Bear Radar

Style Underperformer:

• Mid-Cap Value -.5%

Sector Underperformers:

• 1) Gold & Silver -1.6% 2) Homebuliders -1.4% 3) Utilities -1.3%

Stocks Falling on Unusual Volume: 

• EIX, BL, HRTX, TOL, HOME and QTNA

Stocks With Unusual Put Option Activity:

• 1) ROST 2) SKT 3) HUN 4) ROST 5) RLGY

Stocks With Most Negative News Mentions:

• 1) EIX 2) RHI 3) MSG 4) KR 5) HUBS

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.4%

Sector Outperformers:

• 1) Education +3.3% 2) Disk Drives +1.4% 3) Alt Energy +1.3%

Stocks Rising on Unusual Volume:

• RVNC, RGC, SCMP, LE, GIII, HDS, SOXX, ATGE, DLPH, BOX, IGV, DQ, DGLD, COLL, TWOU, NICE, DSKE, RILY, TYL, IDXX, TMUSP, LRCX, MA, AET, ALGN, SNAP and FSLR

Stocks With Unusual Call Option Activity:

• 1) EQT 2) LL 3) SPB 4) POST 5) KEY

Stocks With Most Positive News Mentions:

• 1) SNAP 2) MU 3) BAND 4) DEPO 5) MCD

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +13.6% Above 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 40.1% of Issues Advancing, 57.0% Declining
• 68 New 52-Week Highs, 33 New Lows
• 63.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.4%
• Vix 11.0 -6.2%
• Total Put/Call .79 -4.8%
• TRIN/Arms 1.20 +66.8%

Tuesday Watch

Evening Headlines

Bloomberg:

• Asian Stocks Decline After Rally in U.S. Fades. (video) Stocks fell in Tokyo, Sydney and Seoul, while stock-index futures pointed to a weaker open in Hong Kong. Tech stocks on the MSCI Asia Pacific Index paced declines after tech-heavy Nasdaq fell. The S&P 500 Index reversed gains of as much as 0.9 percent as investors assessed a rally that’s propelled stocks to numerous records this year. The dollar pulled back in early Asian trading as optimism about tax reform died down and Treasury yields handed back part of their advance on Monday. The Topix index fell 0.3 percent as of 9:22 a.m. in Tokyo and the Nikkei 225 Stock Average lost 0.5 percent. Australia’s S&P/ASX 200 Index dropped less than 0.1 percent and the Kospi index in Seoul was down 0.4 percent.

• Five Things You Need to Know to Start Your Day. (video)

• Americans’ Nest Eggs Have Never Been Bigger. As U.S. stocks continue hitting new highs, President Donald Trump is encouraging Americans to check out their retirement accounts. “Look at your 401-k’s since Election,” the president tweeted Monday morning. “Highest Stock Market EVER! Jobs are roaring back!” Indeed, equity market gains have pushed average IRA and 401(k) balances to record levels. Unfortunately, there’s nothing to see for about half of American households that have no such retirement-savings vehicles.

• Senate's ‘Unpleasant Surprise’ Hurts Tax Breaks for Tech, Others. (video) One of the last-minute, late-night changes Senate Republicans made to their tax-overhaul plan may mean higher taxes for corporations, including technology firms, than the bill’s drafters intended, experts say. As amended, the Senate tax bill would preserve the existing 20 percent corporate alternative minimum tax, a levy designed to stymie companies’ tax avoidance that applies to fewer than 1 percent of U.S. companies under current law. But under the Senate plan, retaining the AMT could prevent companies from making use of planned tax breaks related to intellectual property, to spending on new equipment and to research and development. The AMT may fall hardest on technology and utilities companies -- though the snag would apply broadly, experts say.

• This CEO Sees Robot Taxis and Delivery Cars Coming in 2018.

Wall Street Journal:

• Companies Push to Repeal AMT After Senate’s Last-Minute Move to Keep It Alive. Business lobbyists say keeping corporate alternative minimum tax would undercut several goals of legislation.

Fox News:

• FBI agent fired from Russia probe oversaw Flynn interviews, softened Comey language on Clinton email actions.

CNBC:

• House Republicans introduce 2-week stop-gap to fund government, children's health insurance program.

• Stocks making the biggest moves after hours: ASNA, AAP & more.

• Death rate among people hospitalized for opioids quadrupled since 2000 — with Medicare patients big driver.

• Tax bill is reshaping this bull market for the better with more stocks than just tech participating.

• In wake of CVS-Aetna tie-up, deal speculation abounds. Here are the players to watch.

Zero Hedge:

• Anti-Trump FBI Agent Changed Language Of Hillary Email Scandal From "Grossly Negligent" To "Extremely Careless".

• Can A 16 Year Old Math Genius And Semi-Naked Women Sell The First Ever ICO Tranche.

• Eating Meat Perpetuates "Hegemonic Masculinity", Professor Says.

• China's Central Bank Warns "Bitcoin Will Die" - Here's How.

• "For The First Time In Modern History" US Government Debt Will Surpass Household Debt.

• In Major Victory For Trump, Supreme Court Lets Travel Ban Take Full Effect.

• Tech Wreck Erases 'Ross Rout' Rebound As Government Shutdown Fears Grow. (graph)

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 73.0 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 14.0 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 73.44 +.06%.

• S&P 500 futures +.10%.

• NASDAQ 100 futures +.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AZO)/9.79

• (BOBE)/.35

• (GIII)/1.54

• (HDS)/.75

• (TOL)/1.20

• (AVAV)/-.09

• (PLAY)/.23

• (OXM)/.12

• (RH)/1.04

Economic Releases

8:30 am EST

• The Trade Balance for October is estimated to widen to -$47.5B versus -$43.5B in September.

