Bear Radar

Style Underperformer:

• Small-Cap Value +.2%

Sector Underperformers:

• 1) Gold & Silver -1.0% 2) Utilities -.7% 3) REITs -.7%

Stocks Falling on Unusual Volume: 

• AYI, ELF, BKH, APPN, AAOI, AEO, URBN, AXGN and KALA

Stocks With Unusual Put Option Activity:

• 1) JACK 2) LB 3) PH 4) AKRX 5) DISCA

Stocks With Most Negative News Mentions:

• 1) AKS 2) AZZ 3) GPRO 4) UAA 5) BKH

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.4%

Sector Outperformers:

• 1) Biotech +1.9% 2) Banks +1.6% 3) Gaming +1.5%

Stocks Rising on Unusual Volume:

• PTIE, ABLX, ATUS, ALDR, BPT, ABAX, WTW, GBT, ILMN, AB, CBPO, DQ, PETQ, IIPR, BDXA, ELLI, BSX, JACK, TGT, SUN, BOMN, PX, EXAS, GSUM, STX, ATUS, UCBI, ITCI and KKR

Stocks With Unusual Call Option Activity:

• 1) KKR 2) ZNGA 3) NSC 4) HAS 5) TJX

Stocks With Most Positive News Mentions:

• 1) ILMN 2) TGT 3) CMTL 4) STX 5) UNP

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +13.8% Above 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 42.9% of Issues Advancing, 53.3% Declining
• 222 New 52-Week Highs, 24 New Lows
• 66.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 54.4%
• Vix 9.7 +1.8%
• Total Put/Call .70 +9.4%
• TRIN/Arms .81 -30.3%

Tuesday Watch

Evening Headlines

Bloomberg:

• Kia Unveils Plan for 16 New Electric or Hybrid Vehicles by 2025.

• Samsung Profit Misses Estimates as Stronger Won Hits Sales.

• Asia Stocks Build on Gains as Japan Traders Return. (video) Asian equities built on the best start to a year since 2006 as Japanese traders returned from a holiday following new all-time highs for U.S. shares. The dollar maintained gains and oil rose above $62 a barrel. Shares in Tokyo and Sydney rose as the S&P 500 Index eked out a fresh closing high, while declines at Samsung Electronics Co. in wake of its profit announcement weighed on South Korea’s equity index. Earnings will continue to be a focus as the week goes on, with financial firms including JPMorgan Chase & Co. and Wells Fargo & Co. on the schedule. The dollar’s softness last year may reverberate for some, as it did negatively for Samsung. Japan’s Topix index rose 0.6 percent as of 9:10 a.m. in Tokyo. Futures on the S&P 500 Index were flat after the underlying gauge rose 0.2 percent Monday. The MSCI Asia Pacific Index climbed 0.2 percent and is up 3.7 percent since the year began. Australia’s S&P/ASX 200 Index added 0.2 percent and South Korea’s Kospi was little changed. Futures on Hong Kong’s Hang Seng Index rose 0.1 percent.

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

Wall Street Journal:

• Huawei, Long Seen as Spy Threat, Rolled Over U.S. Road Bumps. Chinese telecom giant has gobbled up huge global market share; now Washington is warning anew about alleged spy threat as U.S. telecoms embark on $275 billion 5G network build-out.

• Apple(AAPL) Defends Its Smartphone Practices for Children After Investor Critique. Company says it has been offering parental controls since as early as 2008.

• A Crypto Website Changes Its Data, and $100 Billion in Market Value Vanishes. Bitcoin, Ethereum and XRP fall sharply after Coinmarketcap.com removes data from some South Korean exchanges.

CNBC:

• Buy Apple(AAPL) because it could acquire more than $120 billion of its stock in two years, UBS says.

Zero Hedge:

• A Curious Thing Happened When Ontario Hiked Minimum Wages By Over 20%.

• New Department Of Labor Report Reveals Rampant Embezzlement By Union Employees Around U.S.

• Mueller Set To Interview Trump "Soon".

• WikiLeaks: John Podesta Was Briefed On "Gross Negligence" Before FBI Removed Phrase From Clinton Exoneration.

• Fired Engineer Damore Sues Google For Discrimination Against White Male Conservatives.

• CEO Of Porn-Focused Cryptocurrency Disappears With Investors' Money.

• Credit Card Debt Hits All Time High As Consumers Unleash Historic Shopping Spree. (graph)

• Ripple Rebounds After Rout As S&P Gains 'Guarantee' 2018 Up-Year For Stocks. (graph)

Forbes:

• Illumina(ILMN) Unveils $20,000 Desktop Sequencer Aimed At Sequencing Germs.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 61.0 -1.75 basis points. 

• Asia Pacific Sovereign CDS Index 11.0 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 74.94 unch.

• S&P 500 futures +.01%.

• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AYI)/2.09

• (AZZ)/.58

• (SCHN)/.61

• (EXFO)/.05

• (VOXX)/.14

• (WDFC)/.84

Economic Releases

6:00 am EST

• The NFIB Small Business Optimism Index for December is estimated at 107.5 versus 107.5 in November.

10:00 am EST

• The JOLTS Job Openings report for November is estimated to rise to 6025 versus 5996 in October.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Trade Balance report, $24B 3Y T-Note auction, weekly US retail sales reports, JPMorgan CES Tech Forum and the Goldman Energy Conference could also impact trading today.

BOTTOM LINE:  Asian indices are 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 Reversing Slightly Higher into Final Hour on Economic Optimism, Oil Gain, Technical Buying, Road & Rail/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.35 +1.4%

• Euro/Yen Carry Return Index 141.01 -.52%

• Emerging Markets Currency Volatility(VXY) 7.50 -1.45%

• S&P 500 Implied Correlation 33.73 -3.36%

• ISE Sentiment Index 143.0 +31.2%
  

• Total Put/Call .61 -33.0%

• NYSE Arms 1.28 +35.26%

Credit Investor Angst:

• North American Investment Grade CDS Index 45.36 -.87%
  

• America Energy Sector High-Yield CDS Index 346.0 -.58%

• European Financial Sector CDS Index 42.97 +1.61%

• Western Europe Sovereign Debt CDS Index 3.96 n/a

• Asia Pacific Sovereign Debt CDS Index 10.83 -4.71%

• Emerging Market CDS Index 110.94 -.37%
  

• iBoxx Offshore RMB China Corporate High Yield Index 146.48 +.11%

• 2-Year Swap Spread 19.0 +.25 basis point

• TED Spread 30.25 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -23.5 -1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.92 -.35%
• 3-Month T-Bill Yield 1.41% +1.0 basis point
  

• Yield Curve 52.25 +.75 basis point

• China Iron Ore Spot 518.50 CNY/100 Metric Tonnes +1.77%

• Citi US Economic Surprise Index 73.90 -1.1 points

• Citi Eurozone Economic Surprise Index 52.20 +6.2 basis points

• Citi Emerging Markets Economic Surprise Index -1.2 -.9 point

• 10-Year TIPS Spread 2.02 -1.0 basis point
  
• 79.8% chance of Fed rate hike at March 21 meeting, 80.7% chance at May 2 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +261 open in Japan 
• China A50 Futures: Indicating +41 open in China

• DAX Futures: Indicating +1 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

• Euro-Area Economic Confidence Soars to Nearly Two-Decade High. (video)
• FedEx(FDX) Readies for Surge in E-Commerce With New Hub in Shanghai.
• Retail Investors Are on Their Longest Buying Spree of the Bull Market. (video)
• U.S. Equity Melt-Up Already Obliterating Analysts' 2018 Targets. (video)

Wall Street Journal:

• Driverless-Car Companies Try to Rev Their Engines on Commercial Prospects. Despite excitement about self-driving vehicles, a tough road to business success amid struggles over regulation and technology limitations.
• As Stocks Reach New Highs, Investors Abandon Hedges. With volatility at consistently low levels, more are revising their strategies.
• Retailers Get Bump From Holiday Season. Strong holiday sales mark a reversal of the previous year’s struggles.

Fox News:

• Obamas criticized for lavish library plans, including 'test kitchen'.

CNBC:

• Cryptocurrencies are plunging, led by ripple, bitcoin. (video)
• New 'insane' ETF proposal for bitcoin generates worry on Wall Street. (video)
• Tax reform prompts Visa(V) to raise 401(k) match for employees. (video)
• Homeowners are sitting on trillions in cash.
• Analyst says iPhone X sales are ‘worse-than-expected,’ downgrades key Apple(AAPL) supplier.
• GoPro(GPRO) has hired JP Morgan to put itself up for sale.
• Trump should only be judged by his policies.
• It's not just the US. Global markets are kicking off 2018 making a killing. (video)
• Fed's Bostic says three rate hikes in 2018 may be too much.
• Billionaire Tom Steyer will funnel $30 million into 2018 elections to help Democrats.
• Celgene(CELG) deal could be the first of many for biopharma as new tax law frees up cash. (video)

Zero Hedge:

• Furious Trump Snubs Bannon Olive Branch: You're With Him Or With Me.
• Two Of Apple's(AAPL) Largest Shareholders Urge Company To Address "iPhone Addiction" Among Kids.
• SEC Halts Trading In Chinese Crypto Company That Soared 900% In 2017.
• NBC Apologizes, Deletes Oprah "OUR Future President" Tweet As CNN Confirms 2020 Ambitions.
• "It Doesn’t Look Good": Intel CEO In Jeopardy For Selling Stock After Learning Of "Staggering" Flaw.

Reuters:

• European shares hit highest since August 2015, Ablynx soars. The STOXX 600 index closed up 0.3 percent at 398 points, a level last seen in August 2015.