Bear Radar

Style Underperformer:

• Small-Cap Value +.1%

Sector Underperformers:

• 1) Airlines -.7% 2) Defense -.6% 3) I-Banks -.5%

Stocks Falling on Unusual Volume: 

• PETS, SANM, LITE, FN and IIVI

Stocks With Unusual Put Option Activity:

• 1) HOG 2) HBI 3) SEAS 4) SYMC 5) K

Stocks With Most Negative News Mentions:

• 1) IIVI 2) SYMC 3) PANW 4) MKTX 5) INBK

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.6%

Sector Outperformers:

• 1) Gaming +3.8% 2) Biotech +2.9% 3) Oil Service +2.7%

Stocks Rising on Unusual Volume:

• VR, BIVV, JUNO, BPT, FE, BG, ARRY, NTG, PI, KODK, CLLS, CCRC, OKTA, ATKR, WYNN, JNCE, AGIO, URGN, IOVA, SXCP, MLNX, KALV, RCKT, CVGI, ADNT, ATRA, EDIT, MDCO, ANF, RARE, BLUE, DIT, PI, NUAN, WYNN, SXCP, PZZA, HCLP, VNOM and BHVN

Stocks With Unusual Call Option Activity:

• 1) FE 2) HBI 3) JUNO 4) BG 5) EXC

Stocks With Most Positive News Mentions:

• 1) ARRY 2) SGEN 3) ANF 4) SLB 5) CSOD

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +8.5% Above 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 51.8% of Issues Advancing, 44.6% Declining
• 200 New 52-Week Highs, 39 New Lows
• 64.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.1%
• Vix 11.0 -2.4%
• Total Put/Call .99 +15.1%
• TRIN/Arms .93 -16.8%

Monday Watch

Today's Headlines

Bloomberg:

• Italy's Election Promises Heap More Strain on Debt-Loaded Nation. Italy’s major parties haven’t formally spelled out their election economic programs, but early hints have politicians sniping and economists questioning their feasibility. Proposals range from Silvio Berlusconi’s 23 percent flat tax for individuals to the Five Star Movement’s minimum income for the poorest households -- all costly ideas, particularly for a country with already-strained finances. The measures could push public spending and revenue out of control just as a more robust economy was starting to cut the country’s debt load.

• Euro Gains, Dollar Slips as Politics Dominates. The euro advanced on optimism Germany’s Angela Merkel has made a breakthrough toward her fourth term after months of stalemate, while the dollar resumed a decline as the federal government shutdown continued. Asian equities opened mixed on Monday and U.S. Treasuries were steady. Germany’s Social Democrats backed formal coalition talks with Chancellor Merkel, boosting the euro. The six-week slide in the greenback showed no signs of easing with the House and Senate back in session Sunday amid a spending-bill impasse in Congress. Foreign exchange traders are also watching China’s appetite for currency strength as the yuan rallies beyond the symbolically key level of 6.4 per dollar for the first time since December 2015. Equities in Japan and South Korea retreated, while Australian shares were little changed. Japan’s Topix index slipped 0.1 percent. South Korea’s Kospi index lost 0.5 percent. Australia’s S&P/ASX 200 Index was little changed. Futures on Hong Kong’s Hang Seng Index added 0.2 percent. Futures on the S&P 500 lost 0.2 percent.

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

• OPEC, Russia Signal Global Oil Alliance May Endure Past 2018. OPEC and Russia reaffirmed that they’ll persevere with oil-production cuts until the end of the year to clear a global glut and signaled their readiness to cooperate beyond that. Russia is prepared to continue cooperating with OPEC and its de-facto leader Saudi Arabia even after the cuts expire, Energy Minister Alexander Novak said in a Bloomberg television interview held jointly with his Saudi counterpart. Producers should keep limits on output through 2018 as the market may re-balance at the end of the year or in 2019, Saudi Energy Minister Khalid Al-Falih said. Neither minister said whether the cuts would continue in 2019.

Wall Street Journal:

• Amazon’s(AMZN) Cashierless ‘Go’ Convenience Store Set to Open. Online retailer says, after yearlong delay, it finally has trained its in-store algorithms.

• Kabul Hotel Siege Ends With Attackers Killed. Death toll still unclear as reports conflict after 12-hour siege.

• Sanofi(SNY) Nears Deal to Buy Hemophilia Drugmaker Bioverativ(BIVV) for More Than $11.5 Billion. Deal would value hemophilia drugmaker at $105 a share, a 63% premium to its closing price Friday.

• P&G(PG) Grapples With How to Stop a Tide Pods Meme. Consumer-products giant has used social media and enlisted an NFL star to address viral videos of people eating its laundry packets; ‘I’m scared of what comes next’.

• Chinese Firms Load Up on Opaque Investment Products. Listed companies piled into wealth-management products last year, despite rising concerns over their risks.

Fox News:

• Newly released texts between ex-Mueller team members suggest they knew outcome of Clinton email probe in advance.

• Cornyn predicts government will remain shut down Monday. (video)

• Mulvaney: Trump won't 'weaponize' shutdown like Obama team did. (video)

CNBC:

• Government shutdown, day 2: Signs of progress emerge.

• 90% of bitcoin's value could get wiped out, Wall Street veteran Peter Boockvar warns. (video)

• Saudi energy minister urges oil producers to extend cooperation beyond 2018.

• The ten biggest US tech companies will top $1 trillion in sales this year.

Zero Hedge:   

• Roughly 20 Senators Support Bipartisan Plan To Reopen Government.

• Turkish Tanks Cross Into Syria As Ground Offensive Against US-Backed Militia Begins.

