Bear Radar

Style Underperformer:

• Large-Cap Value Unch.

Sector Underperformers:

• 1) Oil Service -1.0% 2) Insurance -.6% 3) I-Banks -.6%

Stocks Falling on Unusual Volume: 

• NBLX, PAY, LITE, BRS, NTLA, RIOT, GBT, AYI, TIVO and ARCB

Stocks With Unusual Put Option Activity:

• 1) HBI 2) NUE 3) RCII 4) FOXA 5) GIS

Stocks With Most Negative News Mentions:

• 1) PTI 2) ARCB 3) TIVO 4) GHDX 5) OAS

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.9%

Sector Outperformers:

• 1) Gold & Silver +2.4% 2) Gaming +1.4% 3) Retail +1.0%

Stocks Rising on Unusual Volume:

• RPXC, FNSR, ANTX, CLLS, VRX, ATNX, ENTA, SOI, IJT, CASY, TRN, WWE, KOF, ONCE, LE, IHG, RPD, MSB, MEOH, DSGX, PHI, ACIU, PRAH, ECH, WDC, OSTK, CRAY and TRN

Stocks With Unusual Call Option Activity:

• 1) FNSR 2) BX 3) CLVS 4) STI 5) BLUE

Stocks With Most Positive News Mentions:

• 1) CAT 2) TRN 3) WDC 4) CTL 5) ADBE

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -.4% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 58.1% of Issues Advancing, 37.6% Declining
• 99 New 52-Week Highs, 14 New Lows
• 61.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.8%
• Vix 9.9 -.2%
• Total Put/Call .66 -23.3%
• TRIN/Arms 1.37 +110.8%

Wednesday Watch

Evening Headlines

Bloomberg:

• U.S., EU, Japan Fire New Warning Shot Over China Trade Abuse. The U.S., European Union and Japan announced a partnership to tackle overcapacity issues and forced technology transfers, which could inflame their relationship with China. The three countries issued a joint declaration Tuesday at the World Trade Organization biennial meetings that promised to target the “severe excess capacity in key sectors,” market-distorting subsidies, and policies that force companies to transfer their proprietary technologies abroad.

• Hyundai Bolsters Electric Car Lineup to Narrow Gap With Rivals.

• U.K. Must Prosecute or Fine Social Media Companies for Illegal Content, Panel Says. U.K. Prime Minister Theresa May should legislate to prosecute or fine social media companies such as Facebook Inc, Twitter Inc and Google Inc if they fail to remove illegal content, a panel that advises her on ethics said. Paul Bew, chairman of the Committee on Standards in Public Life, called on the government to shift the liability of content to the companies, so they become publishers, not merely platforms for content.

• Asia Stocks Mixed, Dollar Steady Before FOMC, ECB. Japan’s Topix index edged higher while the Nikkei 225 index fell, and stocks climbed in Sydney and Seoul. The dollar held onto gains after Treasury yields climbed to 2.4 percent and U.S. equities posted fresh all-time highs after data showed signs of inflation in producer prices. The Federal Reserve is expected to raise interest rates after its meeting on Wednesday, and it’s anticipated that the European Central Bank will reveal details of plans to taper asset purchases on Thursday. Comments on the outlook for 2018 will be the focus for investors as they weigh the impact of coming policy normalization on global asset prices. The Topix index rose less than 0.1 percent as of 9:31 a.m. in Tokyo. The Nikkei 225 Stock average inched lower. Australia’s S&P/ASX 200 Index rose 0.2 percent. Westfield Corp. was the biggest gainer on the benchmark, surging 14 percent, after Paris-based Unibail-Rodamco SE agreed to buy the global mall operator for almost $16 billion. The Kospi index was up 0.4 percent in Seoul. Futures on Hong Kong’s Hang Seng Index slid 0.1 percent. The MSCI Asia Pacific Index climbed 0.1 percent.

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

• Traders See No End to the Dollar’s Pain in 2018. Despite a recent bounce back, analysts and investors say the greenback could lose more ground against the euro and yen as the prospect of strong economic growth and tightermonetary policy outside the U.S. more than offsets higher interest rates at home. The dollar is down more than 7 percent versus the world’s major currencies this year, the most in over a decade.

• Bitcoin Fascination Feels Like ‘Speculative Mania,’ RBA Says.

