Morning Market Internals

NYSE Composite Index:

• Volume Running +19.4% Above 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 53.1% of Issues Advancing, 42.6% Declining
• 317 New 52-Week Highs, 24 New Lows
• 64.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 54.8%
• Vix 9.9 -.2%
• Total Put/Call .45 -37.5%
• TRIN/Arms .62 -9.3%

Friday Watch

Evening Headlines

Bloomberg:

• PC Shipments Rise for the First Holiday Quarter in Six Years. Demand for personal-computers rose over the holiday season for the first time in six years, buoyed by commercial upgrades and pockets of improving consumer demand. Although shipments declined slightly overall in 2017, it still marked the most stable year the market has seen since 2011, IDC said in a report Thursday.

• Asia Stocks Are Mixed as Euro Gains, Bonds Steady. Equities rose in Sydney and were flat in Seoul, while a stronger yen weighed on Japanese stocks. The euro was boosted by signals from the European Central Bank the economy may be strong enough to warrant scaling back crisis-era guidance on stimulus. The ECB release was the latest in a series of communications from central banks that have started waking currency markets up from a low-volatility stupor. Treasuries steadied after a sell-off sparked by rising concerns on inflation and potential rollback of purchases by China. Japan’s Topix index fell 0.4 percent as of 9:40 a.m. in Tokyo. 7-Eleven store owner Seven & I Holdings declined with FamilyMart UNY Holdings Co. after reporting results. Fast Retailing surged 4.6 percent after profit topped estimates. Futures on the S&P 500 were little changed after the underlying gauge rose 0.7 percent Thursday. Australia’s S&P/ASX 200 Index added 0.2 percent and South Korea’s Kospi was up 0.1 percent. Futures on Hong Kong’s Hang Seng Index added 0.3 percent. The MSCI Asia Pacific Index was little changed, up almost 4 percent since the year began.

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

• Oil Set for 4th Weekly Gain as U.S. Glut Eases on Winter Decline. (video)

• Bitcoin Set for Worst Weekly Slide Since 2015 as Scrutiny Rises. (video)

• California Approves $41 Million for Electric Vehicle Charging.

Wall Street Journal:

• The Spark Behind Iran’s Unrest: Millions of Defrauded Investors. The collapse of investment firms offering outlandish returns fueled the protests that grew into the biggest challenge to the regime since 2009.

• Donald Trump Signals Openness to North Korea Diplomacy in Interview. President cites a positive relationship with nation’s leader; also accuses Steve Bannon of betrayal.

MarketWatch.com

• Why a U.S. move to exit NAFTA is not the end of the free-trade deal — or free trade.

• Mnuchin says 90% of workers will get more take-home pay under withholding change.

Fox News:

• Trump laments immigration from 's---hole countries' in Oval Office negotiations. (video)

CNBC:

• Trump claims Mexico will 'indirectly' pay for a wall through NAFTA.

• Stocks making the biggest moves after hours: AMD, EXAS & more.

• Doctors will have to be more like actors as A.I. gains momentum: Zocdoc CEO.

• Intel(INTC) just warned that its patches can cause problems for some chips.

• There's going to be a 'Made in America' stock boom this year, investment bank says.

• Big Oil throws California’s climate change hypocrisy back in its face.

• 'Noisy' fourth quarter for banks, but bright 2018 ahead, say analysts. (video)

• Fiat Chrysler(FCAU) to invest more than $1 billion in Michigan plant and give $2,000 bonuses in response to tax reform.

• Cramer shares 5 reasons why the retail sector is back in action, according to industry executives.

Zero Hedge:

• Facebook(FB) Introducing Sweeping Changes: Will Prioritze Only "Trustworthy" News.

• Gundlach: "I Should Change My Firm's Name To DoubleBlockchain".

• After Beating Cancer, Bernstein Analyst Goes Full "Jerry McGuire".

• White House Takes First Step To Attach Work Requirements To Medicaid.

• Wall Street Bank With Three Felonies Sends Employee To Head SEC Trading Division.

• Fed's Dudley Is Worried About "Elevated Asset Prices", Sees "Real Risk" Of US Overheating, Hard Landing. (graph)

• CDS Market On Verge Of "Irreparable Damage" In Escalating Feud Over Hovnanian Debt.

• Bipartisan Senate Group Reaches "Agreement In Principle" On DACA.

• Trannies Soar Most Since 2001, Treasury Yields Tumble, Dollar Dumped. (graph)

Business Insider:

• Walmart's(WMT) closure of 63 Sam's Club stores shows what the company is willing to do to take on Amazon.

• Apple's(AAPL) mountain of cash is about to get even bigger — here's how it could use it.

