks, according to the U.K. official.

• Dollar, Yields Gain on Tax Cuts as Stocks Steady. The dollar, yields and U.S. equity-index futures rallied after Senate passage of tax-cut legislation drew focus away from events in the continuing investigation into connections between Donald Trump’s aides and Russia. Asian stocks opened steady. The greenback recovered some of Friday’s losses, and Treasuries paced gains in yields in Asia on Monday. Stocks were little changed in Tokyo and Sydney, and futures on the S&P 500 index surged, as investors unwound trades triggered by concerns about former national security adviser Michael Flynn’s guilty plea for lying to federal agents. Yields on 10-year Treasuries jumped in early Asian trading. Oil continued to trade around $58 a barrel. Japan’s Topix index was little changed as of 9:22 a.m. in Tokyo, while the Nikkei 225 Stock Average was down 0.2 percent. Australia’s S&P/ASX 200 Index was steady. South Korea’s Kospi index rose 0.4 percent.

• Five Things You Need to Know to Start Your Day.

• Trump Says Investors Should Sue ABC for Market-Moving Report.

• Richmond Fed Said to Tap McKinsey's Barkin as Its President. Directors at the Federal Reserve Bank of Richmond have chosen Thomas Barkin, a senior executive at global consulting firm McKinsey & Co., as the institution’s next president, said a person familiar with the decision.

Wall Street Journal: 

• How GM(GM) Helped Power the Fastest-Growing Auto Maker in China. General Motors’ Chinese joint venture, Baojun, is taking more market share but the U.S. company’s minority stake leaves it vulnerable.

• Like the Cubans Before Them, Venezuelan Exiles Are Transforming Florida Politics. Both U.S. parties are hustling to recruit a flood of new voters in a crucial state for presidential elections.

• Digital-Currency Fever May Spread to Federal Reserve. As electronic-payment methods rise in popularity, central bankers ponder whether they might need to get in the game.

• Banks Build Line of Defense for Doomsday Cyberattack. The Sheltered Harbor project is meant to ensure that every U.S. bank has a protected, unalterable backup that can be used to serve customers in case of a major hack.

Fox News: 

• McConnell eases stance on Moore, says voters should ‘make the call’. (video)

CNBC:

• He correctly called Dow 24,000, and now longtime bull Jeremy Siegel sees another milestone approaching. (video)

• Dow 25K could happen by the end of the year, says Ralph Acampora. (video)

Zero Hedge:

• Republicans Prepare For War With FBI, DOJ: To File Contempt Action Over Anti-Trump Bias.

• "Here's What's In It": Goldman Explains All You Need To Know About The Current State Of Tax Reform.

• Bitcoin Just Crashed Over $1000.

• Reason For Bitcoin Sudden Plunge Revealed: UK Plans Regulatory Crackdown On Cryptocurrencies.

• Carmageddon For Tesla(TSLA).

• USDJPY Spikes - Erases ABC's Fake-Flynn-Fiasco Losses. (graph)

• What The Media Isn't Telling You About the Indictment Of Mike Flynn.

• Skynet Looms: Breakthrough Artificial Muscle Can Lift 1000x Its Own Weight.

• In "Largest-Ever" Military Drill, US Orders 16,000 Troops, 230 Jets To Simulate War With North Korea.

• Trump Twitter Meltdown: President Goes To War With FBI, Urges Suing ABC For "Bad Reporting". @realDonaldTrump:  People who lost money when the Stock Market went down 350 points based on the False and Dishonest reporting of Brian Ross of @ABC News (he has been suspended), should consider hiring a lawyer and suing ABC for the damages this bad reporting has caused - many millions of dollars!

• ABC Makes "Epic Mistake", Retracts Bombshell Flynn Story.

• Anti-Trump FBI Agent Fired From Mueller Probe Relied On Russian Dossier.

• "Deadliest Year Ever" - Baltimore Eclipses 2016 Homicide Total.

Business Insider:

• CVS Health(CVS) is buying Aetna(AET) for $69 billion in 2017's biggest deal.

• Walmart(WMT) and Amazon(AMZN) are locked in a bitter retail war — but they're becoming clones of each other in the process.

• Sinking NFL viewership is threatening to crush ad sales.

• Google's(GOOGL) new 'landscraper' will be as long as a super-tall skyscraper is high — and it could be the next big building trend.

Telegraph: 

• Wall Street readies for Trump’s tax bill boost.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 72.75 -.5 basis point.

• Asia Pacific Sovereign CDS Index 13.75 unch.

• Bloomberg Emerging Markets Currency Index 73.19 unch.

• S&P 500 futures +.57%.

• NASDAQ 100 futures +.46%.

Morning Preview Links

Earnings of Note

Company/Estimate

• None of note

Economic Releases   
10:00 am EST

• Factory Orders for October are estimated to fall -.4% versus a +1.4% gain in September.
  

Upcoming Splits

• (CGNX) 2-for-1
  

Other Potential Market Movers

• The Eurozone PPI report, UBS Media/Communications Conference, Raymond James Tech Conference, Wells Fargo Tech Summit and the Cowen Energy/Natural Resources Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by energy and consumer shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the week.

Weekly Outlook

• Week Ahead on Wall Street by CNBC. (video)

• Wall St. Week Ahead by Reuters. 

• Stocks to Watch Next Week by Seeking Alpha.

• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on tax reform hopes, yen weakness, seasonal strength, buyout speculation, short-covering and economic optimism. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Today's Headlines

Bloomberg:

• Senate Passes Tax-Cut Bill in Milestone Move Toward Overhaul. Senate Republicans narrowly approved the most sweeping rewrite of the U.S. tax code in three decades, slashing the corporate tax rate and providing temporary tax-rate cuts for most Americans. The 51-49 vote -- achieved just before 2 a.m. Saturday in Washington and only after closed-door deal-making with dissident senators -- brings the GOP close to delivering a much-needed policy win for their party and President Donald Trump. After the vote, Trump said on Twitter that he looks forward to signing a final bill before Christmas. Vice President Mike Pence tweeted that a pre-Christmas tax cut would be a “Middle-Class Miracle!”

• Greece, Creditors Strike Deal on the Conditions for Fresh Cash. Greece and its international creditors agreed on a set of economic overhauls the country must undertake in exchange for fresh loans, paving the way for a payment that will help it build a cash buffer as it seeks to prepare for its bailout exit. The so-called staff level agreement came after a week of talks in Athens saw the two sides reach common ground on politically sensitive issues such as reforms in the energy sector, public administration, the financial system, social-cohesion programs and fiscal performance among others.

• OPEC Just Did American Shale Drillers a Big Favor. As corporate boards for American oil explorers prepare to sketch out 2018 drilling budgets, Thursday’s historic agreement by Saudi Arabia, Russia and other major crude producers to extend supply caps for another year may prompt directors to spend more on drilling. That’s because the producer group’s restraint has meant higher prices for U.S. shale drillers, who haven’t been shy about hiring more rigs or flooding global markets with more cargoes. After climbing out of a crater dug by the worst oil-market collapse in a generation, North American explorers probably will boost spending by 20 percent next year, according to an Evercore ISI survey of industry budget trends. That would follow an estimated 41 percent jump in 2017.

• Hedge Funds Signal Trust in OPEC. Hedge funds are giving Saudi Arabia and Russia a big vote of confidence. As the two oil powerhouses pushed for the extension of supply curbs ahead of Thursday’s OPEC meeting, money managers shifted their stance on West Texas Intermediate crude to the most bullish since February. That’s largely due to a strong decline in short-selling. Bets on rising Brent crude also increased as short positions slumped.

Wall Street Journal: 

• Don’t Be Fooled by ‘Secular Stagnation’. American exceptionalism hasn’t come to an end, and we needn’t settle for 2% economic growth. What the U.S. needs is policies like Reagan’s, not Obama’s.

• How Tax Bill Emerged From a Late Night of Deal Making. GOP senators cut deals with leaders, a contrast with the failed health-care push.

• Bitcoin Is the World’s Hottest Currency, but No One’s Using It. As businesses accepting bitcoin payments find few takers, the virtual currency is a long way from its traditional counterparts.

• 50 Unique Gifts.

Barron's:

• Had bullish commentary on (AAPL), (GOOGL), (MSFT), (ETP), (CRM), (CIT) and (ZION).

• Had bearish commentary on (UNG).

MarketWatch.com: 

• Flynn who? For the stock market, it’s all about tax cuts and the Santa rally.

• Here’s why the stock-market rally is unlikely to be derailed by Michael Flynn.

Fox News: 

• H.R. McMaster: Potential for war with North Korea increases ‘every day’. (video)

CNBC: 

• This tax plan will spark an investment boom that will benefit everyone.

• ABC News clarifies, then corrects its bombshell report of Michael Flynn's discussions with Russia.

• Trump says Michael Flynn's actions during transition were 'lawful' and 'there was nothing to hide'.

• He correctly called Dow 24,000, and now longtime bull Jeremy Siegel sees another milestone approaching.

• Disney, 21st Century Fox talks have gotten a 2nd wind, deal still possible: Report.

• China's Tencent is quietly surrounding US tech giants with Trojan horse investments.

• North Korea appears ready to accelerate submarine weapons tests, adding to nuclear threat.

Zero Hedge:

• ABC Makes "Epic Mistake", Retracts Bombshell Flynn Story.

• ABC "Clarification" Upgraded To "Serious Error" - Reporter Brian Ross Suspended.

• Trump On Flynn's Plea: "I'm Not Worried At All; What Has Been Shown Is No Collusion".

• In Major Victory For Trump, Senate Passes "Sweeping" Tax Bill Which Nobody Read: Here's What's In It.

• The Government Is Coming For Your Bitcoin.

• Kushner Is "Senior Official" Who Ordered Flynn To Contact Russia.

• Susan Collins Will Vote For Senate Tax Reform Plan.

• Democratic Campaign Tells Voters Not To Vote For A Man (Because He Has A Penis). (video)

• Tesla's(TSLA) Semi-Truck Would Require Energy Of 4,000 Homes To Recharge.

• Mueller's Top FBI Agent Probing Clinton Emails, Russian-Collusion "Removed" After Anti-Trump Texts Found.

• Did Flynn's Plea Deal Just Disprove Election Collusion.

• GOP Releases All 479 Pages Of The Tax Reform Bill - "Vote-A-Rama" Begins.

• "We Need To Find That Guy": New Docs Reveal FBI Focus On Leaker In Clinton-Lynch Tarmac Meeting. 

• Kunstler: Guilty Until Proven Innocent.

• What Is Behind China's Bond Rout? (graph)

• Weekend Reading: Keeping You Awake At Night.

• Stock Markets Mueller'd As Yield Curve Collapse Continues. (graph)

Business Insider: 

• Tesla's(TSLA) biggest threat is now GM(GM).

• GOLDMAN SACHS(GS): Here's how to make a killing on the 7 top trades of 2018.

The Telegraph:

• Muslim population of the UK could triple to 13m following 'record' influx.