• Republicans Have Four Easy Ways To #ReleaseTheMemo...Not Doing So Will Prove Them Shameless Frauds. 

• Cudmore Stands By His Call: "The Dollar Is In A Multi-Year Down Trend".

• Chilean Catholics Stunned As Pope Accuses Child Sex Abuse Victims Of Slander.

• California Democrats Propose Business Tax Hike To Mitigate Tax Cut's Impact.

• What's So Special About 2.62%? (Spoiler Alert: Nothing!).

• CNN Reporter Admits Its Russia Obsession Is Out Of Touch With America. (video)

• Time-Wasting Stupidity: Facebook To Let Users Rank 'Credibility' Of News.

• Mick Mulvaney: "Shutdown Could Last For Weeks Thanks To The Democrats".

• Germany Avoids New Elections As SPD Votes For Coalition Talks With Merkel's Bloc.

• 200 Million Investors May Have Lost Everything In Largest Ponzi Scheme In China's History.

Business Insider:

• The World Bank is no longer supporting the oil and gas industries.

• India will install cameras in classrooms amid a rise of surveillance measures in Asia.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 63.5 +1.5 basis points.

• Asia Pacific Sovereign CDS Index 10.50 unch.

• Bloomberg Emerging Markets Currency Index 75.58 -.12%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.11%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (HAL)/.46

• (PETS)/.31

• (BRO)/.42

• (LOGI)/.55

• (NFLX)/.41

• (STLD)/.49

• (AMTD)/.51

• (ZION)/.73

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for December is estimated to rise to .25 versus .15 in November.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Commerce Secretary Ross's recommendations to President Trump on Aluminum, Precision Medicine World Conference and the AME Roundup 2018  could also impact trading today.

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

Weekly Outlook

• Wall St. Week Ahead by Reuters. 
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as lower long-term rates, positive earnings outlooks and economic optimism offset profit-taking, technical selling and govt. shutdown worries. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Today's Headlines

Bloomberg:

• For Investors Used to Political Drama, Shutdown Is One More Sideshow. After a year of political spectacle, it’s doubtful a government shutdown will be enough to divert investors from the economic and earnings tidings that have occupied Wall Street’s minds of late. As long as it doesn’t last too long. Indeed, you would’ve had a hard time telling anything was amiss yesterday, with U.S. stocks surging to their 10th gain in 13 days and closing at a record even as impasse built in Washington. That standoff culminated around midnight as Senate Democrats and a handful of Republicans blocked a funding bill and the U.S. government officially entered a partial closure.

• McConnell Threatens Early Monday Morning Vote: Shutdown Update.

• Spain Has Rating Raised to A- by Fitch on Economic Recovery.

• ADM(ADM) Said to Seek Bunge(BG) Merger Talks as Grains Traders Struggle. Archer-Daniels-Midland Co. sought merger talks with Bunge Ltd., said a person briefed on the matter, potentially setting up a battle for control of the giant agricultural trader with Glencore Plc.

• One Chart Shows How Crucial U.S. Tax Reform Has Been for Stocks. (video)

• Facebook(FB) Trustworthiness Ratings Boost ‘Fake News Award’ Winner.

Wall Street Journal:

• A Shutdown With Limited Impact, So Far. Many parks and other activities stayed open; one exception was the Statue of Liberty.

• Trucking Companies Race to Add Capacity, Drivers as Market Heats Up. Investors hope rising prices to move freight translate to higher profits when carriers including Werner Enterprises, Old Dominion report earnings. 

• U.S. Oil Output Expected to Surpass Saudi Arabia, Rivaling Russia for Top Spot. Boosted by shale industry, rising U.S. production could undermine OPEC’s efforts to shore up oil prices.

MarketWatch.com:

• This is what happens in the stock market when the government shuts down.

• More than half of S&P 500 stocks are up 20% or more since Trump took office.

Fox News:

•  Day One of shutdown brings fiery rhetoric, but solutions remain elusive. (video)

CNBC:

• Here's how your senators voted on the government shutdown. (video)

• New GOP tax law will boost corporate earnings at least 10%, says Merrill Lynch wealth manager. (video)

• A crucial German vote this Sunday is seen as the key near-term driver for euro/dollar.

• Visa(V). CEO Al Kelly is planning for the day washing machines can make purchases.

Zero Hedge:

• Now That The Government Has Shut Down, Here's What Actually "Shuts Down".

• As Women March, Ohio State Course Reprimands "White Heterosexual Masculinity".

• "Explosive", "Shocking" And "Alarming" FISA Memo Set To Rock DC, "End Mueller Investigation".

• Turkish Warplanes Begin "Massive Bombing" Of US-Backed Syrian Kurds.

• Crypto Comeback Continues; Shiller "Bitcoin Could Be Here 100 Years... Or Collapse Tomorrow".

• New Photos Show Vegas Shooter's Grisly Final Scene; Child Porn Found On Computer. (pic)

• Another Ponzi Exposed As Long-Term Care Insurers Double Premiums To Stave Off Losses.

• Facebook(FB) To Start Ranking News Sources, Promote Only The "Most Trustworthy".

• Dr.Copper Slides For 3rd Straight Week, Options Signal More To Come. (graph)

• Shutdown, Schmutdown: Stocks Soar To Record Highs As Bonds Bloodbath, Crypto Crashes. (graph)  

Business Insider:

• Red-state Democrats are feeling the pressure to vote for the GOP plan to avoid a shutdown.

• Financial watchdogs are going through the cryptocurrency market with a 'fine tooth comb'.

• Lowe's moves higher after reports that it could triple in value (LOW).

• GOLDMAN SACHS(GS): The government shutdown will take a toll on the US economy, but the pain won't last long.