• Doctors are secretly teaching themselves how to do robotic surgery.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 60.0 unch. 

• Asia Pacific Sovereign CDS Index 10.5 unch.

• Bloomberg Emerging Markets Currency Index 75.24 +.10%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures -.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BLK)/6.02

• (JPM)/1.69

• (PNC)/2.20

• (WFC)/1.02

Economic Releases

8:30 am EST

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

• The CPI Ex Food and Energy MoM for December is estimated to rise +.2% versus a +.1% gain in November.

• Retail Sales Advance MoM for December are estimated to rise +.5% versus a +.8% gain in November.

• Retail Sales Ex Autos MoM for December are estimated to rise +.3% versus a +1.0% gain in November.

• Retail Sales Ex Autos and Gas for December are estimated to rise +.4% versus a +.8% gain in November.

• Real Avg. Hourly Earnings for December.

10:00 am EST

• Business Inventories for November are estimated to rise +.4% versus a -.1% decline in October.

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Imports/Exports report, WasDe Crop report and the North American Intl Auto Show 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 Surging into Final Hour on Economic Optimism, Earnings Outlooks, Lower Long-Term Rates, Retail/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 9.79 -.31%

• Euro/Yen Carry Return Index 139.39 +.47%

• Emerging Markets Currency Volatility(VXY) 7.47 -1.58%

• S&P 500 Implied Correlation 33.59 -.09%

• ISE Sentiment Index 115.0 +.25%
  

• Total Put/Call .69 -1.43%

• NYSE Arms .63 +8.31%

Credit Investor Angst:

• North American Investment Grade CDS Index 46.85 +.41%
  

• America Energy Sector High-Yield CDS Index 330.0 -2.27%

• European Financial Sector CDS Index 43.10 -2.05%

• Italian/German 10Y Yld Spread 147.0 -2.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.44 +.48%

• Emerging Market CDS Index 110.78 -1.92%
  

• iBoxx Offshore RMB China Corporate High Yield Index 146.56 -.01%

• 2-Year Swap Spread 19.0 -.5 basis point

• TED Spread 28.5 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -26.25 -1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 75.19 +.55%
• 3-Month T-Bill Yield 1.43% +1.0 basis point
  

• Yield Curve 55.75 -2.0 basis points

• China Iron Ore Spot 520.0 CNY/100 Metric Tonnes unch.

• Citi US Economic Surprise Index 63.20 -3.3 points

• Citi Eurozone Economic Surprise Index 59.70 +1.4 basis points

• Citi Emerging Markets Economic Surprise Index -.2 -.2 basis point

• 10-Year TIPS Spread 2.02 -2.0 basis points
  
• 79.8% chance of Fed rate hike at March 21 meeting, 80.3% chance at May 2 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +50 open in Japan 
• China A50 Futures: Indicating +53 open in China

• DAX Futures: Indicating +23 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.5%

Sector Underperformers:

• 1) REITs -.4% 2) Utilities -.2% 3) Foods -.2%

Stocks Falling on Unusual Volume: 

• FTAI, ARNA, DVAX and ARNA

Stocks With Unusual Put Option Activity:

• 1) DISH 2) KODK 3) CBOE 4) SIRI 5) RRC

Stocks With Most Negative News Mentions:

• 1) AIZ 2) CTXS 3) LPCN 4) AWK 5) AYI

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.6%

Sector Outperformers:

• 1) Airlines +3.1% 2) Oil Service +3.1% 3) Homebuilders +2.6%

Stocks Rising on Unusual Volume:

• SECO, MGI, DST, SSNC, CMCM, PRGS, KBH, DFRG, AGIO, GSUM, FCAU, NVCR, XRAY, BPT, SBCF, REI, ARES, DAL, MSM, BABY, TGTX, IPAR, DENN, SND, COUP, SND, APPN, BCO, FSLR, TRUP, UNT, SEAS, VRAY, CEQP, DST, Z, FRAC, RES, EMES, AAL, CVX, CRS, ENBL and COUP

Stocks With Unusual Call Option Activity:

• 1) APRN 2) CRC 3) KBH 4) DISH 5) TSCO

Stocks With Most Positive News Mentions:

• 1) PRGS 2) KBH 3) FSLR 4) IPAR 5) BCO

Charts:

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

Market Internals

NYSE Composite Index:

• Volume Running +15.6% Above 100-Day Average
• 9 Sectors Rising, 1 Sector Declining
• 74.5% of Issues Advancing, 23.0% Declining
• 245 New 52-Week Highs, 30 New Lows
• 62.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.5%
• Vix 9.8 -.2%
• Total Put/Call .64 -8.6%
• TRIN/Arms .75 +29.2%