10:00 am EST:

• The ISM Non-Manufacturing Composite for November is estimated to fall to 59.0 versus 60.1 in October.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Services PMI report, Eurozone GDP report, China Services PMI report, Australia Retail Sales report, weekly US retail sales reports, Goldman Sachs Financial Services Conference, Barclays Discretionary Conference, Scotiabank Mining Conference, (AVID) investor day and the (FSLR) analyst day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by consumer 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 Reversing Slightly Lower into Final Hour on Pofit-Taking, Technical Selling, Sector Rotation, Tech/Medical Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.85 -5.07%

• Euro/Yen Carry Return Index 139.12 unch.

• Emerging Markets Currency Volatility(VXY) 7.93 +.25%

• S&P 500 Implied Correlation 36.22 -5.21%

• ISE Sentiment Index 136.0 +23.6%
  

• Total Put/Call .80 +3.9%

• NYSE Arms .75 -6.66%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.44 -1.84%
  

• America Energy Sector High-Yield CDS Index 365.0 -1.26%

• European Financial Sector CDS Index 46.15 -1.55%

• Western Europe Sovereign Debt CDS Index 3.45 -.86%

• Asia Pacific Sovereign Debt CDS Index 13.98 +1.38%

• Emerging Market CDS Index 178.08 -1.57%
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.71 +.08%

• 2-Year Swap Spread 18.0 -.25 basis point

• TED Spread 22.25 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -49.25 -1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.37 +.25%
• 3-Month T-Bill Yield 1.27% +1.0 basis point
  

• Yield Curve 57.0 -2.0 basis points

• China Import Iron Ore Spot $72.68/Metric Tonne +3.67%

• Citi US Economic Surprise Index 65.30 +5.2 points

• Citi Eurozone Economic Surprise Index 69.30 -1.0 basis point

• Citi Emerging Markets Economic Surprise Index 1.10 -.7 point

• 10-Year TIPS Spread 1.90 +2.0 bassis 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 -32 open in Japan 
• China A50 Futures: Indicating -24 open in China

• DAX Futures: Indicating -3 open in Germany

Portfolio: 

• Lower: On losses in my tech/medical/biotech sector longs

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

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• Brexit Breakthrough Fails as Irish Allies Flex Muscle With May. (video) London and Brussels failed to clinch a long-sought breakthrough on Brexit after a series of dramatic twists that saw a tentative deal derailed by the delicate question of the Irish border. “It was not possible to reach a complete agreement today,” European Commission President Jean-Claude Juncker told reporters as glum negotiators looked on. Talks will resume this week and he’s confident there will be a agreement that paves the way for trade talks to begin. As well as the Irish border, the taboo issue of what role the European Court of Justice will have in the U.K. after Brexit was also a stumbling block, according to a person familiar with the matter.

• Europe’s Young Consumers Lead a Revival of Optimism.

• OPEC Crude Output Drops to Six-Month Low. (video)

• The U.S. Economy Is Finally Living Up to Lowered Expectations.

• FedEx(FDX) and UPS(UPS) Surge as Investors Pick Winners From Tax Overhaul.

Wall Street Journal:

• GOP’s Late Changes to Tax Bill Buoy Key Industries. Amendments deliver wins for oil and gas firms, cruise-ship operators, others.

• Should 6-Year-Olds Be on Social Media? Facebook(FB) Launches Messenger Kids. Youngsters are the target, but child-development experts question whether it is appropriate.

• The CVS(CVS)-Aetna(AET) Gamble: a Health-Care Giant Not Built Around Doctors. Deal seeks to create an integrated system, but without the key cost gatekeepers.

• NYC Spending Balloons Under Bill de Blasio’s Administration. Since the mayor took office in 2014, the city has added more than 25,000 employees and city spending has increased by about 20%.

MarketWatch.com:

• Russell 2000 hits record on tax optimism.

• Analysts expect these large-cap U.S. stocks to rise at least 25% in 2018.

• It’s rare for the Dow to have ramped up like this — here’s what typically happens next.

Fox News:

• Matt Lauer did receive 'a shopping bag filled with sex toys,' claims therapist. (video)

• Ancient forbidden Christian text of Jesus' 'secret teachings' to his 'brother' found.

CNBC:

• ABC News blunder helps Trump score a point in his war on 'fake news'.

• Democrats are doomed if GOP tax cuts become law, says Republican businessman Ken Langone. (video)

• UBS sees bull case for 'tax-fueled' 25 percent surge in S&P 500 next year. (video)

• Here are the tax plan differences the House and Senate still need to figure out. (video)

• Life after Amazon(AMZN): Costco(COST), other select retail stocks just hit all-time highs.

• Retail jobs decline as Amazon's robot army grows.

• Apple(AAPL) still has one more major product to launch this year.

Zero Hedge:

• Is President Trump's Legal Team Preparing For An Imminent "Obstruction Of Justice" Charge?

• The Man Behind The Oil Price Rally.

• "No-One Knows What’s Going On Now": Britain, EU Fail To Reach Brexit Deal.

• "Wreaking Havoc" - HP(HPQ) Installs System-Slowing Spyware On Its PCs Without Consent.

• Houthi Rebels Take Over Yemen Capital After Killing Ex-President Saleh.

• US Factory Orders Slide In October. (graph)

• Trump Doubles Down In Verbal War With FBI.

• Tax Deal Sends US Futures Soaring To New All Time High; Dollar, Yields, Global Stocks Follow.

• German Government Drafts "Orwellian Nightmare" Plan To Spy On All Digital Devices.

• Europe's Migrant Crisis: Millions More Still To Come.

• 3D-Printed Suicide-Machines Will Usher In a Silent Genocide.