Stocks Slightly Higher into Afternoon on Lower Long-Term Rates, Technical Buying, Seasonality, Road & Rail/Alt Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.17 -.78%

• Euro/Yen Carry Return Index 140.49 +.38%

• Emerging Markets Currency Volatility(VXY) 7.83 -.89%

• S&P 500 Implied Correlation 38.59 +2.3%

• ISE Sentiment Index 106.0 +73.8%
  

• Total Put/Call .88 -12.0%

• NYSE Arms 1.54 +124.71%

Credit Investor Angst:

• North American Investment Grade CDS Index 48.88 -.43%
  

• America Energy Sector High-Yield CDS Index 374.0 +.68%

• European Financial Sector CDS Index 43.70 -.65%

• Western Europe Sovereign Debt CDS Index 3.96 n/a

• Asia Pacific Sovereign Debt CDS Index 13.24 -1.56%

• Emerging Market CDS Index 120.16 -.52%
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.71 -.18%

• 2-Year Swap Spread 17.25 -2.25 basis points

• TED Spread 22.5 +13.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -59.25 +15.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.96 +.12%
• 3-Month T-Bill Yield 1.44% +10.0 basis points
  

• Yield Curve 52.25 -4.5 basis points

• China Iron Ore Spot 486.50 CNY/100 Metric Tonnes -.51%

• Citi US Economic Surprise Index 78.90 -1.6 points

• Citi Eurozone Economic Surprise Index 50.20 +.2 basis point

• Citi Emerging Markets Economic Surprise Index -2.30 -.3 basis point

• 10-Year TIPS Spread 1.95 unch.
  
• 70.8% chance of Fed rate hike at March 21 meeting, 72.6% chance at May 2 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +40 open in Japan 
• China A50 Futures: Indicating +13 open in China

• DAX Futures: Indicating -17 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.1%

Sector Underperformers:

• 1) Retail -.6% 2) Airlines -.5% 3) Gold & Silver -.2%

Stocks Falling on Unusual Volume: 

• ELY, NETE, CORT and RIOT

Stocks With Unusual Put Option Activity:

• 1) NEM 2) RTN 3) JNJ 4) NW 5) RIOT

Stocks With Most Negative News Mentions:

• 1) ELY 2) AAL 3) PG 4) JPM 5) GLW

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.5%

Sector Outperformers:

• 1) Alt Energy +1.2% 2) Networking +.8% 3) Road & Rail +.8%

Stocks Rising on Unusual Volume:

• WATT, BRSS, FND, APTI, APPN, OSBC, TRNC, SYX, DQ, VGLT, LNN, XOMA, XPO, KLXI, MGEE, NSH, MRSN, INTL, CAMP, MOD, SU, CUK, TYG, EDIT and LNTH

Stocks With Unusual Call Option Activity:

• 1) ALLY 2) UNP 3) WBA 4) MAR 5) ETN

Stocks With Most Positive News Mentions:

• 1) DFFN 2) SRPT 3) TRUP 4) ILMN 5) CGNX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -33.6% Below 100-Day Average
• 9 Sectors Rising, 1 Sector Declining
• 61.5% of Issues Advancing, 34.5% Declining
• 101 New 52-Week Highs, 11 New Lows
• 61.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.7%
• Vix 9.77 -4.7%
• Total Put/Call .79 -21.0%
• TRIN/Arms 1.25 +81.8%

Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 68.0 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 13.5 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 73.87 unch.

• S&P 500 futures +.02%.

• NASDAQ 100 futures +.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases

10:00 am EST

• The Conference Board Consumer Confidence report for December is estimated to fall to 128.0 versus 129.5 in November.
• Pending Home Sales MoM for November are estimated to fall -.5% versus a +3.5% gain in October.

Upcoming Splits

• (GGG) 3-for-1
• (NEOG) 4-for-3

Other Potential Market Movers

• The China Industrial Profits report, $24B 5Y T-Note auction and the US weekly retail sales reports could also impact trading today.

BOTTOM LINE:  Asian indices are slightly higher, boosted by commodity 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 Lower into Afternoon on Profit-Taking, Sector Rotation, Technical Selling, Tech/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.19 +2.93%

• Euro/Yen Carry Return Index 140.03 -.06%

• Emerging Markets Currency Volatility(VXY) 7.89 -.88%

• S&P 500 Implied Correlation 37.51 -2.24%

• ISE Sentiment Index 67.0 +13.6%
  

• Total Put/Call 1.06 +12.8%

• NYSE Arms .64 -34.32%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.50 +.12%
  

• America Energy Sector High-Yield CDS Index 371.0 -.73%

• European Financial Sector CDS Index 43.98 -.16%

• Western Europe Sovereign Debt CDS Index 3.96 n/a

• Asia Pacific Sovereign Debt CDS Index 13.46 -.15%

• Emerging Market CDS Index 120.81 +.04%
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.98 +.02%

• 2-Year Swap Spread 19.5 -1.25 basis points

• TED Spread 35.75 +1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -74.25 -3.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.74 +.02%

• 3-Month T-Bill Yield 1.34% +2.0 basis points
  

• Yield Curve 56.75 -2.5 basis points

• China Iron Ore Spot 489.0 CNY/100 Metric Tonnes -.91%

• Citi US Economic Surprise Index 80.50 -4.0 points

• Citi Eurozone Economic Surprise Index 50.0 -6.5 basis points

• Citi Emerging Markets Economic Surprise Index -2.0 -1.8 basis points

• 10-Year TIPS Spread 1.95 unch.
  

• 72.5% chance of Fed rate hike at March 21 meeting, 74.2% chance at May 2 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +17 open in Japan 

• China A50 Futures: Indicating +19 open in China

• DAX Futures: Indicating -1 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long