• Hacking Isn’t the Only Way Your Cryptocurrency Can Get Stolen. You don’t need to be hacked to lose your cryptocurrency to thieves. An unidentified New York City man found out the hard way when an acquaintance allegedly entered his apartment and took his digital wallet containing $1.8 million worth of ether after another man robbed him of his keys at gunpoint. Manhattan District Attorney Cyrus Vance Jr. said this type of crime will become more frequent as values of cryptocurrencies continue to surge.

Wall Street Journal:

• GOP Bridging Divide in House, Senate Tax Plans. Republicans say they’re moving closer to deal, push for vote next week.

• Unibail Who? The French Mall Owner Is Buying Westfield for $15.7 Billion. Deal would create world’s second-largest shopping-center operator by market capitalization.

• ‘Shelby Mafia’ Is Helping Trump Deregulate Wall Street. The Trump administration is picking people with ties to Sen. Richard Shelby (R., Ala.) for key financial roles as it works to roll back postcrisis rules.

• How North Korea’s Global Financing Web Works Around Sanctions. Report’s conclusions are expected to be cited by advocates for toughening sanctions on firms doing business with Pyongyang.

MarketWatch.com: 

• Yes, the rise of bitcoin has all the hallmarks of a disaster waiting to happen.

Fox News:

• Alabama Senate election: Roy Moore takes early lead over Doug Jones. (video)

Zero Hedge:

• The Non-Crime Of "Lying To The FBI".

• Druckenmiller: "I've Had A Terrible Year... It’s Going To Be My First Down Year In Currencies Ever".

• It's Time To Rethink Education – Part 1 (Indoctrination).

• Republicans Reach Tentative Tax Agreement: Raise Corporate Tax To 21%, Cut Individual Tax To 37%.

• Jim Grant: "Markets Trust Too Much In The Presence Of Central Banks".

• Sessions Exploring Special Counsel For Demoted DOJ Official Tied To Fusion GPS, CIA.

• WTI/RBOB Higher After Surprisingly Large Crude Draw. (graph)

• Bitcoin, Bonds, & Bullion Bounce As Rand Paul Ruins Today's Tax-Deal Ramp. (graph)

Night Trading 

• Asian equity indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 70.5 -1.25 basis points. 

• Asia Pacific Sovereign CDS Index 13.75 -.25 basis point

• Bloomberg Emerging Markets Currency Index 72.83 +.02%.

• S&P 500 futures -.1%.

• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ABM)/.49

• (PIR)/.11

• (RMAX)/.51

Economic Releases

8:30 am EST

• The CPI MoM for November is estimated to rise +.4% versus a +.1% gain in October.

• The CPI Ex Food and Energy MoM for November is estimated to rise +.2% versus a +.2% gain in October.

• Real Avg. Weekly Earnings YoY for November.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,308,800 barrels versus a -5,610,000 decline the prior week.  Gasoline supplies are estimated to rise by +1,792,800 barrels versus a +6,780,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,135,700 barrels versus a +1,667,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.05% versus a +1.2% gain prior.

2:00 pm EST

• The FOMC is expected to raise the benchmark Fed Funds rate to 1.25-1.5% from 1.0-1.25%.
  

Upcoming Splits

• (NSP) 2-for-1

Other Potential Market Movers

• The FOMC Policy Update, Eurozone CPI report, Eurozone Industrial Production report, weekly MBA Mortgage Application report, (TREE) investor day, (HON) investor conference, (JLL) investor day, (SNY) analyst day,  could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Slightly Higher into Final Hour on Economic Optimism, Technical Buying, Short-Covering, Financial/Pharma Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.62 +3.0%

• Euro/Yen Carry Return Index 138.96 -.24%

• Emerging Markets Currency Volatility(VXY) 7.79 -.76%

• S&P 500 Implied Correlation 35.39 -3.5%

• ISE Sentiment Index 144.0 +118.2%
  

• Total Put/Call .91 +13.75%

• NYSE Arms .76 +5.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.28 -.07%
  

• America Energy Sector High-Yield CDS Index 371.0 -.62%

• European Financial Sector CDS Index 45.49 +.22%

• Western Europe Sovereign Debt CDS Index 3.42 +.29%

• Asia Pacific Sovereign Debt CDS Index 13.85 -1.35%

• Emerging Market CDS Index 177.02 +.02%
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.81 -.13%

• 2-Year Swap Spread 19.75 +.5 basis point

• TED Spread 22.75 -4.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -64.5 -6.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.83 -.26%
• 3-Month T-Bill Yield 1.32% +3.0 basis points
  

• Yield Curve 57.5 +1.0 basis point

• China Iron Ore Spot 493.0 CNY/100 Metric Tonnes -.6%

• Citi US Economic Surprise Index 69.0 +5.9 points

• Citi Eurozone Economic Surprise Index 53.90 -1.5 basis points

• Citi Emerging Markets Economic Surprise Index 6.30 -3.2 points

• 10-Year TIPS Spread 1.91 +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 +89 open in Japan 
• China A50 Futures: Indicating +10 open in China

• DAX Futures: Indicating -5 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg: 

• The U.S. Is Exporting Oil and Gas at a Record Pace. (video) You name it -- crude oil, gasoline, diesel, propane and even liquefied natural gas -- all were shipped abroad at a record pace. While the surge comes many years after the shale boom started, it can be traced straight back to the growth of horizontal drilling and fracking. U.S. exports are poised to expand even further, as the fear of peak oil supply has all but vanished just as a new demand threat emerges in the form of electric vehicles.
• What Hedge Funds Will Do After the Hedge Fund Model Dies. As long-short strategies take a beating, managers see niches like private debt as fuel for future returns.
• Here’s Where the GOP Tax Plan Stands Right Now. (video)

Wall Street Journal:

• Four Groups to Watch in Alabama’s Senate Election. Each candidate is depending on high turnouts among their natural supporters to win what polls show is a tight race.
• Is CNN Protecting Adam Schiff? Journalists continue to air his fact-free allegations without requiring evidence.
• Millions of People Post Comments on Federal Regulations. Many Are Fake.. A Wall Street Journal investigation uncovered thousands of fraudulent posts on agencies’ dockets, in hot-button areas such as net neutrality and payday lending.
• Saudi Aramco Ramps Up Spending to Over $40 Billion a Year. World’s biggest oil company needs investments to maintain production capacity.

MarketWatch.com:

• Small-business sentiment in November powers to the second-highest reading on record.

Fox News:

• Port Authority bombing suspect's family faces backlash after chastising authorities. (video)

CNBC:

• Druckenmiller: Central banks are financial world's 'Darth Vader,' creating exploding asset bubbles.
• Airline stocks are breaking out, and one name looks poised for new highs, analyst says. (video)
• My kids get 'no screen time whatsoever,' says Silicon Valley investor Chamath Palihapitiya. (video) Palihapitiya, who grew up in Canada after his family emigrated from Sri Lanka and was granted refugee status, believes that kids learn and thrive by having real-life experiences. "You go figure it out. Go outside, skin your knee. Fall on the ground. Play a sport. Lose at something. And then come back to me and we can talk about it. And we'll talk about it as rational human beings. And I'll try to tell you why that's a good thing that's happened to you," he said. He told CNBC on Tuesday: "The tools that we have created today are starting to erode the social fabric of how society works."
• Tech high flyers could soar 10% or more in 2018, investor Paul Meeks says. (video)
• Tax cuts and rate hikes are on the way, starting Wednesday, CNBC's survey of Fed watchers finds. (video)

Zero Hedge:

• It's Official: Bitcoin Surpasses "Tulip Mania", Is Now The Biggest Bubble In World History. (graph)
• Public Enemy No. 1: Walls Closing In On Peter Strzok As Questions Arise Over His Involvement In FISA Application.
• North Korea Hacks Exchanges Attempting To Steal Bitcoin As Prices Surge.
• Congress Expands Uranium One Probe After Senator Claims Obama Admin Misled Him Over Yellowcake Exports.
• Ethereum Soars Above $600 - Bigger Than GM, As Crypto-Mania Spreads.
• McCabe Cancels Testimony, Something "Far More Sinister" With Fusion GPS.
• US Producer Prices Rise At Fastest Pace In 6 Years As Payday Loan Demand Soars. (graph)
• John Burbank Shuts Flagship Hedge Fund, Plans Launch Of Cryptocurrency Unit.